REGIONAL AIRPORTS PLANNING COMMITTEE Oakland, CA January 28, 2011 Scott P. Lewis Anderson & Kreiger LLP DEMAND MANAGEMENT: Legal Framework

Problem Statement n Growing Imbalance of Airport Capacity and Airline Demand - Individual airport dimension (SFO, OAK, SJC) - Regional dimension n Need for “Demand Management” n Role of Local Airport Proprietors - Airline Deregulation Act - Local proprietary rights - Grant assurances - Contractual commitments Anderson & Kreiger LLP

Airline Deregulation Act n Elimination of Federal Regulation of Airline Routes n Preclusion of Local Regulation n Preservation of Local Airport Proprietary Rights n 2008 DOT Rulemaking n 2010 Court of Appeals Decision Anderson & Kreiger LLP

AIP Grant Assurances n SFO, OAK, SJC: Grant “Sponsors” n “Reasonable” and Not “Unjustly Discriminatory” n Airport Revenue-Use Restriction (“Diversion”) n Self-Sustaining Requirement Anderson & Kreiger LLP

Reducing Demand: Congestion Pricing n Theory n “Reasonable” or “Unjustly Discriminatory”? n Two-Part Landing Fee n Peak-Hour Pricing n Revenue Neutrality n Contractual Constraints Anderson & Kreiger LLP

Increasing Demand: Air Service Incentives n Theory n Revenue-Use Constraint and Subsidy Rule - Airport revenue - Non-airport revenue n “Self-Sustaining” Requirement and Waiver Rule Anderson & Kreiger LLP

Regional System n Reality n Federal Balkanization -Rate-setting and revenue-sharing -“Perimeter rules” n Coordination and Antitrust n Potential for Change? Anderson & Kreiger LLP