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City Auditor Seeks Legal Ruling On DIA Giving $10.7M To Airlines

Colorado Attorney General Asked For Legal Opinion On 'Rebates' To DIA Airlines

POSTED: 5:02 pm MST December 29, 2009
UPDATED: 5:44 pm MST December 29, 2009

The Denver city auditor is asking the Colorado attorney general to rule on whether Denver International Airport illegally gave airlines $10.7 million in credits last year.

In an audit earlier this month, City Auditor Dennis Gallagher accused the financially-strapped airport of giving 23 airlines state fuel tax "rebates" in violation of state law prohibiting subsidies to giving airlines.

The bulk of the money went to major DIA tenant United Airlines, which received $5.2 million. Frontier, SkyWest, Delta and American Airlines were among the top five recipients of credit funded by DIA's share of fuel tax money.

DIA and city attorney officials have maintained they don't consider the money a subsidy to airlines, because they didn't "give" carriers money. Instead airlines were allowed to use "credit memos" to reduce their landing fees and facility rental bills at DIA.

"We did not give them money. We gave them a credit. That's a key distinction," DIA Deputy Manager Patrick Heck told the City Audit Committee Dec. 17.

But Gallagher accused the airport of playing word games Tuesday.

"It’s a bit like Bill Clinton’s rationalization to the grand jury '…it depends on what the meaning of is, is,' " Gallagher said, referring to then-President Clinton's verbal tap-dancing in 1998 when he was being asked about his affair with White House intern Monica Lewinsky.

Now Gallagher has asked Colorado Attorney General John Suthers to issue a formal legal opinion on whether or not DIA broke the law.

"DIA has taken a position that the $10.7 million in credits to the airlines does not constitute a 'subsidy' and therefore is an appropriate allocation," Gallagher wrote in a Tuesday letter to Suthers requesting the legal opinion. "However, they can provide no legal or other substantiation for that position."

DIA officials note that an informal email opinion earlier this year from the State Attorney General's Office stated: "So long as the monies were not provided directly to airlines it does not appear that the use of monies from the (fuel tax) fund to offset airport fees constitute a subsidy."

State law says that the fuel tax money can be used to benefit the "state aviation system." This includes allowing airports to use the money to pay for airfield expansion, access roads, runway construction and safety equipment.

But the law warns that "subsidization of airlines is expressly prohibited as an aviation purpose except for the promotion and marketing of air service at airport facilities."

"We were satisfied that these credit memos issued to the airlines do not constitute subsidies within the meaning of this particular state statue," Assistant City Attorney Helen Raabe, who represents the airport, told the audit committee.
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