Court refuses to refund airlines’ property taxes

MADISON, Wis. (AP) — A state appeals court refused Tuesday to refund $4.2 million that two airlines paid in Wisconsin property taxes.

Wisconsin law grants property tax exemptions for airlines that operate as so-called hub facilities. Airlines must fly at least 45 departing flights every weekday to qualify as a hub facility.

Southwest Airlines Co. and Air Tran Airways Inc. merged in 2011. While undergoing state audits launched in 2014 and 2016, the airlines alleged they determined that collectively they flew enough departing flights to qualify for the hub facility exemption in tax years 2013 and 2014. They filed a lawsuit in 2017 demanding the state Department of Revenue refund the $4.2 million they collectively paid in property taxes.

Dane County Circuit Judge Richard Niess refused to grant the refund, finding the airlines didn’t fly enough department flights to qualify for the exemption.

The airlines conceded that they didn’t meet the minimum number of departing flights on six days in 2012 but the shortfall was due to holidays and bad weather. They argued they met the flight minimum for the second year based on the average number of department flights scheduled. The airlines alleged they substantially satisfied the criteria for the exemption.

The 1st District Court of Appeals disagreed. The court found that state law plainly says an airline has to physically fly 45 departing flights daily to qualify for the exemption. The statutes don’t provide exceptions for holidays or bad weather and don’t allow using the average number of flights or the number of scheduled flights in the calculations.

The airlines’ attorney, listed in court documents as Douglas Pessefall, didn’t immediately return a message.