LOCAL councils are on the verge of taking legal action against the operators of Adelaide and Perth airports for allegedly not paying more than $2 million in rates.

The issue will come to a head on Friday when the Australian Mayoral Aviation Council (AMAC), the Sydney-based organisation representing councils with major airports within their areas, meets federal Government representatives in Canberra with a demand that both airport operators pay any outstanding rates charges.

Both airports are owned by institutional investors.

The Hastings Fund Management-administered Utilities Trust of Australia and Australian Infrastructure Fund together control almost 57 per cent of Perth Airport.

UniSuper and the Motor Traders Association of Australia Superannuation Fund are the biggest stakeholders in Adelaide Airport, sharing 65 per cent.

Because the airports are on commonwealth-owned land, operators are technically exempt from council rates.

But AMAC claims it's a requirement of all airport leases that an amount "equivalent" to rates be paid.

While other airport operators paid the charges, AMAC project manager Greg Harragon said the Adelaide and Perth operators believed they were entitled to pay less than the billed amount because they provided their own services, such as roads and street lighting.

"What they are effectively saying is because they're not using a particular service, they want a discount," he said.

The City of West Torrens claims Adelaide Airport Ltd (AAL) owes it $1.68 million, with some payments outstanding from the 2002-03 financial year.

The council, in a letter sent to ratepayers, claims AAL has not paid full council rates for the past seven years and has calculated that if that underpayment continues for the remaining 91 years of the 99-year lease, the airport operator will avoid payments to the tune of $100 million.

Mayor John Trainer said the council had exhausted every non-legal avenue to resolve the impasse.

But AAL corporate affairs manager John McArdle claims there are a number of inaccuracies in the council letter.

He said the only outstanding money was the 2005-06 rates-equivalent payment amount, which was disputed by AAL.

"Otherwise, our rates are fully paid up," he said.

Perth's City of Belmont claims Westralia Airports Corporation, which previously paid the full amount, still owes more than $409,000 of 2005-06 rates.

City of Belmont chief executive Shayne Silcox said Westralia paid more than $531,000 at the start of this year after being billed almost $1 million.

Dr Silcox said the outcome of Friday's meeting with the federal Department of Transport and Regional Services, which administers airport leases, would determine whether the council proceeded with legal action.

AMAC wants the department to enforce the lease clause that it claims requires owners to pay council rates on the same basis as any other business.

With Perth Airport land accounting for about a third of the total area of the City of Belmont municipality, the council claims it already misses out on about $8 million it would ordinarily collect from ratepayers.

A spokeswoman for Perth Airport said the owners had been attempting to negotiate an outcome with the City of Belmont since 2000.