Seven Year Airline Drama At Dallas Love Field Settles With Government Subsidies For Delta

By law there are only 20 gates at Dallas Love Field. There used to be 32, but 12 were ordered eliminated. That was all part of a deal that,

  • Lifted Wright Amendment restrictions on where flights could go from the airport
  • Limited competition for American Airlines flights out of Dallas – Fort Worth
  • And gave Southwest Airlines a stranglehold on the smaller airport

Out of the airport’s 20 gates,

  • Southwest Airlines leased 16
  • United Airlines leased two. Delta was using one of those gates. But United got a better deal leasing them to Southwest, giving the Dallas-based carrier control of 18 gates
  • American Airlines had two gates, but gave them up as a condition of government-approval for their US Airways merger. The gates went to Virgin America, and are now controlled by Alaska Airlines which acquired Virgin.

All of this left Southwest with 18 gates, Alaska with 2, and Delta without a gate in the game of musical airport chairs. However the Department of Transportation said that the City of Dallas had to continue to accommodate Delta at Love Field even though it had no gates to do so, couldn’t legally build more, and Southwest had a valid lease for the gate Delta was using.

The FAA threated to issue a determination that the City of Dallas was in noncompliance with its Federal grant obligations in the operation of Dallas Love Field, making them ineligible for FAA grant funds.

Everyone wound up in Court. Just for kicks, American Airlines got involved to say they wanted gates at Love Field, too! (They didn’t really, they were basically trolling.) In the meantime Delta squatted on a Love Field gate half the time.

After seven years there’s finally a settlement.

  • Alaska Airlines doesn’t actually want to use two gates at Love Field
  • So Delta will use one of them
  • And the City of Dallas will kick in $200,000 a year to lease the gate for Delta through 2028

Delta used to at least pretend to be against government subsidies for the airline industry, now they are vocally in favor.

None of this would have been an issue if the federal government hadn’t limited the number of gates at Love Field, helping to cartelize the airport, and if the city hadn’t destroyed gates there would have been a greater chance of redress through Congress.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. It’s a travesty that it took 7 years to finalize a settlement. And of course, Delta has undeservedly come out far too good in the results. If they had wanted the gates, then they should have been made to pay for them, just as Southwest does. Apparently, the FAA and Delta are in bed together.

  2. I’d love to see how much the lawyers milked from all this drama…they and Delta are the only winners in this mess.

  3. Apparenty you, Gary, and your readers don’t understand that federal regulations set the price for gates – based on the carriers that either have controlling interest in the airport – or pay the majority of the leases. The leases at Love Field are based on the price that Southwest pays for the original 16 gates.
    Delta SUCCESSFULLY argued before federal courts that, not only does the City of Dallas have to accommodate Delta but Delta should not be expected to pay a lease premium to what Southwest pays.
    Southwest argued that full use of a gate at Dallas Love Field is 10 flights/day and Southwest has met that requirement.
    Alaska gained its two gates via Virgin America as a result of the DOJ settlement between American and USAirways’ merger. ALK has not used its gates to full utilization and Delta appealed to the city to award the ALK gates to Delta. The compromise was for Delta to get one of the two gates.
    The City of Dallas has to refund $1.2 million in pre-paid rent to Alaska for the single gate that is being re-allocated to Delta.
    The City is paying to reconfigure the gate to Delta standards which is common.

    Delta is not receiving a subsidy. It is paying the same price as Southwest paid for its original 16 gates. Southwest paid hundreds of millions of dollars for the two gates it received from United and it will be able to continue to use those gates – although the cost it paid will not be refunded.

    The big news is that Delta will almost certainly increased its flights at Love Field, both to comply with “full usage” requirements and also because Delta sought to expand its flight schedule but was denied because of a shortage of gates. Now that Delta has its own gate, it can schedule as much as it thinks it can get in and out of there in a day.

    All Love Field gate leases end in 2028. The chances are high that American will retake the single gate it had to divest, Delta will get one gate and Southwest will retain its astonishingly high 18 of 20 gates at one of the nation’s top 20 airports by passenger volume

    The Dallas City Council is also hearing consultants regarding expansion of Love Field, something Dallas residents fought against – resulting in the 20 gate cap.

    American will be able to return to Love Field and Southwest will be able to go to DFW as well as add a new airport in N. Texas after 2025 if they choose.

  4. Yes, it’s an interesting posture toward subsidies. Before Bastian, under Anderson, there was an official and strenuous objection to the role of the US Export-Import Bank guaranteeing loans for Boeing’s 747, 767, 777 and 787 birds to foreign flag carries. As a taxpayer and supporter of union labor, I was fine with the bank’s roll, especially since Airbus is a multinational rival.

    Eventually, that objection was dropped. Then, under Bastian, the State of Georgia revoked Delta’s tax break on aviation fuel (could you imagine how much worse that hurts today?) over the discount for NRA membership. Where the tides of fortune take us, no one can know!

  5. I need an operation to re-cartelize my knees…

    Seriously though, when will a new Sky Club open at DAL??

  6. They should open a bus gate and let the airplanes sit where the gates used to be before being demolished. No one likes them, but it would increase airport operations.

  7. John H,
    the gate agreement at Love Field prohibits remote bus operations. All planes have to use gates.
    You may recall there were more gates at Love Field but Southwest managed to convince the residents that 20 gates was better for them (after Southwest made sure it had at least 16) so 1/3 of the gates were withdrawn.
    Then they paid nearly $100 million EACH for United’s 2 gates.

    Delta knew federal rules and fought Southwest and the City of Dallas that wouldn’t do its job until the FAA was ready to withhold federal funding.

    Delta is not being subsidized but is paying market rates for airport gates at Love Field which Southwest established.

    Delta won’t have a large operation at Dallas Love Field but it will be the 2nd largest carrier. Delta’s victory is in keeping Southwest from excluding competitors and in making the City of Dallas follow federal rules.

    and Ed,
    note above that all gate leases end at Love Field in 2028- 6 years from now. Given that no one that actually serves an airport will be thrown out as long as they meet the minimum usage requirements, renewed leases are about financial terms. If Southwest wants cheaps gates, everyone else gets them too.

  8. Or
    Another idea. Close down the airport that was supposed to close to commercial traffic decades ago before southwest lobbied to make up for their inability to compete at Dfw.
    How does it make sense to have an airport where the planes take off directly aimed at downtown or have to do a hard right turn to avoid hitting skyscrapers downtown on final.

    I live in uptown dallas and love field is just dumb to have planes spewing gas exhaust all over the most populated part of the city.

  9. I don’t understand why this wasn’t just a two-party breach of lease terms lawsuit with Delta suing United. It seems Delta was only at DAL because United was subleasing gates to Delta. If United chose to cancel that lease to Delta and instead sublease it to Southwest then why is it not just between Delta and United?

    “United Airlines leased two. Delta was using one of those gates. But United got a better deal leasing them to Southwest,..”

  10. Andrew,
    The US has by far the world’s most open rules regarding ensuring that any carrier that wants to serve an airport has the right to do so.
    The intent of all of the federal laws regarding airport access by airlines is to prevent dominant airlines from using their power – including having leases at airports – to push out or prevent carriers that did not have leases for serving that airport.

    Federal law says that airlines that do not have leases at airports cannot be forced to terminate their service if they lose their sub-lease.

    The issue was not between United and Delta because United did not have an obligation to ensure Delta has access to Dallas Love Field. That responsibility lies with the airport operator – the City of Dallas – which is why Delta sued the City of Dallas which ultimately was forced to settle after federal district and appeals courts BOTH said that Delta had a right to remain at Dallas Love Field.

    ALL airlines that have gate leases at all US airports are required to provide gate access for new entrant airlines or those that do not have leases -which was the case for Delta after United sold its gates to Southwest. Southwest inherited the responsibility to retain Delta.

    When Alaska failed to use its two gates to the full extent of the lease agreements, Delta petitioned the FAA to force the City of Dallas to allow Delta to take over the Alaska leases. The FAA was ready to pull federal funding for Dallas Love Field unless the City and the airline tenants with leases – Southwest and Alaska – came up with a way to allow Delta to remain. Southwest was using its gates while Alaska was not so Delta is gaining its gate from Alaska.

    Southwest still gets to have its 16 original gates plus the 2 it paid United nearly $200 million for – but Delta also pushed that federal law requires that lease prices be set based on no more than the average of all of the lease prices for leaseholding airlines.

    Delta’s lease price is lower than Alaska’s because the lease on Southwest’s original 16 gates becomes the price for Delta’s lease. Delta is paying no more than Southwest paid when it signed its original lease with the City of Dallas.

    Delta is not getting subsidized because it is paying the same lease rates as Southwest.

    Delta knew the rules, continued its pursuit of them, and has won based on the rule of law.

  11. In other Delta news, the DOT has tentatively approved, with minor conditions, the Delta-Latam antitrust applicaiton which will lead to a joint venture.
    The competitive environment between the US and S. America is about to change dramatically.

  12. Yes, common use gates are the solution but Southwest isn’t about to allow that to happen at Love Field and the City of Dallas carried the water for them until the FAA was ready to pull federal funding.
    THEN, and only THEN, Delta got a standalone gate of its own that allows it to grow – which is exactly what Southwest tried to desperately to stop and spent nearly $200 million trying to keep Delta from even serving Love Field, let alone growing.

  13. I’m going to start up a new airline, and I want to base it at Dallas Love field to undercut Southwest Airlines. I need 10 gates, but I will accept 5 initially. And no, I don’t want to fly out of DFW because it is so much more expensive and I want to be an ULCC. Dallas, what are you going to do to accommodate me?

  14. Gary
    WN lobbied to end the wright amendment that they knew was there when they went to love field.

  15. @Kim – No, the Wright Amendment was not “there when they went to Love Field” it was adopted in RESPONSE to their service at Love Field. It was enacted in 1979…

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