It looks like Delta Air Lines is out of the running for two gates at Dallas Love Field.
In a court filing Monday, the Justice Department said Delta is “not an appropriate divestiture candidate” for gates and slots that American Airlines was required to give up to win antitrust approval for its merger with US Airways. Rather, the government said the assets should go to low-cost carriers, such as Southwest Airlines and Virgin America, which are bidding on two gates at Love Field controlled by American.
“The United States concluded that divesting assets to Delta would fail to address the harm arising from the merger and would be inconsistent with the goals that the remedy seeks to achieve,” the filing said.
Delta is currently leasing one of the Love gates from American, which is uses to provide flights to Atlanta on small regional jets.
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Delta argued that it should be allowed to bid on the gates so it could increase service to other cities out of Love Field once the Wright Amendment restrictions are lifted in October. Last fall, it said it would add 18 daily nonstop flights from Love Field to its hubs in New York, Los Angeles, Detroit and Minneapolis-St. Paul, if it won the gates.
In its filing, the Justice Department said the purpose of the Love Field divestiture is to attract “low-cost carriers” and provide more competition for the newly merged American Airlines, which flies from its major hub at Dallas/Fort Worth Airport. “Delta, given its overall size and scope as well as its presence at DFW, can and does challenge [American] for the business of corporate customers flying to and from the Dallas area,” the department said.
Delta, however, believes the gates should go back to the city of Dallas and that local leaders should decide who should use the gates.
“The city has the right under American’s lease and the [Wright Amendment Compromise Agreement] to require that these gates revert to the city as common use gates,” Delta said in a statement Monday evening. “Officials of the city of Dallas are uniquely positioned to decide what to do with these gates based on what is best for their citizens and businesses.”
The department added that the gate divestiture process is expected to begin soon, indicating that decisions have not yet been made.
Also Monday, Southwest said that if it gets the divested American gates it will add 20 flights to 12 new destinations.
Dallas-based Southwest, which operates out of 12 gates at Love Field and will have 16 gates once the airport’s renovations are completed, said it is committed to offering more nonstop service to North Texas travelers.
“No other airline can offer the low fares, variety of destinations and customer service that Southwest is committed to providing at Love Field,” Southwest CEO Gary Kelly said in a statement. “Southwest’s proposal to acquire the two gates is the only option that allows all three carriers to actually grow in this market, which increases competition and provides additional travel choices at lower fares.”
The carrier said it would add flights to Charlotte, N.C.; Charleston, S.C.; Detroit; Indianapolis; Memphis; Minneapolis/St. Paul; Newark, N.J.; Philadelphia; Raleigh/Durham, N.C.; Sacramento, Calif.; San Francisco; and Seattle if it gets the gates.
According to a study conducted by Campbell Hill Aviation Group for Southwest, the carrier’s proposal would reduce airfares by $100 per round trip for the 12 new markets and produce more than $210 million in fare savings annually to travelers.
Even if it doesn’t get the additional gates, Southwest plans to add flights to Boston; Oakland, Calif.; Panama City Beach, Fla.; Portland, Ore.; and San Jose, Calif., in 2015. The company previously announced plans for its post-Wright Amendment schedule to fly to 15 new nonstop destinations.
Virgin America, which announced its intent to bid for the gates last week, argued that Southwest should not get the Love Field gates either because it would then operate from 18 of the 20 gates at Love Field, more than called for in the Wright Amendment compromise agreement, reached eight years ago.
“From a legal standpoint, Southwest agreed in 2006 to operate from 16 gates,” Virgin America CEO David Cush said last week. “This is an agreement they entered into voluntarily and whether American or Virgin America is offering out of those two gates, is largely irrelevant.”