Consultant says Southwest is best option for Love Field gates

04/28/2014 10:12 AM

04/28/2014 11:05 AM

An aviation consultant has put up a roadblock to Virgin America’s plan to acquire two gates at Dallas Love Field, saying Southwest Airlines is the better choice for the gates being divested by American Airlines.

The report, presented to the City Council transportation committee Monday, said Southwest is proposing the most new destinations for the gates and would serve more new passengers.

“Southwest is the most attractive option for the City of Dallas, given both expectations for its [origin and destination passengers] throughput and potential for low fares,” the report by L.E.K. Consulting said.

No decision was made Monday on the lease agreement, but a full briefing will be given later to the Dallas City Council.

On Friday, Virgin America announced at a news conference at the airport that it had an agreement with American to take over the lease for the gates and would launch service to five cities out of Love Field in October. Virgin America said the Justice Department had signed off on its agreement, and CEO David Cush said he expected that securing the city’s approval would be routine.

Apparently not.

City aviation director Mark Duebner said Monday that the city hired a consultant to help evaluate options related to the two gates and consider what would be the best outcome for Dallas residents.

“We, the city, have not actively solicited interest in the gates from any airline,” Duebner told the council committee, saying the city expected to have more input in the process between American and the Justice Department related to the gate divestiture. Instead, the city was informed April 16 that American had an agreement to divest the gates to Virgin America and the government had approved the deal.

San Francisco-based Virgin America airline serves two cities out of Dallas/Fort Worth Airport and has said it intends to transfer its DFW service to Love Field. It refuted the study’s findings, saying that allowing Southwest to have a monopoly at Love Field is not good for consumers. If Southwest gets American’s two gates, the Dallas-based carrier would control 18 of the 20 gates available at Love Field once the terminal modernization is completed this year.

The carrier said the city had previously approved American’s sublease agreements with Delta and Seaport Airlines without holding hearings before the City Council and argues that American’s lease for the gates allows it to sublease them to any party.

“We have a private transaction with American Airlines that in the past has been routinely approved by the city manager,” Cush said.

He said that Virgin American began selling $79 tickets on these flights over the weekend and that “demand has been great.”

“I think people are getting more excited about the Wright Amendment restrictions being removed and they’re happy to see some competition at Love Field,” he said.

The report said that Delta, which announced its own plans last fall for adding nonstop flights to four cities from Love, would be the least attractive option for the gates even though it has the best financial performance of all three carriers.

“Delta’s scale gives it stability although it has left Dallas before, while Southwest is fully committed as the hometown carrier,” the report said, referring to Delta’s pulling dozens of daily flights out of DFW in 2005.

Holden Shannon, a senior vice president for Delta, said the city should be able to take back the gates for common use just as Los Angeles did with the two gates American had to divest there.

“Our position at Delta is that the city not be forced to choose but instead convert these remaining assets to common use so that they can be shared in a way that maximizes the value of the flying product for the citizens of Dallas,” Shannon said.

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