The Dallas city manager will decide by the end of the week whether Virgin America or Southwest Airlines will get the two gates at Love Field that are being divested by American Airlines.
A.C. Gonzalez announced his plan after the Dallas City Council spent more than an hour in closed session on Wednesday discussing the situation. The U.S. Department of Justice required American to give up the gates as part of a broad antitrust settlement to gain approval for its merger with US Airways.
Virgin America, Southwest and Delta Air Lines have all expressed interest in the gates, though Virgin was the only carrier selected by the Justice Department to get them. Delta Air Lines is leasing the gates from American.
Dallas Mayor Mike Rawlings said he will support whatever decision Gonzalez makes and is excited that there are several airlines wanting to do business with the city of Dallas.
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“I believe competition is good,” Rawlings said. “It is a growth driver for this city and the allocation of gates … is an important issue that the council should understand.”
Both Southwest’s chief executive, Gary Kelly, and Virgin America CEO David Cush attended the meeting.
Kelly said he was not surprised that a decision was not made at Wednesday’s meeting and reiterated the Dallas-based carrier’s position that it can provide more low fares to Dallas residents, adding 20 flights to five additional destinations, if it gets the gates. Southwest already controls 16 of the 20 gates at Love.
“If it’s more affordable air that you want in the city of Dallas, Southwest is your answer,” Kelly told reporters gathered for the meeting. A study conducted by a consultant hired by the city of Dallas concluded that giving the gates to Southwest was the best option for the city.
But Councilman Philip Kingston questioned the integrity of the study, saying that the council was unable to ask questions of the consultant who prepared the report. He and other council members indicated that they gave Gonzalez clear directions during executive session on how they want the issue resolved.
“Our obligation is to live up to the terms of the contract we have signed,” Kingston said during a public portion of the meeting.
Kelly said there is no threat from Southwest if the city chooses Virgin America over its hometown airline.
“We want to work with the city and not fight with the city,” Kelly said, when asked whether Southwest would legally challenge the city’s decision if it chooses Virgin America. “I think what we do from here is premature. We need to let the city work through its deliberation.”
Cush said he does not plan to contact Gonzalez prior to the announcement of his decision as he believes Virgin has made its position clear. He said Virgin officials are highly confident they will receive the gates.
“We’ve been confident since day one,” Cush said.
On Monday night, Virgin’s founder, Sir Richard Branson, hosted a party in Dallas to rally supporters for Virgin America.
Since Virgin America already has an agreement with American to take over the gates and is the Justice Department’s only approved choice to receive the gates, Branson said he believes the fight should already be over. Justice has been overseeing the sale of gates and slots at major airport nationwide as part of a deal to approve American’s merger with US Airways.
“I think with Virgin competing against Southwest here, it will be good for the traveling public,” Branson said in an interview on Tuesday morning. “If someone has 100 percent of the market, then fares will go up and the quality of service will suffer.”