A federal judge is weighing whether Southwest Airlines should be forced to accommodate Delta Air Lines’ five daily flights at Dallas Love Field after he heard three days of testimony in a Dallas federal court.
Delta argued that Southwest illegally paid United Airlines $120 million to sublease two gates at Love Field. Southwest executives say that its lease with the city of Dallas gives it preferential use of the gates and it doesn’t have to share them if it has a full schedule.
“Delta has simply shown no legal right to be on the gates,” Southwest attorney Kent Krabill said Wednesday. Southwest had wanted Delta to cease operations by today, but the judge agreed to allow Delta to continue operations until he rules.
While we expected growth at Love Field to happen, no one, not even Southwest, knew it would blow up as quickly as it did.
Mark Duebner, director of aviation for the city of Dallas
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U.S. District Judge Ed Kinkeade said attorneys have until 5 p.m. Oct. 7 to submit final written arguments and he plans to rule quickly after that.
During the three-day hearing, Kinkeade often asked witnesses why they hadn’t prepared for the possible gate space conflict when they had eight years to plan for the expiration of the Wright Amendment restrictions at Love Field.
“While we expected growth at Love Field to happen, no one, not even Southwest, knew it would blow up as quickly as it did,” said Mark Duebner, director of aviation for the city.
Delta is also not the only airline interested in flying from Love Field that doesn’t have any gate space.
A February 2015 email from American Airlines showed that the Fort Worth-based carrier asked Southwest to be accommodated to operate a couple of daily flights. American was forced to give up its two leased gates at Love Field in 2014 as part of an antitrust agreement with the Justice Department. However, the airline has said it wishes it could operate out of Love Field.
“We told them we couldn’t accommodate them,” testified Bob Montgomery, Southwest’s vice president of airport affairs. Kinkeade asked if American and Delta were the only two airlines asking for accommodation and Montgomery said at this time, yes. “The outcome of this case will determine if there is more.”
If the judge rules in Delta’s favor, Southwest could be forced to allow other airlines to use the gate space it leases at Love Field.
Southwest estimated it will generate net profits of $23,926,710 per year from flights operating on two gates it acquired from United.
Southwest is already operating 180 daily flights on 18 gates and accommodating an additional five daily Delta flights on those gates, leading to daily delays and safety issues. In some instances, a plane waited up to 57 minutes for a gate. Since August 9, Montgomery said there have been two incidents where ground equipment have collided but there were no injuries.
“Full utilization is 10 flights per day per gate,” Montgomery said. “Once we run over that threshold we start running into severe customer service issues.”
In Southwest’s cost analysis of the gates, Southwest expected to break even at 20 months if it paid $1 million per slot or break even at 50 months if it paid $2.5 million per slot. The carrier estimated it will generate net profits of $23,926,710 per year from flights operating on those two gates.
Under the terms of its sublease agreement with United, Southwest paid $120 million to use the two gates until 2028. With about 40 slots per gate, the price equates to about $3 million per slot, Montgomery testified. Southwest also agreed to a $5 million indemnity clause so if the sublease had not been approved by the city of Dallas or the federal government, United would pay the $120 million back minus the indemnity payment.
“If the court does not unwind the private sale of public property the citizens will pay again,” argued Delta attorney William Dawson, adding that federal funding for airport improvements could be at jeopardy if the Southwest-United sublease agreement remains in affect.