Southwest Airlines paid United Airlines $120 million to buy out its lease on two gates at Dallas Love Field that runs until 2028, Southwest revealed at a court hearing Monday.
The Dallas-based carrier announced the sum during its opening arguments in federal court at a hearing to determine whether Delta Air Lines should be allowed to continue operating five daily flights at Dallas Love Field.
“While it sounds like a lot of money, it was calculated down to the penny,” Southwest attorney Britta Stanton said.
Southwest is operating 10 flights per gate. At a cost of $60 million per gate, that translates to about $6 million per flight.
By comparison, in 2014 American Airlines received about $3.175 million per landing slot at New York’s LaGuardia Airport and Washington, D.C., Reagan Airport when it sold 120 landing slots for $381 million as part of its deal with the federal government to approve its merger with US Airways.
The legal battle at Love Field began in June when the city of Dallas sued, asking the judge to determine whether it has to continue to provide gate space to Delta, which operates five daily flights to Atlanta.
Delta had been leasing gate space from United until the end of last year when United transferred its leases to Southwest. Delta and Southwest had a temporary agreement that allowed Delta to continue flying through July, but Southwest decided to end the arrangement because it wants to add more flights to its schedule at Love Field. Southwest wants Delta out by Thursday.
Delta argues that the city should force Southwest to accommodate its flights and that United violated city policy by selling those gates to Southwest at a premium. Delta had estimated it would pay about $300,000 a year per gate in lease payments, or about $6 million over 10 years, which was similar to what it paid in previous gate lease agreements at Love Field.
“We didn’t realize we were competing against $120 million,” Holden Shannon, Delta’s senior vice president of corporate real estate, said during his testimony, arguing that landing slots can be bought and sold but gates cannot. “We don’t play games like this. … We weren’t even in the running.”
Testimony from witnesses is likely to continue through Wednesday before U.S. District Judge Ed Kinkeade in Dallas. At the end of the first day of testimony, Kinkeade encouraged the city and the two airlines to work out a settlement, even though he said a quick resolution to the issue is unlikely.
“I’m going to make the decision but it’s not because I’m the most celebrated airport manager in the world,” Kinkeade said during the hearing. “These are really policy issues that should be decided by others outside of the court.”