Love And War: Delta’s New Texas-Sized Battle

Delta certainly has attracted its share of drama recently, from its very public scuffle with the Middle Eastern carriers, to the so-called “Battle for Seattle,” where Delta is trying to forge a hub presence in the Northwest at the expense of its former ally, Alaska Airlines.

Now there’s some very juicy drama involving Delta out of Dallas Love Field. Get your popcorn!

A Love/Hate Relationship
A Love/Hate Relationship

For decades, Dallas’ in-city airport, Love Field, had been operationally restrained by a combination of regional politics and American Airlines lobbyists. Until October 2014, flights out of Love Field could only serve destinations in Texas and immediately neighboring states, limiting the usefulness of the airport for all but extra-short-haul trips.

With the full repeal of governmental restrictions (the Wright Amendment) in October, however, Love Field suddenly became very hot property, given that DFW Airport is much, much further from the Dallas city center.

Under the Wright Amendment, Southwest Airlines had built itself an efficient and powerful fortress hub at Love. With the repeal, Dallas-based Southwest saw Love as an even bigger boon: now it could potentially use its home city as a hub for flights to a huge array of domestic destinations.

Southwest claims the better part of 18 of the 20 gates at Love Field. The other 2 had initially been leased by American Airlines. Even though Delta had actually been using those two American gates for years through a sublease agreement with American Airlines, the Department of Justice forced American to give up its right to the gates (and, by extension, Delta’s) to Virgin America following the Department of Justice’s intervention after American’s merger with US Airways.  Delta had vied for these two gates, but its interest was denied by the DOJ because Delta, unlike Virgin America, was not a “low cost carrier.”

Here’s where the drama heats up.

Southwest actually has a primary lease on only 16 of the 20 gates at Love. United (from its Continental days) had 2 gates. United entered into a gate-sharing agreement with Delta to share the use of one gate for 5 daily nonstops between Dallas-Love and Atlanta. That agreement expires July 6, 2015.

However, once United stopped actually flying to and from Love Field, Southwest Airlines petitioned the City of Dallas (which owns Love Field) to let Southwest sublease the United gates. Remarkably (or, cynically, perhaps unremarkably), the City of Dallas agreed without offering the gates to any other carrier.

So, until July 6, 2015 — the United-Delta agreement controlling the shared use of the gate even with Southwest being the operator — Delta and Southwest share one gate at Love Field.

And July 6 is coming up quickly. Southwest isn’t interested in the extra competition, and has demanded $30 million from Delta for the right to share a gate at Love Field for the Atlanta-Dallas flights.

Delta, meanwhile, has gone to the Department of Transportation and gotten a letter dated June 15, 2015 which instructs the City of Dallas that it has a “legal obligation” to reasonably accommodate Delta at Love Field.

Delta has also notified the City of Dallas that it will bring a lawsuit to keep its gates at Love.

As the drama unfurls, Delta has announced its intentions to keep operating at Love Field, and is selling tickets to and from Atlanta for dates on and after July 7.

Meanwhile, today Southwest Airlines has filed a lawsuit against Delta seeking an injunction, accusing Delta of trespassing on Southwest’s property.

To top it off, the City of Dallas has filed a lawsuit naming Delta, Southwest and the Federal Government in an attempt to have a court figure out exactly what the City’s obligations are respecting Delta and Southwest.

Bottom Line

Delta loves a good war, doesn’t it? Actually, where in the past Delta’s battles could have arguably painted the carrier as a bit of a bully, here it appears Delta is the David against the longstanding Dallas/Southwest Goliath.

There’s no denying that Southwest Airlines has a very cozy relationship with the City of Dallas, where the airline is headquartered. It seems awfully fishy to me that Southwest could legally control 18 of the 20 gates at Love Field with no bidding or appeals process available to other airlines.

It’s also rather perverse that a metropolitan area with two airports is essentially shackled to two airlines (to be fair, Virgin America uses Love as a “focus airport,” but there’s only so much focus you can offer with 2 gates). Texas seems to be one of those states that claims to love a free market, so you’d think the authorities would be willing to provide competitors an opportunity to give American and Southwest a run for their money.

Legally, the contract giving Delta shared access to the one gate at Love Field expires July 6, and there may be nothing Delta can do to demand access beyond getting the Feds involved. And Delta may be out of luck. However, if the DOJ and DOT do intervene and see Dallas’ and Southwest’s actions in violation of federal law, then there may just be hope for competition in Dallas yet.

Comments

  1. Delta stinks. The only place they really go to is Atlanta. Delta any place you want to go to with a stopover in Atlanta first!!!!

  2. If Delta was so interested in a Dallas hub, they shouldn’t have close down their operations in Dallas in 2004. They controlled around 1/3 of the traffic at DFW at the time. Eff Delta and the horse they rode out of town on…

    Like their HND fight, I hope they lose this one – spending truck loads of money in the process.

  3. @Kevin – I do not believe there was any mention of a hub, but more of having a destination inside the city; much similar to ORD and MDW, Delta goes into both, but MDW is far more convenient to get to the city in a prompt manner.

    The analysis you provided was very level headed and well thought out however. Keep up the good work.

  4. This doesn’t make any sense to me. It seems like Delta and Southwest are going to be spending a fortune in legal fees for these gates. It is going to take years for them to recoup the legal fees from these gates even if they win. If Delta wins I don’t imagine Southwest will be shy in launching fare attacks on whatever destinations Delta chooses to serve from Love.

    “Texas seems to be one of those states that claims to love a free market” – This is the free market. Money talks. SW bought sway in City Hall and got what they wanted. Free market at its finest.

  5. “Texas seems to be one of those states that claims to love a free market …”

    HAHAHAHA! No company with a near-monopoly loves a free market. And because companies like that have a lot of money, they can buy politicians who are experts at spouting off about their love of free markets while simultaneously doing everything they can to maintain their benefactors’ monopolies.

  6. Does the airport (Love Field) have potential for expansion? Why couldn’t Delta just help fund a new concourse so they can have gates (and lease some out for a little extra cash) and then potentially making the airport a little better. Although, I haven’t flown into/out of Love Field yet so I can’t really say if it’s a great airport or not. Although, from what I do know DFW is a good airport and I’m confused as to why Delta doesn’t try to move traffic to DFW because of how is serves a larger area of the state and has more possibilities in terms of connections. To be honest, I am not a big fan of Delta (including Skymiles) or Skyteam, so I don’t really care what happens or if they get the gate or not (but you can’t say you don’t just love the drama Delta creates – and how they are kind of like the person who throws a fit if not all of the attention is on them – regardless of their opinion on Delta).

  7. As Kevin pointed out, DL had quite a presence at DFW until the early ’00s. So much so that throughout the 90s my family retained a membership to Delta clubs and status due to their number of flights.

    They chose to almost completely withdraw from serving the area, so as a former Dallas resident I echo the “F em” stance.

    If DL wants to serve Dallas again, go to DFW. But they don’t care about serving Dallas. They care about being a thorn in the sides of anyone they don’t like. Whether that be Alaska, the ME3, Southwest, or anyone who dares accrue SkyMiles.

  8. @Jack – Love Field is in a neighborhood/community area and doesn’t have any room to expand past its current capacity with its location
    situation. Delta wants to fly to Love Field just because it’s closer to downtown Dallas, plain and simple. Delta doesn’t mind being the bully when fighting Alaska in Seattle, but of course it’ll play victim in Dallas. Too funny.

  9. @Jack — Part of the repeal of the Wright Amendment was that Love Field would be restricted to 20 gates maximum.

  10. lol at all of you thinking one airline owning 90% of the gates in a major metropolitan city is a good thing. you’re hatred of DL is skewing your view just a titty bit.

  11. Oh, c’mon Nick. You’re teasing us. We know you’re lawyer, and yet you give us just a breezy (though certainly well written and mercifully concise) summary until the very last paragraph.

    I’m no FAA expert at all, but I’m having trouble understanding how an FAA letter would trump valid preexisting contractual arrangements or what the statutory basis might be for doing so.

    I have no idea what’s going to happen — and politics can sometimes trump everything — but I’d still be interested in what you’re hearing from all the real FAA gurus out there. The timing of how it all plays out could be tricky as well.

  12. Yes–I remember reading something about Love being forced to reduce from 24 to 20 gates or some such. Seems like this is an artificial constraint and it shouldn’t be hard to have politicians put two more gates back into circulation. It’s true DL is disliked but having one carrier have a near monopoly at an airport is good for no one.

  13. The City of Dallas was supposed to close Love Field 40 years ago as part of an agreement with the City of Fort Worth to close their airport and build DFW jointly. The City was in the wrong then for keeping Love Field to accommodate Southwest and they’re in the wrong now for letting Southwest control 18 of 20 gates. Bear in mind that Southwest tried to get the Virgin America gates as well, which would give it sole commercial access to Love Field. A big chunk of the cost of that airport is paid by Federal taxpayers, and the DOT is correct. You can’t run an airport for the sole and exclusive benefit of one airline.

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