SAN ANTONIO – Southwest Airlines failed to stop a new airline use and lease agreement that would keep it out of the new terminal being built at San Antonio International Airport.
However, San Antonio’s largest airline appears ready to continue its federal lawsuit against the City of San Antonio, even as the new lease costs it millions more dollars per year.
The city and airline faced off in U.S. District Court Monday afternoon to argue over Southwest’s 11th-hour attempt to stop a new airline use and lease agreement (AULA) from taking effect on Tuesday.
San Antonio’s largest airline said the city used a “bait and switch” tactic in the more than two years of negotiations, which ended up leaving it out of the still-under-development Terminal C at the airport. Southwest Airlines said Airports Director Jesus Saenz verbally committed to Southwest that it would get most, if not all, of its 10 gates at Terminal C, but instead the airline got relegated to the smaller, older Terminal A.
The airline also claims the city improperly used selection criteria, like routes and airline lounges, to determine which carriers did get the highly-coveted gates in the new terminal. That argument forms the core of its lawsuit.
However, U.S. District Judge Xavier Rodriguez denied the airline’s request for a TRO after an hour-long hearing.
Rodriguez said it appeared to be a lease dispute and did not see the irreparable harm Southwest would face if it took effect. The judge also said he felt he was being “used as a pawn” in negotiations.
The two sides could continue to talk, he said, “but I’m not going to be your mediator for this fight.”
The fight is not over, though. Southwest will continue to pursue a preliminary injunction to put a stop to the lease.
“We’re disappointed that the TRO was denied,” Southwest Vice-President of Airport Affairs Steve Sisneros told reporters outside of the federal courthouse in downtown San Antonio, “but we are looking forward to the preliminary injunction hearing where we can go through the discovery process to really better understand how the City of San Antonio decided in their process that Southwest was not a fit within their gate allocation process.”
In the meantime, City Attorney Andy Segovia said San Antonio “is moving full speed ahead with our plans for the airport.”
‘False and irrelevant’
In a response filed Monday morning, the City of San Antonio called Southwest’s legal maneuvering “an extreme case of sour grapes,” and said the harm to the city from blocking the AULA would be worse than the harm to Southwest were the lease to take effect.
Based on the difference in rates, the city said it would lose $1.2 million per month if the new AULA doesn’t take effect. Without the AULA, the city claims, the $1.4 billion program to develop Terminal C would also be delayed. It’s currently expected to be completed in 2028.
The city said eight other airlines have agreed to sign the AULA, and the agreement was passed unanimously by the San Antonio City Council on Sept. 12.
The city scoffed at Southwest’s claims that it used improper factors to determine which airlines got spots in Terminal C.
“It is difficult to imagine a more fundamental proprietary right than the efficient allocation of space among multiple tenants in a City-owned airport,” the city argues. “And it is equally difficult to imagine how the City could allocate space within the terminal without reference to an airline’s ‘rates, routes, and services.’”
The city’s response also calls Southwest’s “bait and switch” argument “false and irrelevant” and flatly denies “the City” made any such promise, saying “only senior City leadership and the City Council had authority to make a final decision.”
“Southwest alleges that Mr. Saenz told Southwest that it would go into Terminal C,” the city’s response states. “However, even assuming Mr. Saenz made such a statement, he did not have the authority to bind the City on that point.”
Segovia told KSAT after the hearing that the city also disputes that Saenz made any assurances in the first place.
AULA terms
The new AULA has Southwest remaining in its current home of Terminal A, though with 10 gates instead of its current six.
The agreement has a 10-year term with an option to extend for another five years.
Southwest has expressed concern that the $200 million included in the AULA for renovations to the terminal. However, the city said Southwest also declined a city offer to add $100 million to the budget — half funded entirely by the airport, and the other half would be subject to approval under the existing process by the other carriers.
Sisneros said the airline still doesn’t believe that’s enough money.
Though Southwest has not threatened to leave San Antonio over the dispute, it has said its growth plans could be in jeopardy.
Unless it decides to sign the new lease, Southwest will pay higher rates than the airlines that have signed on — to the tune of about $7 million to $9 million more each year, Sisneros said.
The city said the airline would have to drop its lawsuit to sign on, though.
Sisneros said the new terminal was a “generational thing” for the airport, and it paying higher rates while it continue its lawsuit was worth it to “get it right.”
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