DFW Board, Delta Craft $7M Buyout Plan for 24 Gates

"We are extremely grateful for the cooperation and leadership that Delta Air Lines has shown during this negotiation process," DFW CEO Jeff Fegan says in a press release."We know Delta has had some very tough decisions to make here at our airport and around the country and we believe our agreement with the airline is beneficial to both parties."

Beginning Feb. 1, Delta will man four gates and operate 21 flights per day instead of the 258 daily departures from 28 gates in Terminal E. The gates will be vacated in stages in the coming months.

The $7 million will cover costs for Delta's upgrades to Terminal E and gate reduction expenses. The Atlanta-based Delta has been a tenant since the airport opened in 1974.

The payoff clears the tarmac for the airport board to land a replacement carrier. At one point, Southwest Airlines seemed to be the logical candidate since it was looking to expand, but its top execs have made it clear that hub stays based at Love Field in Dallas. Consequently, the DFW board is fighting Love Field's bid to get the Wright Amendment repealed so carriers can expand flights.

While the local fisticuffs go on amid heavy political lobbying, the DFW board has bundled an incentive package to lure a low-cost competitor into Southwest's homeport. The deep-pocketed package guarantees one year of free rent in the terminal plus a year of free use of ground-service equipment, which will be bought by the airport authority. The board's also agreed to make any necessary facility improvements to Terminal E, pledging a minimum investment of $4 million to $6 million if 22 gates are leased. The incentive package includes up to $1 million of cooperative marketing funds for a carrier new to the airport. In essence, a carrier would be eligible for up to $12.2 million for a 10-gate operation and about $22.2 million for a 22-gate commitment through 2009.

In addition to the gate requirements, the carrier would be required to meet certain departure levels. At least 70% of the new seats must be dedicated to markets listed in DFW's top 50 destinations and ones not currently served by the airline from DFW, the world's third-busiest facility with 2,000 flights daily and 57 million passengers annually. The airport's existing carriers now provide non-stop service to 136 domestic and 32 international destinations.

The incentive package's cost will be covered by the airport's discretionary funds or any eligible bond money that's available. More than 40 airlines received the package today.

"It is very clear to business and community leaders that DFW International Airport is the economic engine of North Texas and must remain strong for our region to continue to grow and attract new international business and tourism," said Dan S. Petty, president and CEO of the North Texas Commission, a regional non-profit consortium of business and economic development entities in the North Texas region. "It's the best of all worlds for a carrier wanting to build a significant presence and for travelers wanting more flight choices at competitive prices."