Southwest Airlines Co. v. City of San Antonio, Texas

CourtDistrict Court, W.D. Texas
DecidedOctober 1, 2024
Docket5:24-cv-01085
StatusUnknown

This text of Southwest Airlines Co. v. City of San Antonio, Texas (Southwest Airlines Co. v. City of San Antonio, Texas) is published on Counsel Stack Legal Research, covering District Court, W.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Southwest Airlines Co. v. City of San Antonio, Texas, (W.D. Tex. 2024).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION

SOUTHWEST AIRLINES CO., § Plaintiff § § SA–24–CV–01085–XR –vs– § § CITY OF SAN ANTONIO, TEXAS AND § JESUS SAENZ, In His Official Capacity as § Director of Airports for the City of San § Antonio, Texas; § Defendants §

ORDER DENYING TEMPORARY RESTRAINING ORDER On September 26, 2024, Plaintiff Southwest Airlines Co. (“SWA”) filed its Complaint against the City of San Antonio (the “City”) and Jesus Saenz, its Director of Airports. ECF No. 1. Thereafter, SWA filed a Motion for Preliminary Injunction and Emergency Request for Temporary Restraining Order, and the City responded. ECF Nos. 2, 11. After careful consideration of the motion and response, and the parties’ arguments at the September 30, 2024 hearing, the Court issues the following order. I. BACKGROUND A. San Antonio Airport and Terminal C The San Antonio International Airport is a city owned and operated facility. ECF No. 1 at ¶ 13. It currently has two terminals (A and B). Terminal A was commissioned in 1984. Id. at ¶ 16. Terminal A has sixteen gates with a total area of 397,634 square feet. Id. at ¶ 14. In 2010, Terminal B was constructed and has about 247,099 square feet of space. Id. at ¶ 17. Because of population growth and increased use of the current airport facilities at some point the City began developing concepts for a new Terminal C to be constructed, which would contain 17 gates and 850,000 square feet. ECF No. 11–1 at ¶ 18. It is anticipated that Terminal C will be occupied sometime in 2028. Id.

SWA currently operates out of Terminal A and has a lease that expired on September 30, 2024. See id. at ¶ 13. SWA refused to sign a new lease because it was not allocated gates in Terminal C. But not signing a new lease does not remove SWA from the San Antonio airport. Instead, they are treated as a “non-signatory,” continue to operate from Terminal A, but will pay higher rates than they currently pay, and higher rates than “signatories.”

This case arises from the lease negotiations related to Terminal C. Over the past two-and- a-half years, the City, SWA, and other airlines have been involved in negotiations over the Airline Use and Lease Agreement (“AULA”) that, in part, allocates gate assignments in Terminal A, B, and C. See id. at ¶ 12. The AULA includes a provision for a pre–approved $200 million in funding for capital improvements in Terminal A and $100 million for Terminal B. Id. at ¶ 24. SWA wants to move their gates from Terminal A to Terminal C. SWA alleges that during the negotiations, it was told several times that it would be assigned gates at the new Terminal C. ECF No. 1 at ¶ 19. SWA claims it learned on May 29, 2024, for the first time, that the City would not be leasing them gates at Terminal C. Id. at ¶ 21. Instead, the City would leave SWA in Terminal A. Id.

SWA states that it voiced objections to the decision to keep SWA gates at Terminal A and began to inquire into the City’s methodology for making its decision. Id. at ¶ 21. SWA claims that Terminal A space is inferior, and that the capital improvements the City had planned for Terminal A are insufficient because they “will not allow [SWA] to implement its growth plans for SAT.” ECF No. 2–1 at ¶ 26. That said, SWA continued to meet and negotiate with the City about capital improvements for Terminal A, and a reduced terminal rental rate for a three-year period for airlines (like SWA) that would operate from Terminal A after Terminal C opens. ECF No. 12–1 at ¶¶ 35, 37.

Despite SWA’s objections, the City negotiated and reached a new AULA with other carriers for ten-year leases that became effective October 1, 2024, and the City Council has approved those agreement. ECF No. 1 at ¶ 4. SWA has chosen not to sign a new AULA. Id. at ¶ 42. Under the new AULAs, there are provisions that permit the City to change the gate allocations to comply with federal law. See ECF No. 11 at 16-17. The new AULAs create revenue sharing between “signatory airlines”1 and has a Majority-in-Interest (“MII”) clause that may affect future capital expenditures in Terminal A. The new AULAs also change the existing ratemaking methodology under which the City will recoup approximately $1.2 million per month compared to the existing agreements. ECF No. 11–1 at ¶ 37. This money can be used for new parking structures and

roadway improvements. Id. at ¶ 38. B. The City’s Methodology to Allocate Airline Gates In determining what airlines would be assigned to what gates (either Terminal A, B, or C),

the City solicited information from the airlines about their future operational plans and developed evaluation criteria. See ECF No. 12 at 5. This information was reviewed by the Master Architect, multiple City teams, and approved by an Executive Steering Committee. See ECF No. 12–2 at ¶¶ 12–13. The City claims that it made the gate allocations in the best interests of the City and by balancing the operational needs of the airlines. See id. At issue here is the evaluation criteria, or the Gate Assignment Criteria (“GAC”). ECF No. 1 at ¶ 23; ECF No. 1–2. According to the GAC,

1 SWA, at present, will not be treated as a “signatory airline” because it has not signed the new lease. the City considered a variety of factors in determining how to place airlines at gates. These include the:

• Number of preferential gates requested by airline; • Whether an airline club was requested;2 • Whether airline operates or commits to operating international routes; • Whether airline has relevant code share arrangement(s); • Current level of enplaned passengers @ SAT; • The airline’s “fit” into San Antonio; • The airline’s service, growth, and experience;

• The existence of a written commitment by airline to city pairs, specific flights, or minimum levels of enplaned passengers;

• Potential need by airline for appurtenant City Gates (for expansion); and

• Terminal load–balancing considerations.

See ECF No. 1–2. After the City arrived at its decision to leave SWA in Terminal A, the City provided SWA (and the other airlines) with a memorandum explaining its decision. First, each airline with a significantly large market share was assessed according to certain quantifiable factors, and a score was assigned to each large airline. Then, the City reviewed the airline brand position, the airlines “service, experience, and growth,” and the possible need for further gates. Id. Finally, the analysis turned to “broad–based terminal load considerations,” including the future needs of the airlines and the need to balance passenger loads to avoid overloading curb, baggage, and security screening areas. See id.; ECF No. 11–2 at ¶¶ 23–26.

2 Items in bold are criteria that SWA contends are impermissible factors under the Airline Deregulation Act. In this memorandum, the City stated:

The first component of the decision-making process was to examine airline club requests, as the requests for airline clubs were valuable to the airport/city for potential customer experience, represent a fixed financial commitment by the airline, and are a unique challenge with respect to available space/siting options. The two largest club requests (AA and DL) could only reasonably be accommodated by siting within new Terminal C. Those two airlines (AA and DL) combined requested 11 preferential gates. One of those two airlines had potential need to be placed next to an FIS–connected gate (DL) due to a relevant code share arrangement. Assigning those two airlines (AA and DL) to Terminal C took 11 of 11 domestic gates to be constructed within the new Terminal and left the 6 FIS- equipped gates in the new Terminal available for international operations and/or iterant (per turn) use by other airlines (with international arrivals receiving priority).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

United States v. Jackson
596 F.3d 236 (Fifth Circuit, 2010)
Morales v. Trans World Airlines, Inc.
504 U.S. 374 (Supreme Court, 1992)
American Airlines, Inc. v. Wolens
513 U.S. 219 (Supreme Court, 1995)
Montauk-Caribbean Airways, Inc. v. Hope
784 F.2d 91 (Second Circuit, 1986)
Dan's City Used Cars, Inc. v. Pelkey
133 S. Ct. 1769 (Supreme Court, 2013)
American Trucking Assns., Inc. v. Los Angeles
133 S. Ct. 2096 (Supreme Court, 2013)
Air Transport Ass'n of America, Inc. v. Cuomo
520 F.3d 218 (Second Circuit, 2008)
Thompkins v. Berghuis
547 F.3d 572 (Sixth Circuit, 2008)
Jackson Women's Health Organization v. Currier
760 F.3d 448 (Fifth Circuit, 2014)
United States v. Matthew Massi
761 F.3d 512 (Fifth Circuit, 2014)
Day v. SkyWest Airlines
45 F.4th 1181 (Tenth Circuit, 2022)

Cite This Page — Counsel Stack

Bluebook (online)
Southwest Airlines Co. v. City of San Antonio, Texas, Counsel Stack Legal Research, https://law.counselstack.com/opinion/southwest-airlines-co-v-city-of-san-antonio-texas-txwd-2024.