A U.S. federal judge on Sept. 30 rejected Southwest Airlines’ attempt to keep an expiring lease agreement with San Antonio International Airport (SAT) in place, the latest development in an escalating dispute between the airline and the airport over future terminal location and gate allocation.
Southwest has refused to sign a new use and lease agreement at SAT, set to take effect Oct. 1. It was seeking an injunction to keep the expiring contract in place while a federal lawsuit it has filed against the city of San Antonio plays out.
Eight airlines, including American Airlines and Delta Air Lines, have signed onto the 10-year lease agreement—which assigns gates and space and outlines costs—taking effect on Oct. 1. With Judge Xavier Rodriguez’s ruling, the new multi-airline lease agreement will go into effect as planned.
If Southwest declines to sign, it would have to operate as a non-signatory airline at SAT, which would be an unusual setup for a carrier with such a large presence at the airport.
Southwest is the leading passenger airline at SAT with a near 40% market share. The Dallas-based carrier had expected to be among the airlines located in the airport’s new 17-gate, $1.7 billion Terminal C that is set to open in 2028. But instead SAT has assigned the airline to remain in Terminal A, from which it currently operates.
While that facility is undergoing around $200 million in renovations, Southwest said those improvements will be “inadequate.” The carrier maintains that even a revamped Terminal A will be inferior to the new Terminal C, where American and Delta will be located.
The new terminal will span more 850,000 ft.2, including 41,000 ft.2 of concession space and 29,000 ft.2 of premium lounge space.
The expansion of Terminal A will add three gates and 37,000 ft.2 to the facility.
Southwest alleges in the federal lawsuit filed against the city of San Antonio, which owns and manages SAT, that the airport assured the airline it would have the majority of its 10 gates located in Terminal A as of 2028. Southwest alleges SAT “unjustly discriminated” against it by locating American and Delta in the new terminal because those airlines are building premium lounges in Terminal C.
The airline contends relegating Southwest to the older Terminal A gives the carrier a secondary status at the airport despite the fact that it provides by far the most service at SAT and has operated from the airport for 53 years.
Southwest will operate as a non-signatory carrier at SAT if it does not sign the new agreement as of Oct. 1. That arrangement would provide no long-term guarantees for either the airport or the airline, and likely raise Southwest’s costs, perhaps significantly, to operate at SAT.
In response to an inquiry, San Antonio City Manager Erik Walsh said the court’s ruling denying an injunction was based on “thoughtful consideration of the case,” adding: “Southwest’s customers are our customers, too, and we will begin the work right away of planning the transformation of Terminal A.”
A Southwest spokesperson noted the judge did not rule on the merits of the case, adding that the carrier does not intend to sign the new lease agreement in its current form. “We believe the city’s gate-allocation methodology discriminated against Southwest,” the spokesperson said. “We look forward to a robust [federal lawsuit] discovery process that will shed light on the city’s actions.”
Southwest “values its relationship with San Antonio and remains hopeful that the airline and the city can agree on a plan that accommodates our future growth and treats us equal to the other carriers,” a Southwest spokesperson said, adding that filing a lawsuit against San Antonio “is by no means preferred. [But the city] unjustly discriminated against Southwest, leaving the airline no other choice.”
Southwest previously said the airport is “targeting an elite subset of passengers with its gate allocation decision and forcing nearly 40% of its [passengers] into the airport’s smallest space.”
The clash brings Southwest into sharp conflict with a city that is core to its history. Founders Herb Keller and Rollin King famously devised the airline by drawing a route network on a cocktail napkin over drinks in a San Antonio bar in 1967. San Antonio was on the map, as were Dallas and Houston, forming a triangle.
The idea was to operate low-cost flights connecting Texas’s three biggest cities to supplant bus services and automobile trips on those routes. In 1971, the carrier launched from a Dallas base, and the three Texas cities were connected to each other by air. SAT has been part of the carrier’s network since then.
“San Antonio has had a long and storied relationship with Southwest Airlines, and we expect that will continue,” Walsh said. He added that the multi-airline lease agreement taking effect on Oct. 1 “will provide the financial foundation for us to build the new terminal complex.”