Southwest Airlines Is Adding Flights in Dallas as Delta Spat Continues

In recent years, Southwest Airlines (NYSE: LUV) and Delta Air Lines (NYSE: DAL) have been embroiled in a legal fight over the limited space at Love Field, the closest airport to downtown Dallas. Southwest controls 18 of the airport’s 20 gates and wants to get as much use out of them as possible. Meanwhile, Delta wants to add flights at Love Field and has argued that Southwest and the city of Dallas need to accommodate it.

On Thursday, Southwest Airlines announced plans to add 15 more daily departures at Love Field in early 2019, increasing its schedule there by more than 8%. This will allow it to serve more customers at its home airport despite the space constraints there — and it could also help the carrier make its case in court if the dispute with Delta goes to trial next year.

Southwest Airlines will increase its Dallas flight schedule in early 2019. Image source: Southwest Airlines.

A long-running dispute

Southwest Airlines began an aggressive expansion at Love Field in late 2014, after federal rules governing flights there were relaxed. By the end of the year, it was operating a little more than 150 daily departures in Dallas from 16 gates.

In early 2015, Southwest subleased two additional gates from United Continental, which had decided to move all of its Dallas flights to the larger Dallas-Fort Worth International Airport. This gave Southwest control of 18 gates. It used the extra gates to quickly expand its flight schedule to 166 daily departures and then 180 daily departures.

However, Delta Air Lines had been subleasing gate space from United for its five daily flights to Atlanta. Southwest tried to evict it, but Delta refused to leave, saying that the airport — and tenants like Southwest — had to make room at least for its existing flight schedule.

Southwest and Delta are fighting over gate space at Love Field in Dallas. Image source: Author.

The two companies have been battling in court ever since. In the meantime, a court order has enforced the status quo, allowing Delta to continue operating its flights to Atlanta using one of the gates that Southwest Airlines now controls.

Southwest will add more flights in Dallas

When its January schedule goes into effect in early 2019, Southwest Airlines will increase its flight schedule in Dallas for the first time since 2015. It will begin or resume daily service on seven nonstop routes from Dallas — plus a weekly flight to Tucson, Arizona — and add an extra daily roundtrip on eight other routes.

This will give Southwest Airlines 195 daily departures at Love Field: an average of about 11 per day per gate. Most airlines consider eight flights per day per gate to be a busy schedule. However, this level of utilization is not unprecedented for Southwest, and the carrier says that it used schedule-optimizing tools to make sure it could squeeze in the extra flights.

None of Southwest’s additional flights in Dallas will use the disputed Gate 15 that it shares with Delta. This will head off the potential for a new dispute between the two companies.

Building a case — with flight schedules

Dallas is a very profitable market for Southwest Airlines. There is relatively little competition aside from Southwest and American Airlines, which has a dominant position at nearby Dallas-Fort Worth International Airport. Furthermore, many travelers prefer Love Field, which is closer to the city center and far smaller (and therefore easier to navigate).

Thus, Southwest Airlines has ample reason to squeeze in as many flights at Love Field as it can. Nevertheless, it’s telling that Southwest is adding 15 more flights in Dallas just a month before it is scheduled to go to trial with Delta over their respective rights at Love Field.

Theoretically, Southwest Airlines has the right to use its gates as much as it wants, while Delta Air Lines has a right to use any gate time that Southwest isn’t using. A key reason why Delta has been allowed to maintain its five daily flights to Atlanta as this case has worked its way through the courts is that the two carriers seemed to be coexisting at Love Field with few problems. In other words, it wasn’t clear that either carrier’s rights were being violated, so it was easy for the judge to leave the status quo in place for the time being.

However, Southwest doesn’t want the status quo to become a permanent solution. Adding more flights now will help it make the case that it could add even more flights if Delta were evicted. Alternatively, if the new flights lead to spiraling delays or cancellations on bad-weather days, it will demonstrate that there isn’t enough gate space and/or gate time available to accommodate Delta.

In other words, in addition to seeking profitable new routes in Dallas, Southwest Airlines is also using its latest schedule changes to build its case for the upcoming trial. We’ll find out next year if this tactic is successful.

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Adam Levine-Weinberg owns shares of Delta Air Lines and Southwest Airlines. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.

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