DALLAS — Virgin America will compete with Southwest Airlines at Dallas Love Field after the city approved a lease for two gates at the airport.
Southwest, which is bond financing most of a $519 million remodeling of the Dallas-owned airport, will occupy 16 of 20 gates that will remain after the project is completed later this year.
Virgin America will occupy two Love Field gates that American Airlines is required to surrender under terms of its merger with US Airways. United Airlines will operate the other two gates.
Southwest fought for the gates, saying it would be able to add 20 flights to five more destinations. Delta Air Lines, which currently operates at Love Field, had also sought the gates.
The reconfiguration of Dallas' original public airport is part of a settlement with stakeholders at Dallas-Fort Worth International Airport that ended restrictions on destinations from Love Field. Under the so-called Wright Amendment, Southwest was allowed to fly only to cities in Texas and nearby states. When those restrictions are lifted Oct. 13, airlines at Love Field can fly to any U.S. destination.
The original Wright Amendment was, passed by Congress in 1979 to protect Dallas-Fort Worth International Airport from competition at Love Field.
Now well-established as one of the world's busiest airports, DFW officials said Love Field now poses no threat to the larger airport's status as an international hub for cargo and passengers.
Virgin America will move from DFW, where it operates flights to Los Angeles and San Francisco. Airline founder Richard Branson came to Dallas to urge city officials to grant his carrier the gates after winning a recommendation from the federal government.
Virgin America agreed to provide a performance guaranty in the form of a $4 million irrevocable letter of credit to American for the lease obligations, according to a memo to Dallas City Council members.
Southwest in 2010 issued $310 million of airport revenue bonds for the remodeling project under the conduit Love Field Modernization Corp.
The remodeling debt carries the airline's rating of BBB from Standard & Poor's with a negative outlook and Baa3 from Moody's Investors Service with a stable outlook.
Dallas's revenue bonds for Love Field, issued in 1996, carry ratings of BBB-plus with a stable outlook from Fitch Ratings.
In 2011, Standard & Poor's raised Love Field's rating to A with a stable outlook from BBB-plus.
