Legal battle looms over Austin airport’s plans to demolish South Terminal

The private company that runs the South Terminal at Austin-Bergstrom International Airport – a separate three-gate facility where discount airlines Allegiant and Frontier operate – says it was not consulted over plans to demolish the terminal as part of a multiyear airport-expansion program.

Lonestar Holdings is moving ahead as if the terminal will remain and is even planning to spend nearly $1 million to accommodate Allegiant’s move to create a base of operations in Austin.

Both sides are bracing for a legal battle.

“No communication and then out of the blue,” is how Lonestar Airport Holdings CEO Jeff Pearse said he found out about plans to raze the structure that handled almost 1 million passengers annually before the pandemic slashed that to around 300,000.

“It was a bit insulting, honestly, particularly when I found out a few moments later that they had reached out to my two tenants, Allegiant and Frontier, prior,” Pearse said.

Austin airport officials declined to be interviewed about the conflict due to “anticipated litigation,” but issued a statement saying Lonestar “recently notified the city of Austin that it is not interested in participating in a structured negotiation process.”

“The Department of Aviation plans to transition the carriers that currently use the South Terminal to the Barbara Jordan Terminal in the coming years,” the statement said. “This is in support of a larger program that will allow AUS to create the infrastructure needed to support our growing community and our airline partners as they continue to invest in Austin.”

Airport officials have said Allegiant and Frontier airlines could continue to operate at the airport.

“AUS has given Allegiant assurances that we will work together on a transition plan and strategy to accommodate our future growth,” Allegiant spokesperson Sonya Padgett said in an email.

In July, an internal memo from Aviation Department CEO Jacqueline Yaft to the mayor and City Council said the decision to close the South Terminal was based on the advice of “independent consultants” and would take place within about two years.

KUT filed a public information request seeking a copy of the 40-year lease agreement (30 years plus two optional five-year extensions) between the city and Lonestar Holdings, along with communication records between them about discussions around the terminal’s future. The city contends it does not have to release the documents and has asked the Texas attorney general to support it.

A copy of the lease agreement viewed by KUT includes a provision for the airport to grant the “exclusive first right” to develop and operate any expansion of the facility. Lonestar could argue it should have been consulted under this provision.

The new concourse that airport officials hope will replace the South Terminal would be accessible by underground tunnel from the Barbara Jordan Terminal. The concourse would have at least 10 gates.

Members of the Airport Advisory Commission, who are appointed by City Council, have asked for clarification about the airport’s plans.

“There are thousands of (airport) employees and people who don’t know really what’s happening,” Commissioner Wendy Price Todd said at the group’s last meeting. “We’ve been asking for briefings all along.”

This story was produced as part of the Austin Monitor’s reporting partnership with KUT.

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