Virgin America Wins Dallas Gates to Beat Southwest on Home Turf

May 12, 2014 5:24 pm ET

May 12 (Bloomberg) -- Virgin America Inc., the carrier partly owned by U.K. billionaire Richard Branson, won the right to sublease two gates at Dallas Love Field, beating out larger rival Southwest Airlines Co. at its home airport.

The gates were among assets American Airlines Group Inc. agreed to surrender to win U.S. Justice Department approval for its December merger with US Airways. The chief executives from both Southwest and Virgin, joined by Branson, had lobbied city officials for the gates. Delta Air Lines Inc. also had sought the gates at one point.

The decision by Dallas’s city manager to approve a sublease between Virgin and American will create a competitor for Southwest at Love, where it commands 97 percent of travelers. Virgin America, based in Burlingame, California, will use the gates to shift its Dallas operations from nearby Dallas-Fort Worth International Airport, which is dominated by American.

“We are very pleased to have the opportunity to bring new competition to Love Field, an important airport for travelers because of its proximity to the city’s central business district,” Virgin America Chief Executive Officer David Cush said in a statement today.

In its biggest expansion since starting service in 2007, Virgin America will add flights to New York’s LaGuardia, Washington’s Reagan National and Chicago’s O’Hare airports from Love Field, Cush said in March. The airline began selling tickets for the routes even before it was awarded the gates.

Southwest was “very disappointed” by the decision and will continue to expand its operations at Love Field, Chief Executive Officer Gary Kelly said in a statement. The carrier will control 16 of 20 gates once renovation at the airport is complete.