Operator Of Austin Airport’s South Terminal Sues Over The Most Insane Eminent Domain Case Ever

Part of how the Austin airport has handled growth is opening a separate, privately-funded terminal for low cost carriers. They gave a 40 year lease to a company to build it, that company has invested tens of millions of dollars, and Allegiant and Frontier currently operate out of the terminal.

The South Terminal has only been open 5 years and the Austin airport has changed its mind. They want the land back to reconfigure how the airport works as part of a new expansion plan.

  • They offered less than $2 million to buy out the lease (!)

  • And they’re moving forward with eminent domain to take the land.

The city’s plan is to close the South Terminal in summer 2023 as part of their plan to build a midfield concourse with at least 10 more gates, connected to the Barbara Jordan Terminal via underground tunnel. This requires relocating the terminal’s taxiways, and using space currently occupied by the low cost terminal. They’ll also introduce a $77 million baggage system and new ticket counters.

Yet it’s the strangest eminent domain case. Eminent domain is supposed to allow government to forcibly take private property, with compensation, for a public use. Here they are trying to take public property that they already own.

In other words they want to use eminent domain to let them cancel a lease they signed. It basically makes the City of Austin untrustworthy as a counterparty. What private business would make large investments based on a lease with the city, if they can cancel the project after the business invests tens of millions of dollars even though the lease does not let them do this.

Unsurprisingly the company with the lease on the terminal has sued.

  • As a passenger out of Austin airport I want the airport to grow to meet demand
  • And I don’t want to fly out of the South Terminal (or, for that matter, fly Allegiant or Frontier)
  • But as a human being this is insane.

Unfortunately it’s par for the course here. Austin airport business reports up to the city council and is badly mismanaged.

  • The airport has had jet fuel shortages because city politics stalled an expanded fuel storage facility.
  • They lost having an American Express Centurion Studio. The folks who operate The Club lounges protested, and the city tanked the deal failing to follow FAA contracting rules. So neither project happened.
  • And need I mention the city’s corruption managing its Hilton at the Convention Center?

The City of Austin should have had a better contract buy out option with the South Terminal. Now, if the best way to expand is to exit the deal they signed in 2015 (and that a business spent 8 figures in reliance of, and has an expected 40 year return) then they should pay to do so. But they’re probably envious of how the City of Dallas got away with turning the Love Field Legend Airlines terminal into a car dealership and not paying a penny for the taking.

Surely an attempt to take land already owned by the city has to be about the most insane use of the government’s eminent domain power in the past ten years?

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