Breaking News
More () »

DFW Airport wants to start moving forward with Terminal F again

The airport informed investors that it submitted a $27.8 million capital spending request to the airlines in May to cover the design cost for Terminal F.

DALLAS — Read this story and other North Texas business news from our content partners at the Dallas Business Journal

Dallas Fort Worth International Airport officials want to move forward with long-term planning for a long-awaited sixth terminal after putting the project on hold for the last two years because of the pandemic.

The airport informed investors that it submitted a $27.8 million capital spending request to the airlines in May to cover the design cost for Terminal F, according to roadshow documents from a bond issuance earlier this summer. The request marks the airport’s first step in restarting the highly anticipated project.

“The note in our bond documents is to notify investors that we would like to proceed with the long-term planning of Terminal F,” airport spokesman Francisco Rodriguez said in a statement. “DFW Airport is committed to informing our investors of potential capital projects as it would have a material impact on the airport’s debt outlook. We have not received airline funding approval for Terminal F. We look forward to continuing discussions with the airlines regarding Terminal F.”

Terminal F, originally announced in May 2019, would have been DFW’s most significant infrastructure project in decades. The terminal, estimated at the time to cost upward of $3 billion, would have been located south of Terminal D and added up to 25 gates.

When the pandemic hit in 2020 and slammed the travel industry, the airport put the project on pause. CEO Sean Donohue said in April 2020 that the timing of the project and the size of the terminal would need to be “revisited.” Airport officials have remained mum about the project ever since.

The request to the airlines comes amid a recovery for the travel industry. The major airlines have seen passenger demand boom, and fares have spiked. Fort Worth-based American Airlines Group Inc., the dominant carrier out of DFW, reported record revenue in the second quarter and a return to profitability. The airport itself has also experienced a turnaround, exceeding pre-pandemic passenger traffic totals for the first time in April. DFW also exceeded pre-pandemic numbers in May and June.

Earlier this month, DFW’s board of directors approved a $1.2 billion operating budget for fiscal 2023, representing a 13% increase from the current fiscal year. The airport estimates 78.3 million passengers will come through in fiscal 2023, up 9.5% from the outlook for the current year.

DFW needs approval from the airlines for spending from a joint capital account as part of use agreements. The airport remains mired in negotiations over new use agreements with 28 passenger and 29 freight airlines. The current use agreements expired in September 2021, but the airport and airlines have a month-to-month extension while they negotiate a new long-term agreement.

American Airlines (Nasdaq: AAL) has more than 80% market share at DFW and stands to benefit from a new terminal. The carrier also has to ensure it grows in a cost-effective way, which means the project is almost surely at the center of the use agreement negotiations.

“DFW is American’s largest hub and a central gateway to our extensive international and domestic network,” AA spokesman Matt Miller said in a statement. “We are grateful for our long-term partnership with the airport and proud to have led the growth that has propelled DFW to become the second busiest airport in the world. We continue to work with DFW to finalize a new lease agreement and capital plan that will set the stage for American and DFW to continue to grow – in a prudent and cost-effective manner – for years to come.”

While DFW can use Terminal F-related spending as a bargaining chip, the airport controls landing fees. During the budget discussions, Chief Financial Officer Chris Poinsatte said DFW does not plan to impose a rate increase on the airlines in the first quarter. However, he said the airport has scheduled a rate increase set to go into effect in January.

The airport has given about $300 million in federal relief money — about three-quarters of its total — to the airlines for rate relief. Currently, airport officials plan to use federal relief money in 2023 for inflationary impacts on capital projects.

“We are willing to talk about applying some of that to rate relief should we get to the negotiating table and finish our use agreement negotiations,” Poinsatte said to the DFW board.

Before You Leave, Check This Out