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Austin's legal costs to oust the South Terminal's operator double to $3 million

The entrance to the South Terminal at Austin-Bergstrom International Airport. A large white canopy would create shade, but this picture was taken on a cloudy day. Cars are parked in front. A car is pulling away.
Gabriel C. Pérez
The South Terminal at Austin-Bergstrom International Airport is in the path of a planned expansion to build a new concourse connected to the Barbara Jordan Terminal.

Legal bills are piling up in the city's fight to oust the company running the South Terminal at Austin-Bergstrom International Airport. Austin's City Council voted Thursday to double ABIA's legal services agreement with corporate law firm Winstead PC to more than $3 million.

The move comes after the company with a 40-year lease to run the South Terminal — Lonestar Airport Holdings — sued in federal court in at attempt to stop the city from forcing it out through the use of eminent domain.

Thursday's council vote was taken without discussion. The money for legal services is coming from ABIA's operating budget, which is funded by airport revenue.

Only two airlines — ultra-low-cost carriers Allegiant and Frontier — operate out of the South Terminal. More than 38,000 passengers traveled through the facility in September, compared to 1.7 million travelers through the main Barbara Jordan Terminal.

Officials who run the city-owned airport want to bulldoze the South Terminal to make room for a new concourse with space for up to 40 gates, connected to the main terminal by an underground walkway.

An illustration of the new midfield concourse planned under ABIA's $4 billion expansion
City of Austin
ABIA's planned $4 billion expansion includes a new midfield concourse with at least 10 gates, connected to the Barbara Jordan Terminal through an underground tunnel. The expansion would push into land now occupied by the South Terminal.

The project is part of a $4 billion expansion to accommodate unprecedented volumes of travelers. Airport officials are hoping to open the new concourse by 2027.

In a novel use of eminent domain, the city is attempting to seize the lease of city-owned land from Lonestar and pay $1.9 million compensation.

Lonestar said it found the city's offer of less than $2 million "offensive," arguing it spent more than 10 times that amount fixing up the facility. Now, the company is waging a two-front legal battle against the city in Travis County Probate Court and federal court.

An image of the South Terminal before renovation, showing a green building with corrugated sides.
Lonestar Airport Holdings
The South Terminal before renovation. The image was included in a federal lawsuit filed by Lonestar Airport Holdings.

The vote to boost the airport's legal war chest to $3 million means Austin is now spending 58% more on lawyer bills than its rejected offer to Lonestar.

The increase in legal costs "came after Lonestar filed a federal lawsuit in response to the City's legal action to acquire the leasehold," ABIA said in a statement to KUT, calling the addition of a new midfield concourse "a necessary step to increase capacity for more flights at AUS."

Lonestar Airport Holdings said the city wouldn't have to spend so much on lawyers if it had offered "reasonable terms reflecting our existing 40-year agreement."

"We're eager to continue to be a good partner to the city, to foster further development of the airport and to resolve this dispute," Lonestar CEO Jeff Pearse said in a statement.

U.S. District Judge Robert Pitman has set a hearing on the case for Jan. 20.

A look inside the South Terminal showing two seating areas and a mural of Austin on the wall
Gabriel C. Pérez
A waiting area inside the South Terminal
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Nathan Bernier is the transportation reporter at KUT. He covers the big projects that are reshaping how we get around Austin, like the I-35 overhaul, the airport's rapid growth and the multibillion-dollar transit expansion Project Connect. He also focuses on the daily changes that affect how we walk, bike and drive around the city. Got a tip? Email him at Follow him on X @KUTnathan.
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