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Austin pays $88 million to settle legal fight over ABIA's South Terminal demolition

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.

The City of Austin will shell out $88 million to Lonestar Airport Holdings, the company running the South Terminal at Austin-Bergstrom International Airport. The move paves the way for the terminal's demolition and construction of a new concourse capable of accommodating 10 to 40 gates.

The South Terminal, while on airport premises, is a stand-alone facility with its own entrance and parking lot, separate from the main Barbara Jordan Terminal. Discount airlines Allegiant and Frontier fly out of the South Terminal largely because of its lower landing fees.

A legal dispute was sparked in 2021 when Austin unveiled plans for a new concourse connected to the Barbara Jordan Terminal.

A rendering showing a new concourse connected to the Barbara Jordan Terminal by an underground walkway.
Austin-Bergstrom International Airport
City of Austin
A new concourse connected to the Barbara Jordan Terminal by an underground walkway (depicted with the orange line) will add at least 10 and as many as 40 gates to the airport.

Lonestar said it was left in the dark.

"No communication and then out of the blue," is how Lonestar Airport Holdings CEO Jeff Pearse told KUT he found out about plans to raze the structure. "It was a bit insulting, honestly."

Last year, Austin City Council moved to seize the South Terminal's lease rights in a novel use of eminent domain powers. The city offered Lonestar $2 million to vacate, an amount the company called "objectively offensive."

Lonestar sued for damages in federal court while fighting the eminent domain process in Travis County courts. In federal court filings, Lonestar said it has invested more than $20 million in the South Terminal and claimed "one market participant" had valued the company at over $300 million. A Travis County probate court would later award Lonestar $90 million, 46 times what the city had originally offered.

Austin City Council put an end to the legal tussle Thursday by approving the $88 million settlement.

As part of the deal, Austin will take over operation and management of the South Terminal this fall. Airlines, food vendors and other businesses will still be able to operate out of the facility until it gets demolished in 2025.

An outdoor patio and food truck at the South Terminal
Gabriel C. Pérez
Passengers at the South Terminal can access an outdoor patio and food truck after they clear TSA security.

Airport officials say they want to relocate Allegiant and Frontier to the Barbara Jordan Terminal. KUT has reached out to both airlines. Allegiant declined to comment.

The plan to erect a new concourse is part of a broader scheme designed to manage ABIA's record-breaking passenger volumes. The airport regularly handles 50,000 to 70,000 passengers a day — more than the number of daily visitors to Disneyland.

The hefty $4 billion expansion includes a project to add three gates to the Barbara Jordan Terminal, construction of a 90,000-square-foot cargo facility and a quarter-billion-dollar upgrade of the baggage handling system.

 An aerial view of ABIA. Buildings and facilities that are part of the airport expansion are shaded in blue.
City of Austin
An aerial view illustrates the many projects planned or underway as part of ABIA's $4 billion expansion.

In preparation for the transformation around the South Terminal, ABIA has already hired a company to demolish 39 buildings near the facility. NTP Construction is currently obtaining demolition permits for these older structures, some of which date back to ABIA's time as an Air Force base.

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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 Twitter @KUTnathan.
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