Austin settles airport legal battles for $88 million, will take control of South Terminal

A plane flies above Austin-Bergstrom International Airport's South Terminal last June. The city plans to eventually replace the South Terminal with new infrastructure for a midfield concourse, which will connect to the main terminal through an underground tunnel.

An $88 million payment to the management group of the South Terminal at the Austin-Bergstrom International Airport will settle two lawsuits with the company and allow the city to assume control of operations at the facility.

Austin City Council members unanimously approved the payment to settle with LoneStar Airport Holdings LLC on Thursday, effectively concluding attempts by the city to end a 40-year lease with LoneStar and make way for an airport expansion.

The $88 million will come out of the airport’s general fund, which is not funded by local taxpayer dollars, according to a press release published by the airport’s information office after the City Council decision.

Two lawsuits over one terminal: Austin tried ousting airport terminal operator with $1.9 million. Now it will cost $90 million, court says.

For the time being, all airline, vendor and business operations from the South Terminal will remain in place as LoneStar and Austin's Department of Aviation work to transfer management to the Department of Aviation later this fall, according to the airport.

The facility will remain operational until it is removed for new infrastructure for a midfield concourse, which is expected to occur in 2025, according to the airport.

Legal battles at Austin-Bergstrom International Airport

The lawsuits settled by this council decision relate to Austin’s efforts to obtain control of the South Terminal.

In 2022, Austin tried to use eminent domain authority in order to seize control of the property. The city originally offered LoneStar $1.9 million to buy it out of its contract to manage the South Terminal. LoneStar rejected the offer, saying it already had spent $12 million on renovations of the facility and citing the fact it had 34 years left on its contract.

In June 2022, the council voted to authorize the eminent domain proceedings.

The city claimed in its eminent domain filings it would like to tear down the South Terminal building to make way for the airport’s long-term expansion, the American-Statesman reported in February.

But LoneStar countered the city’s move by filing a breach of contract lawsuit against Austin, and in February a panel of special commissioners in Travis County Probate determined $90 million would be a fair cost for the city to pay in exchange for taking the property back.

What comes next at the airport?

Long-term expansion plans at the airport call for multiple projects.

Projects include a new outbound luggage handling system, an extension of the west concourse that will add three gates, and a midfield concourse that will connect to the original terminal through an underground tunnel in the coming years, according to airport spokeswoman Sam Haynes.

Austin's airport has seen record passenger volumes in recent years, and it has at times been unable to move travelers through in a timely fashion, with long waits in security lines and other problems arising as a result.

Editor's note: This story was updated to provide more accurate descriptions of upcoming projects.

This article originally appeared on Austin American-Statesman: Austin settles airport legal battles with LoneStar for $88 million