A sunset at the South Terminal at Austin-Bergstrom International Airport (Courtesy of AUS / Dan Herron)

The New York-based company that operates the South Terminal at the Austin-Bergstrom International Airport (AUS) just won a massive $88 million settlement from the city to close out two lawsuits related to the airport’s expansion.

How did we get here? Plagued by congestion in our rapidly growing city, Bergstrom officials announced a new master plan and massive expansion of the airport in 2021 to add capacity, and that plan includes demolishing the South Terminal to make way for a new concourse.

The South Terminal is one you might not have used – it’s a separate building for ultra-low-cost carriers (mostly Frontier and Allegiant), developed through a public-private partnership between the city and LoneStar Airport Holdings, LLC.

Under Texas eminent domain law, the city’s plan was to buy LoneStar out of their 40-year concession agreement with the city for a few million. The offer was $10 million in 2019 (which LoneStar refused) and last summer the city had lowered it to $2 million to cover the value of the South Terminal real estate but not the business there. But LoneStar wasn’t willing to walk away, so they sued with two primary goals: to keep the South Terminal running, and to bring their business in as a partner on the entire Airport Expansion and Development Program.

The airport is an enterprise department within the city, so its budget is made up of its own revenue, airport revenue bonds, and federal grants, but not local Austin taxpayer dollars. The big settlement coming out of the airport’s own self-sustaining budget sorts that all out and sets the expansion back in motion.