Exclusive-Use Arrangements

Exclusive-use arrangements typically assign to one airline the right to use and occupy gates and facilities for a specified duration, as well as the right to sublet or assign those gates and facilities conditioned on prior consent of the airport. These types of arrangements are recognized to con­stitute potential barriers to entry based on com­plaints by new entrant carriers that incumbent airlines hoard gates, require substantial sublease premiums, offer access at less preferable times, force the new entrant to use the incumbent’s ground personnel, or refuse to sublease alto­gether. These arrangements also have the effect of hindering airport management from properly exercising its legislative mandate of providing equal, nondiscriminatory access to its federally funded facilities. Moreover, since gate leases are considered assets in law, secured creditors of bankrupt carriers, like banks, can wind up pos­sessing the proprietary rights to airport gates, and preventing recovery and use of those gates by airport management.

The prevalence of exclusive use gates has been in consistent decline since 1968, and because of the effects of deregulation on air­port traffic, that decline has accelerated. U. S. airports increasingly now prefer to maintain more control over gate access. This trend has been buttressed by the Wendell H. Ford Avia­tion Investment and Reform Act (AIR-21) that requires some airports to submit for approval “competition plans” to the FAA, more fully dis­cussed below.

Preferential-Use Arrangements

Preferential-use arrangements normally give the tenant airline the primary right to use the facil­ity only when it has operations scheduled. These arrangements constitute a shared control between the airport and the airline with an explicit con­tractual right remaining in the airport author­ity to allow use of the gate by other airlines. Importantly, this type of arrangement preserves the airports’ ability to honor the legislative man­date of providing nondiscriminatory access to its facilities and to use the tenant’s gates for new entrants.

Preferential-use agreements differ in their specifics, some containing “use-it-or-share-it” or “use-it-or-lose-it” requirements, as well as other types of recapture provisions. These types of gate arrangements have become more prevalent at large hub airports, increasing from 28 percent in 1992 to around 50 percent in 2004. For example, Reagan Washington National has reported a gate composition of all preferential-use gates, and Boston Logan has converted to all preferential – use gates or common-use gates. By 2005, Detroit Metropolitan Airport, with 16 carriers and 114 jet gates, had converted to all preferential-use gates, with the exception of 2 common-use gates.