Denver International Airport announced an agreement Tuesday that clears the way for its two largest carriers to grow here for the foreseeable future.
The deal essentially involves consolidating all of United Airlines' flights to the B concourse, thereby allowing Frontier Airlines to lease six more gates on the A concourse. DIA also will expand United's regional jet facility and retire some of the carrier's debt.
The agreement is good news for consumers because it could help keep a lid on fares and spur the addition of new flights and destinations.
It also puts to rest concerns that gate issues could stifle growth and helps solidify the presence of United, DIA's dominant carrier, and Frontier, its second-largest airline.
Combined, the two airlines account for more than 77 percent of DIA's passenger traffic.
"This is the same strategy we've been operating on for three years, which is trying to keep a robust, competitive environment at DIA," said John Huggins, economic development director of Denver. "It's especially good for leisure and business travelers."
Under the agreement, United will give up its six gates on Concourse A, where it currently operates flights of its discount arm, Ted. United will move those flights to five gates on the B concourse, where the airline is installing bridges that allow passengers to load and unload from the back and front doors of an airplane. The bridges help United speed up the process and allow the carrier to handle more flights daily.
United, which operates most of its flights on the B concourse, will give up one Concourse A gate in July, another in November and its remaining four by next spring.
In exchange for relinquishing the gates, DIA will pay for a $41.5 million upgrade and expansion of United's regional jet facility on the east end of Concourse B. It's a scaled down version of the expansion DIA and United planned - and then shelved - in 2003.
The airport also will pay off $110 million in debt related to United's automated baggage system, lowering the carrier's operating costs at the airport. The money used to retire the debt will come from the airport's revenue stream.
Last year, DIA agreed to retire $184 million in debt tied to the baggage system, which never worked properly and eventually was shut down. In return, United agreed to route more passengers through Denver.
Aside from the financial benefits for United, the move will pay dividends for the company's customers, who currently have to switch concourses if they are making a connection from a Ted flight to a main or regional United flight, or vice versa.
"All of our operations and equipment will be in the same terminal now," said United spokesman Brandon Borrman. "That's a big advantage for our customers."
United also estimated that it will add about 125 daily flights systemwide after the change.
Frontier, too, will grow, as it will lease the six gates on Concourse A, where all of its flights at DIA are based.
The Denver-based carrier said it can increase efficiency on its existing flights and will have enough space to comfortably add service for years to come. Frontier, which plans to bring on 14 new planes during the next five years, had run out of space on the A concourse and previously indicated it could grow elsewhere if it couldn't get more gates at DIA.
"This agreement is a mile high sigh of relief," said Frontier spokesman Andrew Hudson. "It guarantees Denver as Frontier's hub for the long term. It provides for our growth both in terms of destinations and frequencies and also will lead to improved efficiency of our Denver operation."
The deal is cheaper for DIA than the likely alternative: an expansion of the A concourse. That project would have cost about $116 million, airport officials say. Expanding the concourse also would have taken longer.
DIA will spend $41.5 million to upgrade and expand United's regional jet facility on the east end of Concourse B. The airport also will pay off $110 million in debt related to United's failed...
The expansion would involve extending the east end of the concourse by a couple of hundred yards.
To reacquire the gates, DIA will give United a one-time $10 million credit on what the airline pays for the automated baggage system at the airport.
The project likely would be a "significant" expansion of the existing facility, which has nearly a dozen passenger-loading areas for airlines.