Denver officials unveiled an agreement Nov. 9 it reached with the two largest airlines at Denver International Airport (DIA), United Airlines [OTC: UALAQ] and Frontier Airlines [Nasdaq: FRNT], under which the city agreed to build a $40-million, 38-gate regional jet facility for United and its regional partners, and expand Frontier's regional parking positions. The agreement settles a dispute between the two major carriers over how many gates they would operate there.

United and Frontier had been reluctant to surrender any of their gates. United said more gates would be needed for its new low-cost airline, reportedly named "Ted," which the carrier plans to launch from Denver next year. It was unclear whether United's new regional jet facility would be used mostly for "Ted" operations or whether United planned to expand services to its regional partners operating out of Denver, including Mesa Airlines [Nasdaq: MESA], Air Wisconsin and Great Lakes Aviation.

In addition to the new regional jet facility for United, Denver also will build new ticket counters for United, valued at $15 million. As part of the agreement, United said it would not ask a bankruptcy court judge to end its Denver lease.

For Frontier, Denver plans to build an extension on Frontier's concourse, estimated at $42.5 million. Frontier has said it needs more gates to accommodate its growing fleet, and had threatened to move some of its operations to another airport if more gates were not available at DIA.

Frontier said expansion plans for Concourse A are still in development and a firm estimate of the project's costs and financing structure are still in flux. But current plans call for the addition of four to five regional jet slots and two to six mainline gates. Following completion of the proposed expansion, Frontier will have a total of 16 to 20 permanent mainline gates.

United will reportedly relinquish three gates during the expansion.

"Neither side got everything they want, but this will work," Denver Mayor John Hickenlooper said.

While some other discount carriers had shied away from DIA because of expensive landing fees, Frontier has been the boosting its operations at the airport. It increased its share of traffic from 10 percent last year to 13 percent in 2003.