AA cant take the heat

[apdsm]

There was no WA "deal"

Herb's take on it! Please not the bolded paragraphs regarding the WA "Deal" and also Reagan National.


The Old Goofiness

- Herb Kelleher is Cofounder and Executive Chairman of the Board of Southwest Airlines. Published in the Dallas Morning News on March 18, 2005
The goofiness of the Wright Amendment is encapsulated by the passenger who told me Southwest was an "idiot" because it was headquartered in Dallas but didn't offer any air service between Dallas and Phoenix, even though he was willing to connect in El Paso.

Prior to the Wright Amendment, Harding Lawrence, the CEO of Braniff, stated on a radio show that Dallas/Fort Worth International Airport was already a tremendous success, and that its principal problem was? Congestion!

What 'deal'?

Southwest located its headquarters in Dallas because Dallas had most of its flights. But, today, Dallas is dropping fast in rank as Love Field traffic and flights decline subsequent to 9-11.

Immediately after Southwest began service at Love Field, the "D/FW parties" began a series of lawsuits to oust Southwest from Love Field.

This litigation was brought under the Dallas and Fort Worth 1968 Concurrent Bond Ordinances. These ordinances did not provide that Love Field would be "closed" (another urban myth). Instead, they provided that, if "legally permissible," air carrier service would be "phased out" at Love Field. The federal courts twice held that this provision of the 1968 Concurrent Bond Ordinances was not "legally permissible." Thus, Dallas did not "welsh" on any commitments to Fort Worth or D/FW Airport: The federal courts declared those commitments legally unenforceable.

Subsequently, in 1978, the airline industry was deregulated. Having lost in the courts, the D/FW parties turned to Jim Wright, then the majority leader of the U.S. House from Fort Worth, to restrict Southwest's Love Field service. Southwest opposed any restrictions on Love Field air service and a multi-month political battle ensued. Jim offered a "compromise" permitting nonstop Love Field air service within Texas and the four states adjoining it. Southwest was told by its congressional supporters that it was either Jim's "compromise" or "nothing"; so Southwest took something over nothing. There was no Wright Amendment "deal." There was just the application of political power to curtail Southwest's Love Field air service.

Also, as Al Casey, then CEO of American Airlines, recounts in his memoirs, American moved in 1979 solely to get much cheaper headquarters space in Fort Worth due to a tax-free bond deal.

The Modern Goofiness

The Wright Amendment was supposedly pushed through to protect D/FW Airport (i.e., the carriers serving D/FW). That was 26 years ago; D/FW is now the third-busiest airport in the world and dominated by American, the world's largest carrier (no more Braniff and virtually no more Delta). But Southwest still cannot even provide one-stop, single-plane or normal connecting air service between its headquarters city and points beyond the Wright/Shelby Amendment states (yes, the Wright Amendment can be amended: Sen. Richard Shelby, R-Ala., amended it to add three more states).

Dallas County reaped $15 million in taxes from Southwest in 2004, since Southwest's entire aircraft fleet is taxed in Dallas, not Fort Worth. Our air services are restricted, but our tax payments aren't.

The Dallas Love Field Master Plan, approved by the FAA, limits Love Field to approximately one-fifth the size of D/FW. All parties to the master plan, including neighborhoods and American Airlines, approved this size for Love Field and the amount of commercial air service it can support.

Fares at D/FW are competitive within the Wright/Shelby Amendment states but are woefully noncompetitive beyond those states.

According to a Dallas Morning News poll in 1997, an overwhelming majority of the people in Dallas, Collin, Denton and even Tarrant counties favored repealing the Wright Amendment. Only D/FW lobbyists stand against the people's will.

A nonstop perimeter rule was adopted at Reagan National Airport to encourage growth at Dulles International Airport. American Airlines lobbied successfully to have the Reagan National perimeter expanded. Apparently, what's good for the Northern Virginia goose is evil for the metroplex gander. Furthermore, no perimeter rule has ever included the goofy marketing and ticketing restrictions of the Wright Amendment.

American lowered its fares at Miami in order to compete with low-fare service at nearby Fort Lauderdale and reported more passengers and revenues by doing so. Why, then, will lower fares at D/FW, produced by modestly enhanced competition from Love Field, harm either the airport or the airline?

Conclusion

Southwest does not intend to harm D/FW Airport or any of its air carriers. If that baseless concern persists, however, then the Wright Amendment could be gradually, in steps, phased out over a period of years, starting with its unprecedented and goofy marketing and ticketing restrictions.

Dallas has a reputation as a free-market, free-enterprise city. Does that reputation square with the 26 years of restricting Love Field in order to protect the carriers at D/FW so that they can impose higher fares on the public?

If the goofiness does not stop after 26 years of protectionism, when will it end?

The time is now!

 

[seefive]

If you're going to repeal the WA, I'm fine with it. But SWA doesn't get to keep all its gates at DAL. They got all their gates because of the WA. With the WA in place, no other airline wanted to operate out of DAL. If it goes, so does the monopoly for SWA at DAL

The same would apply to DFW with AA if there aren't enough gates there for SWA. That's not the case at DFW though.

 

[On Your Six]

If you're going to repeal the WA, I'm fine with it. But SWA doesn't get to keep all its gates at DAL. They got all their gates because of the WA. With the WA in place, no other airline wanted to operate out of DAL. If it goes, so does the monopoly for SWA at DAL

The same would apply to DFW with AA if there aren't enough gates there for SWA. That's not the case at DFW though.

What would AA fly out of Love - MD80s or CR7s? Can the 737-800s be used? I wonder if AA could use those crappy, loud MD80s and then contribute to the "noise pollution detrimental to North Dallas" that it claims will result from SWA's expansion using its 737-300/700s? With the FK100s gone, AA's choices are limited... No way AA will compete effectively against SWA out of Love.

 

[ivauir]

If you're going to repeal the WA, I'm fine with it. But SWA doesn't get to keep all its gates at DAL. They got all their gates because of the WA. With the WA in place, no other airline wanted to operate out of DAL. If it goes, so does the monopoly for SWA at DAL

The same would apply to DFW with AA if there aren't enough gates there for SWA. That's not the case at DFW though.

This has been extensivly covered (on this thread I think). There are many empty gates at DAL; it is interesting that this is not what AA is asking for though. They don't want gates at DAL, they want legal protection from legitimate competition.

 

[Eagle-ista]

No way AA will compete effectively against SWA out of Love.

They were very effective against Legacy. They spent a fortune flying specially reconfigured F-100s at $60-70 a seat to shut them down, and I believe they would spend/waste a fortune at LUV if they felt threatened again, and they do feel threatened...

Also, doesn't AA still own leases on a few gates at LUV?

 

[apdsm]

They got all their gates because of the WA. With the WA in place, no other airline wanted to operate out of DAL. If it goes, so does the monopoly for SWA at DAL.

You would have a valid arguement if SWA got all their gates because the WA did not allow other airlines to operate out of DAL. The fact that they did not want to operate out of DAL was their own choice.
If you recall, at least one other airline wanted to operate out of DAL and it was run out of business by a competing airline which, for the most part, left after the little guy was gone. And you claim SWA does not want to compete?

 

[seefive]

I don't have a horse in this race guys. Just an opinion. Of course you SWA guys have a little chip on your shoulder about this. I think the WA is not a fair law. However, SWA wants to change the rules now that they have the advantage there. AA doesn't want to change because of their niche. Both sides are seeking to take advantage. My take is that AA has the better legs to stand on because they have played with cards that were dealt. SWA did too. Until now. They want to change the rules.

 

[LUVChild]

2. The cities responded by creating the DFW Board in 1968 and adopting a Bond Ordinance to finance the construction of DFW. As an essential part of the Bond Ordinance, the cities agreed to phase out passenger air service at their existing airports. The interstate carriers using the Dallas and Fort Worth airports agreed to move their operations to DFW (which opened in 1973).

3. Despite the clear intention of the Cities and the cooperation of all other air carriers, Southwest Airlines (which began operating solely intrastate service from DAL in 1971) steadfastly refused to move its operations to DFW, leading to a series of long and expensive law suits in the 1970s. Southwest, by arguing that the CAB determinations and Bond Ordinance provisions did not apply because it only served intrastate markets, successfully thwarted the efforts of Dallas, Fort Worth, and DFW to fulfill the Bond Ordinance objective of consolidating passenger service at DFW. As a result of this litigation, Southwest continued to offer intrastate service from Love Field.

4. Shortly after Congress deregulated the airline industry in 1978, Southwest applied for permission to provide interstate service between Love Field and New Orleans, in clear contravention of the intention of the Cities (as set out in the Bond Ordinance).This action threatened yet another round of litigation and controversy regarding Love Field.

5. In order to put an end to the dispute and resolve all legal challenges, Texas Congressman Jim Wright negotiated a settlement among the interested parties. To make it binding, the agreement was codified into the so-called Wright Amendment (section 29 of the International Aviation Transportation Act of 1979).The law allowed Love Field to stay open instead of being closed down to commercial aviation as originally intended.

6. With the agreement of Southwest Airlines, the City of Dallas, the City of Fort Worth, the DFW Airport Board, and other interested parties, the Wright Amendment allowed the airport to remain open only so long as service would be limited to points in Texas and the four contiguous states.Without this amendment, the city of Dallas would have continued the process of closing Love Field. Since 1979, the only change to the law was the 1998 “Shelby Amendment” to allow service to an additional three close-by states and unrestricted flights on aircraft with less than 56 seats.

Some things to consider:

Regarding #2: There's something rather humorous here. If the other airlines (Braniff and TI) had not been fighting so hard to keep Southwest from ever flying in the first place, we would have been in business in 1968, rather than 1971. And we would have likely signed the agreement to move to DFW like all the other carriers.

Regarding #4: CAB Abolished: Effective January 1, 1985, by the Civil Aeronautics Board Sunset Act of 1984 (98 Stat. 1703), October 4, 1984, and provisions of Title XVI of the Federal Aviation Act of 1958, contained in the Airline Deregulation Act of 1978 (92 Stat. 1744), October 24, 1978.

So if I'm reading this correctly (and I'm not at all sure if I am), the Airline Deregulation Act of 1978 held within it the seeds to abolishing the CAB. All of which in effect made null and void many of the regulations previously put into effect by the CAB. So although the CAB was no longer to exist, Southwest was still expected to abide by CAB restrictions, although the other carriers no longer had to? It seems to me that deregulation was for all airlines...not just the ones flying out of DFW.

Regarding #6: To say Southwest agreed to the Wright Amendment is laughable. That's like saying you agree to let a thief mug you for your wallet. When you have a gun in your face, it's not like you have a choice, do you? Southwest was still a very small airline at that point, without any financial or political clout. What other choice did they have?

As I recall, the other airlines had agreed to eat a sizable chunk of the loss if DFW did not prosper. Proponents of the Wright Amendment say it was put in place not to limit Southwest, but rather to allow DFW to grow.
Okay, DFW is now I believe the third busiest airport in the world.
Love Field is limited to 32 gates by the master plan.

I'm sorry, but I just can't buy that big DFW still needs protection from little 32-gate Love Field.

 

[Whirlwind]

AA is certainly going to have to do better than they do in ATL. Last week, within 1 hour of 2 departures, not a single agent was anywhere near any one of their four gates, although hundreds of people were waiting for someone, anyone to help them. The only agent anywhere around was the one who had closed the door 20 prior to departure, and told a revenue passenger "no you can't get on, I've already done the paperwork." The airplane pushed with 20 open seats. No wonder they can't compete with this kind of customer service.

What does AA expect? When you cut employee pay to the bone, treat your employees like crap, and cancel their retirements, they aren't going to be very happy.

Since every airline offers the same basic service, flying seats from one place to another in a metal tube, customer service is one thing that can seperate the winners from the losers.

 

[seefive]

LUV,

Blinded by your job. Poor, poor Southwest.