DFW takes SWA to task because of Denver

[koko nw]

Ok Flyboeingjets, you win. I see your point.

Forgive my "arrogant spew" it's been a long 3+ years of shite after shite.

Your pilots and FA's where nothing but accommodating and a class act when I commuted to SFO via OAK from SEA. Your mgt/employee relations should be copied and envied.

Best

Koko

 

[FlyBoeingJets]

1) ...Southwest, which would be able to keep its short haul flights at Love Field and initiate long-haul traffic from DFW.

2) "It is beyond my understanding why Southwest would choose to go 650 miles away to do business in Denver, when they can go eight miles up the road to existing empty gates where a $22-million dollar incentive offer awaits them," said Mayor Mike Moncrief of Fort Worth.

Mayer Moncrief cracks me up. Nowhere does he mention that costs at Denver have improved relative to other airports. The bag eating automatic baggage system is no more and the front range has grown so much that Colorado Springs no longer looks as attractive.

1) Sounds like a great deal if AA would also move its RJ flying to Love and keep the big planes at DFW. The passenger would love that too. Lets start a light rail project from DFW to Love. Great idea from DFW, and cheap too!

2) Someone should explain to the good Mayor that in order to serve North COLORADO passengers a carrier has to go to an airport closer than DFW. I guess the world revolves around North Texas.



On a more serious note, I hope no one gets too upset by this issue. Politics is always an imperfect compromise made by imperfect people. I tend to debate the faulty logic I see in WA arguments.

I personally don't think the WA is protecting jobs at AA anymore. With Delta reduced at DFW and competitors with costs as low as SWA at DFW I think it would be a small blip to AA. But it would put the DFW planners on notice and they would find more innovative ways to operate. DFW would eventually get to be a better airport for airlines to operate out of with WA repeal. DFW is offering $22 million only becuase they value their monopoly much more than that.

 

[chase]

Southwest Responds to DFW Criticisms

DEN Service: DFW Reacts, SWA Responds
Our announcement of service to DEN beginning in early 2006 triggered a reaction from DFW Airport officials. In response to their claim that our flying to DEN should prove that we are also capable of providing service at DFW, Southwest says the following:
• Regarding the existence of an entrenched hub carrier at DEN, Southwest already serves airports dominated by one carrier–perfect examples are DTW, PHL, and PIT. The difference between DEN and DFW is that United has more than 40 percent of the market share and operates over 400 daily nonstops at DEN, while American has more than 80 percent of the market share and almost 900 flights at DFW.
• One of the attractive qualities of DEN is the reduction of United’s service. DFW has not been able to maintain a consistently profitable low-fare carrier in its history, due to American’s mega-hub. (For example, see AirTran story at right.)
• The average taxi-out time at DFW is two minutes higher than at DEN, and the taxi-in time at DFW is almost twice the time it takes at DEN.
• Additionally, there is no additional airport in Denver. Southwest has a choice of airports in the DFW metroplex, and we choose DAL, our home for the last 34 years.
"We want to serve Love Field; it’s efficient, it’s here, it’s our home base, and it fits us perfectly," said Gary. "Most businesses have the right to choose where they operate. I don’t know why it would be any different for an airline."

_______________________________________________________

I was looking for a following up article that Eric Torbenson (writes for Dallas Morning News) in which he debunks a common argument that folks use but I couldn't find it. I'll summarize: "Taxpayers would have their money wasted if DFW shrinks & would be hit with a rising failure rate & the loses would be absorbed by the government." He reponded by saying that the government isn't liable for DFW, DFW is run like a business...airlines, vendors, other businesses pay for the operation of DFW....yes there is money from the government paid to some government workers who work there but the bulk of the operational money comes from the airlines that operate from there....if DFW was to take a hit financiailly, the government isn't out money, the users are....that's the way it is at most airports & is wise (the government should be funding airport operations)....bondholders are the financiing sources for most expansion & operation so for these entities to be protected from competition he argues is a bit different than what occurs in most businesses.

One last article posted below on the WA issue.

________________________
Senate may OK Love bill


[SIZE=+1]Provision to allow flights to Missouri must also pass House


[/SIZE]
[SIZE=-1]12:00 AM CDT on Friday, October 21, 2005

[/SIZE]
[SIZE=-1]

[/SIZE]

WASHINGTON – The Senate was poised Thursday to approve a provision that would allow commercial flights between Dallas Love Field and cities in Missouri.
The provision is contained in a $142 billion fiscal 2006 transportation spending bill.
But Missouri remains a long way from becoming the eighth state that can be served with interstate flights from Love Field.
The spending bill now goes to a conference committee where congressional negotiators must reconcile differences between the House and Senate versions before final approval.
The Missouri provision, sponsored by Sen. Christopher "Kit" Bond, R-Mo., is not in the House version.
Commercial service at Love Field is restricted by the Wright amendment, a 1979 federal law that limits service to Texas and its four adjacent states – Louisiana, Arkansas, Oklahoma and New Mexico.
The 1997 Shelby amendment added three more states – Alabama, Kansas and Mississippi. _________________________

 

[Flopgut]

Recap

An agreement was made that DFW be built and supported. SWA declined to oblige the agreement claiming they were not a party to it. This agreement was determined to be of enough importance that when Braniff did not fully comply with the terms they were forced to do so, by a court order. (Braniff stayed at Love and matched SWA on every leg, they were forced by a court to stop and leave)

The WA is the agreement in place now for Love Field, and SWA is most certainly a party to it this time. The terms of that agreement should be continuously and vehemently imposed on SWA. No less than they were on Braniff.

Remember the bumper sticker that read: "Fly SWA, Herb needs the money". This is the only thing that has really changed. Herb (SWA) doesn't need the money. DFW does! DFW needs revenue and renewal. SWA wants to legislate an inappropriate advantage, again. Unfortunately, these days SWA still has the momentum. They are a political juggernaught and somehow still make the public believe they are the underdog. It will be enormously inequitable, but I'm afraid the WA might be lifted.

Beyond just normal bickering with you SWA folks I'm wondering if you are at all worried about a backlash? Herb was quite content with the situation at Love because I think he new how badly it screwed everyone else at the time. Some municipalities have already acted to preclude the dilemna your airline creates with airport problems (like AUS) and BFI just recently rebuffed you. In the time after the WA is repealed there is going to be a frenzy in the Dallas aviation world an a lot of expense and problems for everyone, except you...with your nice little empire. The tide may already be turning. The SWA effect could have a new meaning.

Chase: It is probably just me, but those articles you just posted I think illustrate the fact that SWA will not truly compete in the Dallas marketplace, to everyone elses detriment. SWA is actually afraid of a free market in Dallas outside of its protected Love Field enclave.

FBJ: People don't dislike riding on Legacy airlines and large airports as much as you think. I think the big airports have a sort of renesance (sp) coming. I have put on here before so maybe you have heard it from me and maybe not. I used to fly a lot on airlines in my former career. I was a SWA Rapid Rewards customer and earned about 4 or 5 tickets or so, I think I ran about 50k through that deal in about 3 years so I was a pretty good SWA customer. I took the family to California and we had a great time, but... A coworker of mine focused on AA miles. I got my rewards much quicker than he did but when he did earn the free stuff it was far better than what I got. He went to Africa and then later he went to Octoberfest in Germany. Man did I feel cheated! You see, on some level, it is not about what you pay, it about what you get. When your in business your travel dollars are really just money that is already spent, so if either airline can get you from A to B you start to focus on what this money can reward you with. Except, when the non-market, geopolitical craziness is going on, like it has been. When that is no longer a factor people will gravitate back to Legacies and hub airports.

 

[FlyBoeingJets]

Except, when the non-market, geopolitical craziness is going on, like it has been. When that is no longer a factor people will gravitate back to Legacies and hub airports.

I too think Legacies will see a renaissance of sorts. It will definitely start in earnest in 2006, and it will be even stronger if oil goes down as predicted.

I respect your opinion but we do differ on what is right for DFW and Love field. I also think right now, in 2005, SWA is asking for repeal when it looks like they have too much of an advantage. SWA has had a big advantage in the years after 9/11. It looks bad from that point of view. But times are once again changing. 2006 going forward it doesn't look that way to me. The playing field will begin leveling out and the perks being offered by Legacies will once again allow them to attract passengers at a higher RASM. Populations are going up everywhere and even RJ loads are improving and contributing more to the bottom line. Since legislation takes so long to work out, this is the right time to work on repealing the WA to allow an all domestic carrier a chance to stay viable at Love field. Particularly as international legacies regain their dominance. It's only going to get tougher for SWA after their unprecedented period of success after 9/11.

 

[FlyBoeingJets]

You see, on some level, it is not about what you pay, it about what you get. When your in business your travel dollars are really just money that is already spent, so if either airline can get you from A to B you start to focus on what this money can reward you with.

I agree, SWA needs to offer lower fares and keep costs lower just to stay in the game and attract travelers.

 

[Flopgut]

Fbj:

I respect your opinion as well. Your last several posts made particulairly good points. Do you think that going to DFW could contain some good opportunities for SWA? I think that a bit of "tough love" might be in order here. If SWA went to DFW it would give the company a exercise in adversity and a chance to grow in discipline. And, would also equip the airline for long term growth. There are a LOT of passengers over there that you really don't have access to. If/when you win a repeal of the WA, is it going to be that good of a deal long term? The result would, of course, be a airline/passenger mess in the North Texas market near term, which usually results favorably for SWA. But I think SWA might be stepping over a dollar to pick up a nickel.

Looking out 20 years I think SWA would do better at DFW. You would certainly regain the martyr/underdog status, and all you have to do is accept a pretty good deal from the airport.

 

[FlyBoeingJets]

In New York, SWA could have went to a major airport but they instead went to an out of the way airport, Islip. SWA is missing out on a lot of opportunity in that market. I don't really know if SWA is being penny wise or pound foolish. SWA is serving some passengers that might not have flown at the other airports. Instead, JetBlue is flying out of the major airports there. I know it was tough to get gates at Midway back in the 1980's and legal maneuvering was needed to get them. Now its a great airport to fly out of and the city loves it. O'hare is working a new construction project even with record travel at Midway. As good as studying the past is it is in the past. The future is a new ball game.

I know that Braniff was treated unfairly over 25 years ago. We can't change that and I don't think it makes a case for restricting SWA now.

Besides the debate on whether the WA is needed to protect DFW, fair, or economically stifling in the 21st century, it would be disruptive and painful for SWA to leave Love. The HQ is right next to the runways and it is a short bus ride over to the terminal. It is part of the culture to be at Love field. Every employee that eats at the upstairs cafeteria gets an up close view of our aircraft landing and taking off. I dig that. I think it helps keep the company focused on flight operations and is always a reminder of SWA's tough beginnings. How often do politicians ask a company to move their headquarters for their convienance? Seems ridiculous to me.

I don't think having some flights at each airport is a good idea. Connecting flights via bus or taxi are out of the question.

I don't know if DFW would be good for SWA long term. Maybe it would. But If flying out of DFW is such a good deal for a LCC, why isn't ATA, Airtran, Frontier and JetBlue filling those empty gates?? Airtran is actually reducing flights.

I also think Dallas and Fort Worth could use 2 airports as they grow. Maybe not this year but definitely by 2008.

 

[Flopgut]

Fbj

I agree with a lot of what you are saying. On a side note, I meant to post something on the "Southwest propaganda" thread recently. I work for CAL and we get a pretty healthy dose of SWA propaganda that is negative. CAL management pay themselves very well and are not at all bashfull about making the claim that they are the "best in the biz". Which is really ridiculous, obviously SWA is the best. If we compare the two (scale the economies), I don't see how CAL mgt should make above minimum wage! Not only that, there are a legion of these mgt types! WAY more than we need. They inhabit a huge highrise downtown and sip lattes all day, all the while thinking "this would be a pretty good job if it weren't for all these airplanes"! So they very subtly put out the SWA negative vibe to throw the employees off their trail; It is heaped in with all the other propaganda we get every month.

I do think DFW would be a good long term move for SWA. Thats where the international leisure travelers touch down with their bags of money. Anxious to see the "states" on their month long holidays. You could sell them an unlimited pass for the 30-45 days they are here like Quantas does for Australia. Furthermore, it would cement SWA as underdog for another 25 years. Additionally, it would be a strategic hub for SWA which is more emphasis than any other LCC would do in Dallas. I think that would make it work.

Also, I agree that having flights at both airports is not wise and light rail or a bus is stupid. (That is what AA is going to do, for better or worse)

I do take issue with part of this:

"Besides the debate on whether the WA is needed to protect DFW, fair, or economically stifling in the 21st century, it would be disruptive and painful for SWA to leave Love....How often do politicians ask a company to move their headquarters for their convienance? Seems ridiculous to me."

It is ridiculous. The last time it happened, that I can recall, was right there at Love Field, to Braniff and every other airline there. If you can imagine how painful it would be for SWA to leave, imagine how much more that pain would be amplified by the fact that another airline got to stay, and take over everything your company has built there? It would be devastating, and I would not wish that on anyone.

All other parties to the Love Field debacle were richly deservant of some equitable "soft landing" result. That was the WA. Although it was long ago, repealing it will tear open that scar like it was yesterday. So what do we do? If we repeal the WA your airline will be just fine and continue/enhance record profits. Everyone else gets screwed, again. This has to end, it has to be a two way street. I know business is not a "fairy tale land" and fairness has no place, really. But there will be a backlash. Repealing the WA will be one of your last "stunts", is it that important? Was it to Herb?

 

[canyonblue]

Repealing the WA will be one of your last "stunts", is it that important? Was it to Herb?

Herb is not looking at a longer upgrade, the possibility of future concessions and the devaluation of our stock options. This fight is personal with current SWA pilots, even if it is self serving, just as self serving as American and DFW are with it. Outside of it affecting me, even if I was not a Southwest pilot, I could not , for the life of me , understand how a Amendment that affects ticket prices would even last one minute anywhere else in this country. People outside of the Metroplex could care less about AA or DFW, they just want to go to or from Dallas for $99. And that is the edge we have.

 

[Flopgut]

canyonblue:

Longer upgrades, concessions, and stock price declines are part of this business. I'm not wishing any of that on you, but lets keep some perspective. SWA is wildly profitable, is growing exponentially and is seeking windfall legislation that would allow it to short circuit the competitive process. AA is struggling, and shrinking and is only asking that instead of changing laws, SWA be required to follow the same steps it, and every other airline did, to compete in earnest. I don't see where you can assert AA is being as self serving as SWA. They are not even trying to change the status quo.

There are down sides to everything in this business. Right now legacy airlines are in a terrible downside period. Really, all airlines are in a downside except SWA. I'm glad you are making money, I hope you are a captain soon, and I hope your retirement is always secure. I am also not ashamed to admit, that if you get the WA repealed (in this environment no less) I hope there is a backlash. It would be well deserved.

 

[miles otoole]

I am also not ashamed to admit, that if you get the WA repealed (in this environment no less) I hope there is a backlash. It would be well deserved.

I now hope more than ever it passes very soon!

 

[firstthird]

I'm a little confused. A backlash? From the people of North Texas when the prices out of DFW come down? I guess I can see that, not.
It is a tough issue, no doubt. But as a free enterprise type, I think that when all is said and done, the repeal of the WA would end up helping AA. The SWA effect raises traffic for everyone, albeit at reduced profit margins from the current prices that AA can charge out of DFW.
I also think that if DFW gets their wish for SWA to come on over, it might be much uglier than it would have been if the WA just went away. Careful what you ask for, you just might get it. Just my pilot level opinion.

 

[Annie]

I am wondering what the similarities are between SW effort in Texas and their effort to "re-open" Boeing field to the public in Seattle. A short summary of WA would be helpful.
For what it is worth, I much prefer SW over Alaska Air.

 

[FlyBoeingJets]

Longer upgrades, concessions, and stock price declines are part of this business. I'm not wishing any of that on you, but lets keep some perspective. SWA is wildly profitable, is growing exponentially and is seeking windfall legislation that would allow it to short circuit the competitive process. AA is struggling, and shrinking and is only asking that instead of changing laws, SWA be required to follow the same steps it, and every other airline did, to compete in earnest.

SWA has been unfairly profitable since 2003. And that profit is due to hedges. But hedges are losing their bite. Unfairly profitable for 3 years does not equate to keeping the WA as is. Perhaps a phased or delayed end to it.

AA is struggling but that will change as revenue continues to rise and they increase international flying next year by 7%. Southwest can't increase international flying. AA has a strong feed and have made it out of the woods. Look for them to take market share from NWA and DAL.

Side note: Aviation week states Denver fees will be about $8 per. Not the higher price DFW claims. DFW must be looking in the rearview mirror, not forward. Aviation week also says the highest fee airport SWA serves is Seattle. Any sane management would try to find ways to limit those costs.

I try to appreciate the pain all carriers felt moving to DFW, but the hub and spoke demanded the move. The reason for the move was a huge construction project and promise of future prosperity. The reason for the proposed move now is to keep hot dog vendors and the Fort Worth mayor happy. Its a turf battle.

So DFW fails to grow as much as they want to. It will be better for everyone if they aren't the only game in town. SWA will not continue to be "wildly" profitable and pay concessions are around the corner. Those of us proactive enough to see it coming want to work every angle to make the pain smaller.

 

[apdsm]

SWA has been unfairly profitable since 2003. And that profit is due to hedges. But hedges are losing their bite. Unfairly profitable for 3 years does not equate to keeping the WA as is. Perhaps a phased or delayed end to it.

Unfairly profitable? Do you really believe it is "unfair" or is that merely a poor choice of words?

 

[FlyBoeingJets]

Unfairly profitable? Do you really believe it is "unfair" or is that merely a poor choice of words?

From a competitor's point of view, especially with the losses to pay and retirements, I can see it being called unfair. Maybe I could use a different word but my meaning is that it is not perfectly equitable to the employees involved. My point is even if SWA has had a tremendous advantage, that advantage is diminishing and the past 3 years is not a good enough reason to continue the Wright Amendment.

If we had been born just a few years earlier, made a couple different decisions, or faired less well in the interview, more than a few SWA pilots would have become Delta, CAL, UAL or AA pilots instead. We would be the same people but be on the other side of the fence.

 

[SWA/FO]

:laugh: Just check some prices into DFW from anywhere in the country. You AA folks like to rip people off :angryfire ! That is what all this whinning is about...AA is about to lose all their "suckers". These folks don't know any better and fly into DFW. The WA will fall.....quote me on that one. Its all good, GO SWA!!

 

[FlyBoeingJets]

J.P. Morgan: Fuel's Silver Lining for Airlines
http://www.thestreet.com/tsc/c.gif
By Ross Snel
TheStreet.com Staff Reporter
10/25/2005 12:30 PM EDT
Click here for more stories by Ross Snel


Like the rest of the airline industry, AMR's (AMR:NYSE - commentary - research - Cramer's Take) American Airlines and Continental Airlines (CAL:NYSE - commentary - research - Cramer's Take) face a gloomy winter, with sky-high fuel prices and the normal seasonal travel slowdown.

However, J.P. Morgan analyst Jamie Baker believes next year is starting to look bright for the two carriers -- the only so-called legacy airlines able to avoid bankruptcy in the wake of the Sept. 11, 2001, terrorist attacks.

Baker, whose firm does and seeks to do business with companies covered in its research reports, raised his ratings on both stocks to overweight Tuesday.
His investment call lifted AMR 25 cents, or 2%, to $13.01, and Continental 29 cents, or 2.5%, to $12.14. Baker contends that high oil prices are at long last having a salutary effect on the industry by forcing excess capacity from the system and allowing carriers to boost unit revenue.

"Ex-fuel margins are reaching new highs," Baker writes in a research note. "By our account, a model that was supposedly 'not built for $40 oil' appears poised to function at $60, though you wouldn't guess it looking at how certain equities have performed as of late. Not surprisingly, we feel better about the industry's near-term fundamental prospects and equity potential upside than at any time this decade."

In 2006, rising unit revenue should help AMR record a profit of $1.60 a share and Continental EPS of $1.15, Baker writes, adding that his forecasts are based on crude oil averaging $62 a barrel next year and crack spreads -- which measure the additional cost of refining that oil into jet kerosene -- averaging $12 a barrel.

Judging by what his peers predict, the J.P. Morgan analyst is sticking out his neck. The average estimates of Wall Street analysts surveyed by Thomson First Call are for AMR to lose $2.22 a share next year and Continental to lose 79 cents a share.

 

[flyinglow]

:laugh: Just check some prices into DFW from anywhere in the country. You AA folks like to rip people off :angryfire ! That is what all this whinning is about...AA is about to lose all their "suckers". These folks don't know any better and fly into DFW. The WA will fall.....quote me on that one. Its all good, GO SWA!!

You Know I did just that. I went on AA.com and check prices between several cities, one out of ORD and the other out of DFW. There was no significant difference in the fares. Sometimes they were higher other times lower. In one case ORD was several hundred more. Go ahead and give it a try. This ripping people off mantra that SWA likes to throw out there has no merit.