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Study Finds Opening Love Field to Long-Haul flying would have Serious Conserquences

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Dangerkitty

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Joined
Feb 21, 2004
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New Comprehensive Study Shows Opening Dallas Love Field to Long-Haul Flying Would Have Serious Consequences

Eclat Consulting Says Wright Amendment Repeal Could Result in Major Loss of Air Service in Dallas/Fort Worth Market and Adversely Impact Dozens of Communities in 22 States

FORT WORTH, Texas, Oct. 10 /PRNewswire-FirstCall/ -- A study conducted by Eclat Consulting concludes that the repeal of a federal law known as the Wright Amendment -- thus allowing long-haul flying at Love Field in Dallas -- would trigger a chain reaction leading to significant losses in the number of flights and destinations served at the nearby Dallas/Ft. Worth International Airport (DFW).

The loss includes both international routes and service to dozens of small- to medium-sized cities throughout Texas and the United States.
Smaller communities would bear the brunt of the changes, the study found, losing vital access to the nation's air transportation system that they enjoy today via DFW, as American Airlines is forced to move flights to Love Field. International service also would be significantly reduced. The results of the study, commissioned by American Airlines, were based on publicly-available data and Eclat's internal models.

Eclat Consulting, a Washington-based aviation consulting practice, predicts that while Love Field would gain approximately 251 daily flights (in and out) to major metropolitan areas the benefit of the additional Love Field flights would be greatly outweighed by the loss of approximately 436 daily flights at DFW -- with the greatest harm felt on routes to smaller towns and foreign destinations with fewer passengers.

The net loss of 185 daily flights would have a negative economic impact for the North Texas region and a serious reduction in connecting service opportunities for many smaller communities now served by American Airlines, its regional affiliate American Eagle, or the AmericanConnection carriers.

"American and the other airlines currently operating out of DFW would be forced to move a large number of flights from DFW Airport to Love Field to compete with Southwest Airlines if the Wright Amendment is repealed," said William S. Swelbar, president and managing partner of Eclat Consulting. "If that happens, 'hub degradation' would take place, making marginal routes unprofitable. Inevitably, those unprofitable routes would be eliminated."

If the DFW hub shrinks there would be fewer connecting flights, resulting in reduced service to smaller communities that rely on American's extensive route network as their link to the world. The study also suggests that additional flight reductions likely will come from Southwest as it accelerates its historic trend of reducing service to smaller cities in Texas and surrounding states and begins long-haul flying from Love Field.

On the surface, according to the study, the repeal of the Wright Amendment appears to be strictly a Dallas/Fort Worth issue and one that affects only American Airlines and Southwest. It is not.

"The repeal of the Wright Amendment is certainly a commercial issue for the carriers most affected, but the losers will be smaller communities that rely on DFW to provide access to, and competition within, the U.S. air transportation system," said Swelbar.

According to the study, the cities most at risk of losing service or seeing a reduction in service include 11 in Texas -- Abilene, College Station, Corpus Christi, Killeen, Laredo, Longview, McAllen, San Angelo, Tyler, Waco and Wichita Falls. In addition, service to Fayetteville, Ft. Smith and Texarkana, Ark.; Lawton, Okla.; and Springfield, Mo., would also be at most risk.

The study also suggests that small cities that rely solely on federally- subsidized Essential Air Service (EAS) provided by the AmericanConnection carriers will see the effectiveness of their only air service degraded as they lose the ability to connect to important domestic and international destinations. Those EAS cities include Burlington, Iowa; Kirksville, Cape Girardeau, Joplin and Ft. Leonard Wood, Mo; Marion, Quincy and Decatur, Ill.; Owensboro, Ky.; and Jackson, Tenn.

Metropolitan areas in 22 states also face a risk of reduced flights including, Alabama, Arkansas, Arizona, California, Connecticut, Florida, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Missouri, Nevada, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Texas, Virginia and Washington.

"Business and leisure travelers headed to international destinations will be adversely affected if the Wright Amendment is repealed and American Airlines is forced to move flights from DFW to Love Field in order to compete with Southwest," said Swelbar. "Fewer connecting flights at DFW mean fewer connecting passengers are available to combine with local travelers on routes that need such a strong mix in order to be financially viable. We believe flights from DFW to London; Paris; Zurich; Los Cabos; Puerto Vallarta; Leon, Mexico; Guadalajara; Cozumel; Belize City; San Jose, Costa Rica; Caracas; Lima; Sao Paulo; Santiago, Chile; and Buenos Aires will be affected."

"We have no doubt that those elected officials advocating repeal of the Wright Amendment are well-motivated and genuinely believe that repeal would be in the public interest," said Will Ris, American's Senior Vice President - Government Affairs. "But as the Eclat study so succinctly points out, a change of such magnitude can unleash unintended consequences that ripple throughout the transportation system.

"Those consequences simply can't be avoided by American sitting back and doing nothing if the agreement upon which we and the communities have relied for years is suddenly undone. Given the disproportionate economic power and resources of Southwest Airlines, which is now the nation's largest and wealthiest domestic airline and which dominates Love Field, we would have no choice but to respond decisively.

While neither American nor American Eagle can say for sure what specific actions would be taken should the Wright Amendment be repealed or altered, the Eclat study does suggest one highly plausible scenario."
To view the American Airlines-Eclat Consulting Webcast or see the Eclat Study go to: http://www.videonewswire.com/event.asp?id=30684 .
About Eclat Consulting

Eclat Consulting, located in Reston, Virginia, specializes in the economics of commercial aviation. The firm advises the full spectrum of aviation clients, including airlines, airports, investors, governments and aerospace/aeronautics corporations. Eclat has completed numerous assignments that rely on its knowledge of airline network planning issues and the competitive aviation market.

About American Airlines American Airlines is the world's largest airline. American, American Eagle and the AmericanConnection(R) regional airlines serve more than 250 cities in over 40 countries with more than 3,800 daily flights. The combined network fleet numbers more than 1,000 aircraft. American's award-winning Web site, AA.com, provides users with easy access to check and book fares, plus personalized news, information and travel offers. American Airlines is a founding member of the oneworld Alliance, which brings together some of the best and biggest names in the airline business, enabling them to offer their customers more services and benefits than any airline can provide on its own. Together, its members serve more than 600 destinations in over 135 countries and territories. American Airlines, Inc. and American Eagle are subsidiaries of AMR Corporation AMR.
 
This the AMR study that I mentioned

You think it's tilted towards AMRs point of view.:D LUV has a tough battle ahead as lobbyists, politicians, and the various entities with everything to gain in this battle will decide the outcome. Tough one to call, although I believe it will be a give and take with WN getting some long haul markets at DAL in exchange for opening double the number of flts at D/FW. The proprietary field for WN will never fly.:beer:
 
Let me get this right...

Dangerkitty said:
New Comprehensive Study Shows Opening Dallas Love Field to Long-Haul Flying Would Have Serious Consequences

Eclat Consulting ....commissioned by American Airlines.

if the Wright Amendment is repealed

"Fewer connecting flights at DFW

fewer connecting passengers

to combine with local travelers on routes that need such a strong mix in order to be financially viable. We believe flights from DFW to London; Paris; Zurich; Los Cabos; Puerto Vallarta; Leon, Mexico; Guadalajara; Cozumel; Belize City; San Jose, Costa Rica; Caracas; Lima; Sao Paulo; Santiago, Chile; and Buenos Aires will be affected."

"Those consequences simply can't be avoided by American sitting back and doing nothing.

Given the disproportionate economic power and resources of Southwest Airlines, which is now the nation's largest and wealthiest domestic airline and which dominates Love Field, we would have no choice but to respond decisively.


About American Airlines American Airlines is the world's largest airline. AMR.

Sorry, but this is a pretty weak argument. In essence it says WN should not prevail because it would impact the worlds largest airline. Farce.
 
Yeah, the study should be entitled, "Opening Dallas Love Field to Long-Haul Flying Would have Serious Consequences on the Ability of American Airlines To Gouge Consumers"
 
Oh no! The return of a free market economy to DAL? Whatever are we to do? This seems to be one of the most lame PR moves that AA has put out in while; what a lamea$$ study.
 
"American and the other airlines currently operating out of DFW would be forced to move a large number of flights from DFW Airport to Love Field to compete with Southwest Airlines if the Wright Amendment is repealed,"

Just like Continental has to do at Houston Hobby....
 
Consultants will say whatever you want so long as you are signing their fat checks.... Houston Hobby is a great example that nobody in Dallas/Ft. Worth wants to mention. AA knows it will get its a$$ kicked because it just can't compete on the low-cost side.

Dallas/Ft. Worth consumers are the ones who will lose if things don't change - who cares about how it will impact people in North Dakota. I can't see how Southwest's increase in service out of Hobby has crippled people in Montana... It's all consulting SPIN...
 
"American and the other airlines currently operating out of DFW would be forced to move a large number of flights from DFW Airport to Love Field to compete with Southwest Airlines if the Wright Amendment is repealed," said William S. Swelbar, president and managing partner of Eclat Consulting. "If that happens, 'hub degradation' would take place, making marginal routes unprofitable. Inevitably, those unprofitable routes would be eliminated."

If the DFW hub shrinks there would be fewer connecting flights, resulting in reduced service to smaller communities that rely on American's extensive route network as their link to the world. The study also suggests that additional flight reductions likely will come from Southwest as it accelerates its historic trend of reducing service to smaller cities in Texas and surrounding states and begins long-haul flying from Love Field.


What a bunch of baloney. But I actually hope the political elite buys it. I would love the HQ to move to San Antonio. You can't say we didn't warn them.
 
The only leg AA and DFW have to stand on is whether or not the community wants to force all airlines from flying out of DFW in order to pay for its initial construction and continuing debt servicing. If that is their argument, and Congress and the local yocals agree, I can't argue, as airports are large public works projects and need to be paid for in a reasonable manner and timeframe. Now, if we are going with the increased competition for AA, the deterioration of their own chosen hub and spoke model, a reduction in service on unprofitable routes, and other anti-free market arguments, then that is another ball game.

And how come AA was allowed to cut back so darn much in STL if that obviously had to hurt the entire midwest economy immensely, assuming their own DFW analogy/study is accurate? Oh thats right, they felt like it, and I guess hosed over all those places they now either don't serve or serve a lot less. I won't be surprised if the Wright Amendment doesn't go away, but regardless, lets use some ethical and legitimate arguments to support our sides.
 
Jim Smyth said:
Oh my, this would mean they would have to compete?

If competition is your argument then why doesn't SWA just come to DFW. DFW has been begging for SWA to launch service there.
 
Since I am furloughed from AA and have moved to greener pastures I really could care less what happens to the whole Wright Amendment thing.

I just find it incredibly hypocritical that SWA now wants the Wright Amendment repealed when 30 years ago Herb himself signed off on the deal. The whole Wright Amendment was put into place to appease SWA so that they wouldn't have to move to DFW like everyone else. Now they are crying foul.
 
Dangerkitty said:
If competition is your argument then why doesn't SWA just come to DFW. DFW has been begging for SWA to launch service there.

Why would we want to move to DFW! I cant think of any good reasons but hey, who am I.

This is America isnt it? Americans pride themselves on competition. Cant fly more than one state away from Dallas Love Field? WTF! This is a rediculous rule from day 1 meant to stop the competition and they are still at it today.
 
Jim Smyth said:
Why would we want to move to DFW! I cant think of any good reasons but hey, who am I.

This is America isnt it? Americans pride themselves on competition. Cant fly more than one state away from Dallas Love Field? WTF! This is a rediculous rule from day 1 meant to stop the competition and they are still at it today.

It's obvious you dont know the history of the Wright Amendment do you?
 
It's a simple fact. If AA loses flying out of DFW, then there will be service cuts. The first cities to be cut will probably be those "feed" cities that would likely have no service otherwise such as Waco, Victoria, etc.

This is the decision that will have to be made- cheap fares between big cities only (i.e. point-to-point) or do we accept some of the inefficiencies of hub-and-spoke in order to provide an economic stimulus to small town America that would otherwise not have airline service and therefore become less desirable as a business location?
 
Nope, dont know a thing about it...................

Lets put the shoe on the other foot and say that tomorrow that no Airlines can take off out of DFW and fly more than 1 state away for say the next 30 years. Does this seem like a fair thing to do? Doesnt make much sense to me and I dont think AA would be standing still on the sidelines if that was the case.

Personally I kinda like it the way it is. Love field is a nice place to fly in and out of rather than going into the unprofitable meat grinders.
 
Where was fair when DFW was built and American, Braniff, Continental, Delta, Eastern, Frontier and the others that were forced to move there from Love on their own dime? I worked for a small carrier that fed mostly Delta, and it was a pain in the arse logisticly to transfer everything over there.
 
Miscellaneous Ramblings, with apologies to Tony Hogg

pianoman said:
It's a simple fact. If AA loses flying out of DFW, then there will be service cuts. The first cities to be cut will probably be those "feed" cities that would likely have no service otherwise such as Waco, Victoria, etc.

This is the decision that will have to be made- cheap fares between big cities only (i.e. point-to-point) or do we accept some of the inefficiencies of hub-and-spoke in order to provide an economic stimulus to small town America that would otherwise not have airline service and therefore become less desirable as a business location?
If you take this argument and apply it to, let's say, Chicago, one would conclude that feeder cities into ORD are underserved because of Midway. Is this a proper conclusion?

What about Los Angeles? Are there cities near to LAX, that are underserved because of the presence of competing airports?

Boston Logan?

Miami International?

Houston Bush?

Next question. Should the citizens at large, subsidize citizens of smaller communities? Obviously Waco can't generate enough originating traffic to justify service between itself and Chicago; should the citizens of Dallas be forced to pay so that BettyBaylor can shop on Michigan Ave?

For myself, I believe that the EAS program is/was justified. But it was a national program wherein each citizen of these United States paid so that said small markets could maintain air service. In case of DFW vs LUV, it is the Metroplex air travelers who are being forced to pay, with high fares, for BettyBaylors shopping trip. I find that objectionable. FWIW, Waco happens to be very near to my home, I occasionally commute from there but am willing to stick to my principles in this matter.

Maybe you should ask yourself this; Why would ACT lost service if the
WA is repealed? The AA business model is based upon feeding the hub, so why would they abandon their model just because they lost some metroplex customers? Is AA going to completely abandon the "feed the hub" model?

I think that AA's current "we're going to cut service to Waco if the WA goes down" stance is an admission that the hub passengers have been subsidizing the feeder towns, AND that they are screwing the metroplex market to do so.

I'm actually very surprised that AA has entered the fight. I really gave them credit for being smarter than they have shown these last few months.

IF AA MANAGES TO DEFEAT SWA'S ATTEMPT TO REPEAL WRIGHT, IT WILL BACKFIRE ON AA.

If I were AA, I'd be working to convince Waco, and every other DFW feeder city, that I was their only friend. I'd be wining and dining their corporations, chambers of commerce, etc, NOT in an attempt to scare them into politcal support, but in an attempt to gain their business.

Here's the bottom line to me, AA wants to have their cake and eat it too (that old saying really doesn't make, sense, but we all know what it means:))

I've said before, If I were Arpey, I'd be using this to twist DFW's arm into lower fees, not trying to enable DFW to continue its gluttony of tax money.

enigma
 
I normally would never defend a morally bankrupt company like AA, but I just can't agree with SWA on this one. The Wright Amendmend has been a around since SWA was started it is status quo. All decisiosn made by AA and SWA since then have been made with it in mind. SWA knew about the the WA when it built it's new terminals, training center, etc. What SWA is doing now is asking the government to legislate a competitive advantage for themselves. The purpose of the government is not to help one company over another especially in such a competitive industry period. (Please no comments on the bankrupcy courts, we all no that system is broke)
 
SWA is not asking the government to legislate a competitive advantage for themselves. We are now asking the government to remove a Congressional Anti-competitive Amendment from the books in DC. Kind of like the Bill of Rights being added after the Constitution was written. We are trying to change things for the better. The only legitimate arguments I see, and they are truly legitimate, is the fact that the other carriers were forced to up and move (pseudo forced, as I'm sure they actually had a major part in the design and expenditures of DFW), and hence they had expenses to deal with and have based their business plan on that fact since its opening.

But as others have alluded to, why is this not a problem in LAX (Burbank, Orange County, Long Beach, Ontario) or ORD (MDW), or Houston with Hobby and Intergalactic? Why didn't DFW FORCE DAL to keep hundreds of flights there and not pull out? The market per chance? Then let the market determine this situation. As a SWA employee I want it to go away because it would be good for business and I think it is quite unfair. As a consumer who might live in the metroplex, I would be livid that my choices were extremely limited, and hence my costs much higher than need be. Econ 101.

And if the purpose of the government is not to help one company over another, especially in such a competitive industry, how can keeping an anti-competitive Congressional restriction on a single airport in the US do anything but specifically help SWA's competition? They should have bulldozed it like Stapleton in Denver if they really wanted Love closed off.
 
At 41:58 the Will Rix AA spokesman says:

There were just two conditions in which we (AA) want you (EClat) to operate under when doing this study. First of all, we want to make sure you take a look at this and you agree with us in principle as to what our advocacy is and secondly....ah ECAS said they would do....in fact they did agree with us...secondly we're not going to do your analysis for you...we're not going to give you proprietary material, we're not going to tell you how we think about it, we want you to take an independent, objective look at it based upon the tremendous number of years you have and then do an analysis and that is exactly what has happened..." 42.34 tape stop

At 44:54 with the first question from the crowd the very question was asked in regards to how much did the study cost & why should it be considered valid if the author had to agree with the client (AA) in advance to the study. As Risk states the bet was whether this would be the first question vs. on the content of the study but it is a valid question. Judge for yourself by his answer if you believe he answered it properly. :rolleyes: It is a valid question but the material presented has some very interesting data.

I won't disagree with the assumptions (yet) but what is very interesting to see if the gloom & doom presented that small cities will lose service leaves out one very glaring issue....no where in the study is the assumption that another carrier, regional or major or new startup will fill the void. Historically where there is demand for service then the void is filled with some sort of air travel either generated by the demand or by subsidies from the government via the EAS system from the government. Will every regional out there pass on what Eagle decides to pass up on? If AA starts to lose money at Love will they remain there? No discussion about an average ticket fare is mentioned.

Arpey back in Oct '04 when this issue first came up stated then that AA would move to Love but admitted then "AA would lose money at it." The cost of fuel to AA currently isn't $65 a barrel but well over $100 due to the difference between what a price of oil costs and what distilled jet fuel costs...the dreaded "crack spread" is hurting them & many others....it is hard to believe they would move to MDW to compete with us so why does that business model make sense in Dallas? If AA is threatening to jump off a cliff should that mean nothing should change to make sure they don't commit a financial hari-kari? Threatening to make a bad business decision doesn't appear to me to justify keeping high fares in price.

Why was there no study to show why AA couldn't compete from DFW? What would happen if they moved out to Alliance? I bet the same thing would occur but why do that? Why not remain where they are & then do a study based upon what they could charge?

I respect AA for making a valiant effort at putting forth their reasons. There is much merit behind this study than the last one but I'll be looking for more behind it as I look at it. Folks of sane minds will come to different conclusions and whether it pushes anyone closer ot the other side I don't know but the debate is good....to those who are engaging in healthy debate, please continue, my initial review will continue through the Q&A....cheers,
 
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flyinglow said:
(Please no comments on the bankrupcy courts, we all no that system is broke)

This is one of the bigger factors driving this WA issue IMO. Its been dormant for 30 years until recently. GK has to produce profits for the shareholders. So since 50 percent of the airlines arnt paying there 100 percent of the bills we have to find more ways to return shareholder value or whats the use.
 
Because we did not agree to it...

Dangerkitty said:
Since I am furloughed from AA and have moved to greener pastures I really could care less what happens to the whole Wright Amendment thing.

I just find it incredibly hypocritical that SWA now wants the Wright Amendment repealed when 30 years ago Herb himself signed off on the deal. The whole Wright Amendment was put into place to appease SWA so that they wouldn't have to move to DFW like everyone else. Now they are crying foul.

Again, spin on your part. We did not agree to it, we did not start it, we did not ask for it, we did not sign anything saying we would live with it, we were forced to operate under it. We don't want it any more.
 
Screw the whole thing. Let the chips fall where they may. Screw the small cities in Texas, and screw the taxpayers in Dallas.
 
Draginass said:
Screw the whole thing. Let the chips fall where they may. Screw the small cities in Texas, and screw the taxpayers in Dallas.


This threat to cut service to small cities is not relevant to the WA. AA will still be able to get the small town passenger where he or she wants to go, if they deem it in their best interest to do so. AA needs to fill those MD 80's. If AA wants to cut service to smaller cities they will do so with or without the WA. But, knowing AA, they will say service was cut and furloughes at Eagle were due to threat of WA repeal.

If SWA cut fares a few dollars for ticket to LA from Dallas you are telling me AA will lose all their passengers?? Right.....

Why aren't we talking about the huge benefit AA got when DAL pulled out of DFW?? AA's profit potential soared when that happened. And, as was discussed, SWA's traffic has not really grown in Texas. AA is DOMINANT in Texas. AA is crying wolf as they eat everything out of the picnic basket. AA loves their competitive advantage and will do anything they can to leverage it, including lying about it.
 
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I agree with others on this board who bring up examples like Houston Hobby, Chicago Midway and Long Beach/Burbank/SNA. Can you quantify the detrimental impact to ORD from SWA's operation out of MDW? You can demonstrate that the consumer wins with more choice. DFW's and AA's arguments are laughable and contrary to anti-regulation spirit of American capitalism... Why constrain free choice?
 
Southwest Airlines spokeswoman Beth Harbin said that the study is nothing new.

"It's along the lines of what they have always said," Harbin said. "It's really less of a study and more of a bold threat that they're making to their smallest markets, which is unfortunate."

Southwest said the study has not swayed its position.
" ... D/FW is best for American and Southwest is best for Love Field ... We're two different animals and we have two very different locations for a good reason," Harbin said. "We thank them (American) for their advice. If we sought their advice for all of our operational moves, we'd certainly go out of business."
 
Dangerkitty said:
If competition is your argument then why doesn't SWA just come to DFW. DFW has been begging for SWA to launch service there.

Lots of airports are begging for SWA. They only go to the ones that fit their business plan. DFW doesn't fit into their business plan.
 

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