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

[kelbill]

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.

 

[chase]

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. 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,

 

[Jim Smyth]

(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.

 

[scoreboard]

Because we did not agree to it...

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.

 

[ivauir]

The Wright Amendmend has been a around since SWA was started ...

Not true.

 

[Draginass]

Screw the whole thing. Let the chips fall where they may. Screw the small cities in Texas, and screw the taxpayers in Dallas.

 

[FlyBoeingJets]

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.

 

[On Your Six]

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?

 

[FlyBoeingJets]

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."

 

[hoover]

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.