FACTS ABOUT THE WRIGHT AMENDMENT
(released to the press)
After years of so-called “passionate neutrality,†during which Southwest Airlines exploited the unique advantages bestowed upon it by the Wright Amendment, the airline now claims that the amendment is unfair. Rather than compete with everyone else at DFW Airport, Southwest wants Congress to allow it to fly from Love Field to markets throughout the United States. Southwest is trying to legislate a competitive advantage.
WHAT IS THE WRIGHT AMENDMENT?
The Wright Amendment was a legislative compromise that allowed Southwest the ability to expand service from Dallas Love Field to four neighboring states while preserving financial and operational commitments made to DFW Airport. The agreement was reached between Southwest Airlines, DFW Airport and the cities of Dallas and Fort Worth and signed into law in 1979.
WHY WAS IT NEEDED?
In the late 1960s, the U.S. government ordered the cities of Dallas and Fort Worth to build a single airport to better serve the area’s aviation needs. The federal agency regulating commercial air service declared that competition among multiple airports was harmful and not in the best long-term interests of the region. The agency threatened to withhold all airport funding to the respective airports in Dallas and Fort Worth if they did not voluntarily agree to build a single airport. The two cities agreed that it was in everyone’s interest to combine resources to support a single regional airport, instead of two competing local ones. At the request of the federal government and the local communities, all the airlines serving the local airports agreed to move their operations to the new DFW facilities, and pledged to guarantee the bonds issued to finance the airport. The agreement was based on the promise to close both local airports forever.
Southwest did not sign up to move to DFW because it didn’t exist when the bond ordinances were enacted. It started service after construction began on DFW, operating as an airline offering service within the state of Texas, with a very small operation at Love Field. When it came time for all the carriers to move to the new airport, Southwest refused to move and sued to stay. It was a perfect situation for Southwest because all the other carriers had legally committed to move, leaving them with an ironclad monopoly at Love, if they could prevail in court.
Unfortunately, the courts allowed Southwest to defy the intent of all the elected officials in North Texas the Love Field monopoly granted to Southwest by the courts was the key to its initial survival and ultimate success.
After 1978, when Southwest was granted authority by the Civil Aeronautics Board to provide interstate service, it sought authority to fly from Love Field to New Orleans. This precipitated more litigation and more uncertainty in North Texas. Both the cities of Dallas and Fort Worth still wanted Love Field closed.
At a bare minimum, they wanted it restricted to very short-haul traffic. With more litigation on the way, Congressman Jim Wright, who was then House Majority Leader, stepped in to broker an agreement. This was the birth of the Wright Amendment.
The amendment itself, allowing flights from Love Field to points within Texas and the four contiguous states, was actually drafted by Jim Wright and Herb Kelleher of Southwest. The Wright Amendment not only allowed Love Field to remain open – contrary to the government’s and the communities’ original intention – it allowed Southwest to add flights beyond Texas to four adjacent states.
For the past quarter century, as dozens of carriers fought it out at DFW, Southwest has had Love Field pretty much to itself. Rather than compete and fly wherever it chose from DFW, Southwest chose, and continues to choose, to restrict its Dallas flying to Love Field, knowing the airport’s limitations and advantages better than anyone. Even the most casual observer of the airline industry knows that Southwest has been able to exploit its advantage while growing itself into a large and very successful airline.
Southwest claims the Wright Amendment is unfair, and it is. It is absolutely unfair to American and the other airlines that have been competing at DFW all these years. However, repealing Wright at this point would be unfair to everyone, since it would shift airline competition from DFW’s level playing field to Love Field, where Southwest’s structural advantages are enormous. It would also be incredibly unfair to change the rules of the game when DFW, American, other airlines and the community at large have invested billions of dollars under the assumption that the law Southwest helped write would remain in effect.
WHY SHOULD I CARE?
Repealing the Wright Amendment would be bad – not just for American Airlines and DFW Airport – but for the entire North Texas community, Dallas included. No reasonable person can dispute the fact that if Love Field expands, that expansion will come at DFW’s expense. Given Love’s closer proximity to lots of people in Dallas, American and other airlines will have no choice but to divert a significant number of flights from DFW to Love in order to protect share in many markets.
With reduced passenger volume at DFW, American will
have to scale back or eliminate additional destinations and frequencies made non-viable by the loss of connecting traffic from the flights shifted to
Love Field. Today, the citizens of North Texas are able to fly many places nonstop – in the United States and all over the world – thanks to the critical mass of connecting traffic created by the DFW hub. A city with a large hub inevitably gets a lot more service than it would attract independently.
In fact, the desirability of hosting a large hub is one reason why many communities all over the country have gone to great lengths to ensure that the expensive new airports they build are not undermined by the airports they replace.
DFW is the engine that drives the local economy, attracting billions of dollars in economic activity that might otherwise flow to a rival community. In fact, DFW’s annual economic impact on the North Texas economy is estimated at $14 billion. Nearly 300,000 jobs are supported either directly or indirectly by the airport. Moreover, access to an international gateway is often a determining factor as companies decide where to locate their headquarters and other facilities. To purposefully weaken DFW would be akin to unilaterally disarming in the fight to attract companies, people and money to Dallas.
LOWER FARES?
This debate isn’t about low fares. As most frequent travelers know, there is no shortage of low fares or low-cost competitors at DFW Airport. Air Tran, America West and Frontier Airlines already have flights from DFW. Fares have fallen quite dramatically during the past few years. And of course, nothing prevents Southwest from offering whatever fares it would like from DFW anytime they like.
EFFECT ON THE LOVE FIELD MASTER PLAN
In addition to other impacts, repealing or amending the Wright Amendment would likely lead to an overturn of the Love Field Master Plan, an agreement between the city of Dallas and local neighborhoods and businesses surrounding Love Field that limits the number of gates at the airport to 32. More gates would have to be added to accommodate other airlines eager to fly from Love Field. It’s estimated that the number of daily flights from Love Field could more than triple, leading to an increase in noise, air pollution, street traffic and safety concerns for an airport that is surrounded by densely-populated communities. Service from Love Field to cities outside of the states Southwest is currently able to serve would mean longer flights and bigger planes to serve those cities – meaning more noise associated with flying those larger planes. That would not be good news for the local schools, businesses and homeowners.
IS THERE A BETTER SOLUTION?
Southwest could immediately begin service from DFW Airport today and offer flights to dozens of markets. DFW has plenty of gates ready and waiting to be put to use. In fact, DFW Airport has already offered a big incentive package to Southwest that could help the carrier start operating at DFW, yet they have repeatedly said they will not consider moving. At the same time, Southwest has also acknowledged publicly that there are no real constraints that keep it from moving to DFW – they just don’t want to compete against other airlines from DFW Airport.
The truth is that Southwest could operate effectively at DFW. DFW Airport already outperforms many other airports – including those where Southwest already operates – in important areas for customers, such as on-time arrivals. In addition, Southwest already successfully operates out of multiple airports in a single area. Examples include the Los Angeles basin, the San Francisco Bay area and Southern Florida. Given their successes there, claims that DFW Airport doesn’t fit their business model just aren’t credible.
THE BOTTOM LINE
Almost nobody but Southwest Airlines would benefit if the Wright amendment were repealed or weakened. With its current business model, Southwest has the financial muscle to compete where ever and whenever they want. From San Jose to Austin to Nashville, American and Southwest compete head-to-head and offer competitive low fares in dozens of markets across the country.
The plain fact is that Southwest is trying, once again, to pass legislation that will benefit only itself. The irony is that it doesn’t need this sort of government assistance. Southwest is the industry’s most profitable carrier, and there is no airline better positioned to take full advantage of the enormous investment North Texas has made in DFW Airport. Apparently, Southwest is unwilling to compete on a level playing field in North Texas. What it is willing to do is damage its North Texas home to extend an artificial advantage it didn’t earn, and doesn’t need. It makes no sense for Congress to hand it an enormous and unprecedented economic windfall.
(released to the press)
After years of so-called “passionate neutrality,†during which Southwest Airlines exploited the unique advantages bestowed upon it by the Wright Amendment, the airline now claims that the amendment is unfair. Rather than compete with everyone else at DFW Airport, Southwest wants Congress to allow it to fly from Love Field to markets throughout the United States. Southwest is trying to legislate a competitive advantage.
WHAT IS THE WRIGHT AMENDMENT?
The Wright Amendment was a legislative compromise that allowed Southwest the ability to expand service from Dallas Love Field to four neighboring states while preserving financial and operational commitments made to DFW Airport. The agreement was reached between Southwest Airlines, DFW Airport and the cities of Dallas and Fort Worth and signed into law in 1979.
WHY WAS IT NEEDED?
In the late 1960s, the U.S. government ordered the cities of Dallas and Fort Worth to build a single airport to better serve the area’s aviation needs. The federal agency regulating commercial air service declared that competition among multiple airports was harmful and not in the best long-term interests of the region. The agency threatened to withhold all airport funding to the respective airports in Dallas and Fort Worth if they did not voluntarily agree to build a single airport. The two cities agreed that it was in everyone’s interest to combine resources to support a single regional airport, instead of two competing local ones. At the request of the federal government and the local communities, all the airlines serving the local airports agreed to move their operations to the new DFW facilities, and pledged to guarantee the bonds issued to finance the airport. The agreement was based on the promise to close both local airports forever.
Southwest did not sign up to move to DFW because it didn’t exist when the bond ordinances were enacted. It started service after construction began on DFW, operating as an airline offering service within the state of Texas, with a very small operation at Love Field. When it came time for all the carriers to move to the new airport, Southwest refused to move and sued to stay. It was a perfect situation for Southwest because all the other carriers had legally committed to move, leaving them with an ironclad monopoly at Love, if they could prevail in court.
Unfortunately, the courts allowed Southwest to defy the intent of all the elected officials in North Texas the Love Field monopoly granted to Southwest by the courts was the key to its initial survival and ultimate success.
After 1978, when Southwest was granted authority by the Civil Aeronautics Board to provide interstate service, it sought authority to fly from Love Field to New Orleans. This precipitated more litigation and more uncertainty in North Texas. Both the cities of Dallas and Fort Worth still wanted Love Field closed.
At a bare minimum, they wanted it restricted to very short-haul traffic. With more litigation on the way, Congressman Jim Wright, who was then House Majority Leader, stepped in to broker an agreement. This was the birth of the Wright Amendment.
The amendment itself, allowing flights from Love Field to points within Texas and the four contiguous states, was actually drafted by Jim Wright and Herb Kelleher of Southwest. The Wright Amendment not only allowed Love Field to remain open – contrary to the government’s and the communities’ original intention – it allowed Southwest to add flights beyond Texas to four adjacent states.
For the past quarter century, as dozens of carriers fought it out at DFW, Southwest has had Love Field pretty much to itself. Rather than compete and fly wherever it chose from DFW, Southwest chose, and continues to choose, to restrict its Dallas flying to Love Field, knowing the airport’s limitations and advantages better than anyone. Even the most casual observer of the airline industry knows that Southwest has been able to exploit its advantage while growing itself into a large and very successful airline.
Southwest claims the Wright Amendment is unfair, and it is. It is absolutely unfair to American and the other airlines that have been competing at DFW all these years. However, repealing Wright at this point would be unfair to everyone, since it would shift airline competition from DFW’s level playing field to Love Field, where Southwest’s structural advantages are enormous. It would also be incredibly unfair to change the rules of the game when DFW, American, other airlines and the community at large have invested billions of dollars under the assumption that the law Southwest helped write would remain in effect.
WHY SHOULD I CARE?
Repealing the Wright Amendment would be bad – not just for American Airlines and DFW Airport – but for the entire North Texas community, Dallas included. No reasonable person can dispute the fact that if Love Field expands, that expansion will come at DFW’s expense. Given Love’s closer proximity to lots of people in Dallas, American and other airlines will have no choice but to divert a significant number of flights from DFW to Love in order to protect share in many markets.
With reduced passenger volume at DFW, American will
have to scale back or eliminate additional destinations and frequencies made non-viable by the loss of connecting traffic from the flights shifted to
Love Field. Today, the citizens of North Texas are able to fly many places nonstop – in the United States and all over the world – thanks to the critical mass of connecting traffic created by the DFW hub. A city with a large hub inevitably gets a lot more service than it would attract independently.
In fact, the desirability of hosting a large hub is one reason why many communities all over the country have gone to great lengths to ensure that the expensive new airports they build are not undermined by the airports they replace.
DFW is the engine that drives the local economy, attracting billions of dollars in economic activity that might otherwise flow to a rival community. In fact, DFW’s annual economic impact on the North Texas economy is estimated at $14 billion. Nearly 300,000 jobs are supported either directly or indirectly by the airport. Moreover, access to an international gateway is often a determining factor as companies decide where to locate their headquarters and other facilities. To purposefully weaken DFW would be akin to unilaterally disarming in the fight to attract companies, people and money to Dallas.
LOWER FARES?
This debate isn’t about low fares. As most frequent travelers know, there is no shortage of low fares or low-cost competitors at DFW Airport. Air Tran, America West and Frontier Airlines already have flights from DFW. Fares have fallen quite dramatically during the past few years. And of course, nothing prevents Southwest from offering whatever fares it would like from DFW anytime they like.
EFFECT ON THE LOVE FIELD MASTER PLAN
In addition to other impacts, repealing or amending the Wright Amendment would likely lead to an overturn of the Love Field Master Plan, an agreement between the city of Dallas and local neighborhoods and businesses surrounding Love Field that limits the number of gates at the airport to 32. More gates would have to be added to accommodate other airlines eager to fly from Love Field. It’s estimated that the number of daily flights from Love Field could more than triple, leading to an increase in noise, air pollution, street traffic and safety concerns for an airport that is surrounded by densely-populated communities. Service from Love Field to cities outside of the states Southwest is currently able to serve would mean longer flights and bigger planes to serve those cities – meaning more noise associated with flying those larger planes. That would not be good news for the local schools, businesses and homeowners.
IS THERE A BETTER SOLUTION?
Southwest could immediately begin service from DFW Airport today and offer flights to dozens of markets. DFW has plenty of gates ready and waiting to be put to use. In fact, DFW Airport has already offered a big incentive package to Southwest that could help the carrier start operating at DFW, yet they have repeatedly said they will not consider moving. At the same time, Southwest has also acknowledged publicly that there are no real constraints that keep it from moving to DFW – they just don’t want to compete against other airlines from DFW Airport.
The truth is that Southwest could operate effectively at DFW. DFW Airport already outperforms many other airports – including those where Southwest already operates – in important areas for customers, such as on-time arrivals. In addition, Southwest already successfully operates out of multiple airports in a single area. Examples include the Los Angeles basin, the San Francisco Bay area and Southern Florida. Given their successes there, claims that DFW Airport doesn’t fit their business model just aren’t credible.
THE BOTTOM LINE
Almost nobody but Southwest Airlines would benefit if the Wright amendment were repealed or weakened. With its current business model, Southwest has the financial muscle to compete where ever and whenever they want. From San Jose to Austin to Nashville, American and Southwest compete head-to-head and offer competitive low fares in dozens of markets across the country.
The plain fact is that Southwest is trying, once again, to pass legislation that will benefit only itself. The irony is that it doesn’t need this sort of government assistance. Southwest is the industry’s most profitable carrier, and there is no airline better positioned to take full advantage of the enormous investment North Texas has made in DFW Airport. Apparently, Southwest is unwilling to compete on a level playing field in North Texas. What it is willing to do is damage its North Texas home to extend an artificial advantage it didn’t earn, and doesn’t need. It makes no sense for Congress to hand it an enormous and unprecedented economic windfall.
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