corl737 said:
Why the Wright Amendment was created is 100% irrelevant. The ONLY consideration should be whether or not it is reasonable to have the law continue to exist. We live in a dynamic country. Situations change. If it makes sense to keep the Wright Amendment, then keep it. If not, get rid of it. This applies to every law on every book in the nation. To criticize today's airline passengers for not knowing the WA history is ignoring the reality that no one cares why it was created. They only know that it allows DFW's carriers to charge premium fares to non-WA markets at their expense.
You have a say in the process as a voter. The issue will boil down to whether or not the politicians listen to the majority of their constituents or the powerful (aka $) AA/DFW lobbyists.
A lot of people aren't even aware that Southwest has assigned seating. I kid you not; you are assuming people (mostly voters) know 1,000 times as much as we do on this board. This is why so many letters to the editor deride Congress for "regulating" Southwest or "keeping" Southwest out of DFW. They are talking out their butts.
Geez, get off your paranoid horse. No one want to run you out of business. SWA doesn't subscribe to predatory practices. They simply want to do what every other company aspires to -- increase their revenues at the lowest possible cost. In the Dallas market it is much cheaper to persue a Wright Amendment repeal than move to the high-cost/high-congestion airport. It's called business.
As for "running out of gas," the Dallas market has been stagnant for a decade. All of SWA's expansion is outside Texas. Pittsburgh has been phenomenal and is preparing for a doubling of flight operations this fall. Philadelphia, similarly, is huge! Dallas, meanwhile, has nearly dropped off of the list top 10 revenue generating cities for SWA.
Fly out of DFW, and Dallas will be back in the top 10 whenever you're ready.
By the way, if SWA really wanted to put AA (or any other domestic airline) out of business all they'd have to do is BUY the fricking company. The entire market cap of the other major airlines is so low and SWA's cash balance is so high that it would be quite easy to acquire a controlling interest in any one (or more) of them. (Remember that fact the next time someone says "SWA should move to DFW and compete with the big dogs.")
Well, not quite. First of all, there are anti-trust concerns. You can't buy out a competitor just to dismantle it (hmm... that doesn't explain AA buying QQ and several other examples), but theoretically that is not allowed, and the DOJ would pay a lot more attention if Southwest tried to buy AA just to dismantle it.
Secondly, it's not as cheap as just market cap. The market cap is based on the current trading price. If you want to buy the company, the price will go up. Southwest could probably still afford it, though.
I agree with your analysis. AA doesn't currently split their operations because the cost to do so is enormous. This is the same reason SWA doesn't want to split their operations. The incremental revenue gain with a DFW presence doesn't provide enough revenue to offset the cost of the split operation. Repeal the Wright Amendment and AA's traffic will GROW at DFW because more people will be flying out of that airport as well!
But Southwest doesn't have hubs. It's all local, with the opportunity for some connections. AA would have a hard time splitting up DFW into DFW and DAL because the connections plus the local traffic would not support DFW. Southwest, on the other hand, could fly long haul only out of DFW and keep today's schedule out of DAL. Why would anyone need to stop in Dallas from one place to another (aside from city pairs like AMA/LBB and stuff like that, but those are within the Wright Amendment anyway).
AA's traffic will grow at DFW if Southwest flies out of DFW. For the 50th time, it is not the fault of the Wright Amendment that Southwest does not fly out of DFW. It is their *choice*. Contrary to popular belief, TX 161 or I-35E is not an international border where regulations come into play.
When I first moved to Dallas (actually, Tarrant County), that is when I discovered that Southwest flew out of Love Field while all the other airlines flew out of DFW. It was a while before I realized the reason. Initially I thought there was some law that prevented Southwest from flying out of DFW. It never made any sense to me.
Again, no one is asking AA to move their operations to Love. Their myopic focus on "market share" instead of "revenue" is why they have earned the title "Prince of the Predators." If AA management would spend more time on their financials instead of stroking their egos they'd be fine.
Physically, yes, DFW can hold SWA. Financially, it can't. Businesses run on the balance sheet.
[Thanks for a nice discussion. I appreciate your views though I obviously don't agree with them all!]
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In the airline business, market share = revenue. The sunk costs of running an airline, especially a major airline, require that revenue/market share be maximized at all times.