Justice department questions Wright deal

[TWU informer]

Justice department questions Wright deal, memo saysBy SUZANNE GAMBOA
Associated Press Writer
WASHINGTON - An aviation agreement reached by Texas officials and two major airlines to eventually lift flight restrictions at Dallas Love Field would violate federal antitrust laws and should not be approved, the Justice Department said in a memo.

The agency's antitrust division told lawmakers restrictions in the local agreement to repeal the Wright Amendment in eight years "would be hard-core, per se violations of the Sherman Act," according to a copy of the memo obtained Tuesday by The Associated Press.

The agency's concerns refer to an agreement among Texas officials to eventually repeal the so-called Wright Amendment and legislation sponsored by Sen. Kay Bailey Hutchison, R-Texas, containing the agreement.

Forged by officials from Dallas, Fort Worth, Southwest Airlines Co., American Airlines and Dallas-Fort Worth International Airport, the compromise also calls for reducing gates at Love Field in Dallas from 32 to 20. Other airlines have objected to the gate reduction, saying it limits their ability to establish service there.

The 1979 law, named for its author, former House Speaker Jim Wright of Fort Worth, prohibits flights by aircraft with more than 56 seats between Dallas and any points outside Texas, Kansas, Missouri, New Mexico, Oklahoma, Arkansas, Louisiana, Mississippi and Alabama.

A spokeswoman at the Justice Department was not immediately available for comment Tuesday.

The Justice Department said the gates to be torn down could be used by other airlines to enter and compete there. Razing them "is the very kind of collusive output reduction that the antitrust laws are designed to prevent."

The department said the parties to the local agreement are aware of the antitrust violations because they have sought blanket immunity for the agreement, instead of including an "antitrust savings clause," which the agency said is commonly done to preserve competition under antitrust laws.

American Airlines, based in Fort Worth, disputes the Justice Department's view of the antitrust implications, a spokesman said.

"We simply disagree with the conclusions of the Justice Department, and we believe that so do the cities of Dallas and Fort Worth and the North Texas congressional delegation," said American spokesman Tim Wagner.

Officials with Southwest and the cities of Dallas and Fort Worth did not immediately return calls for comment.

Southwest is limited to 16 gates in the deal, which the Justice Department said is a hard cap on Southwest service from Dallas for more than eight years and would not allow Southwest to expand its operations once the Wright Amendment is lifted without leaving cities it now serves or facing penalties for starting up service at another Dallas area airport.

Consumers would lose out on a 50 percent discount in fares from Southwest's entry into the market, the agency said.

"More broadly, the cap on gates at Love Field affects every other airline that would otherwise be attracted to the new competitive opportunities at Love Field, including low-cost carriers such as JetBlue (Airways), as well as other legacy carriers, such as US Air," the agency said.

Also, House Judiciary Committee Chairman James Sensenbrenner, R-Wis., sent a letter to House Speaker Dennis Hastert, R-Ill., requesting that his committee be given a chance to review the House bill that includes the agreement. In his letter, Sensenbrenner also raises competition concerns. A copy of the letter was obtained Tuesday by the AP.

The compromise also would allow for immediate through-ticketing from Love Field, meaning passengers would have to buy one ticket instead of two for travel beyond the states in the Wright bill.

 

[lpbrian]

Sounds like the DOJ has the airlines business all figured out. They think air service in the DFW area revolves around Love and completely ignores DFW airport.

 

[PRINCESS KIDAGAKASH]

Sounds like the DOJ has the airlines business all figured out. They think air service in the DFW area revolves around Love and completely ignores DFW airport.

The DOJ is only trying to enforce the Airline Deregulation Act of 1978. Actually I'm suprised the Wright amendment hasn't been struck down in it's entirety by the courts.

 

[aafsc]

Is the Love field agreement any different from the restrictions imposed by LGB airport? What about the DCA or LGA perimeter restrictions?

 

[AMFAMAN]

Is the Love field agreement any different from the restrictions imposed by LGB airport? What about the DCA or LGA perimeter restrictions?

Distance wise, it would appear to be as AA has been flying from DFW to those airports for as long as I can remember. As opposed to being restricted to the surrounding states.

I wouldn't be surprised that this deal was put in place just to stall the Wright Amendment from going away all together for at least a year. In the mean time they grease the pilots with some cash, and they in return allow unlimited Eagle RJ's at Wrightless Love field next year.

 

[aafsc]

I was speaking from the legal aspect. If the local communities/airports like LGB, DCA, and LGA can have restrictions to the number of flights and perimeter rules (DCA and LGA) why can't Love field do the same thing? It appears a precedent has already been set; especially with LGB.

 

[eolesen]

The funny part about the whole Jetbloo argument is that they're more than content leaving LGB constrained so that they have no competition, but are pissed that the same situation pretty much exists at DAL.

I was speaking from the legal aspect. If the local communities/airports like LGB, DCA, and LGA can have restrictions to the number of flights and perimeter rules (DCA and LGA) why can't Love field do the same thing? It appears a precedent has already been set; especially with LGB.

You forgot about SNA. LGB and SNA's flight caps are based on noise budgets. What Dallas should do is impose noise budgets and restrict the airport in the same manner as LGB and SNA. That's federally protected.

 

[coolflyingfool]

OFF TOPIC - Hey TWU Informer, is that a real B757 AA tail with the MD nose on top of the AA? just wondering....

 

[jimntx]

I was speaking from the legal aspect. If the local communities/airports like LGB, DCA, and LGA can have restrictions to the number of flights and perimeter rules (DCA and LGA) why can't Love field do the same thing? It appears a precedent has already been set; especially with LGB.

Totally different situation at the other airports than at Love.

At LGA, the restrictions have more to do with lack of landing slots than a desire to restrict airline access to those airports.

At DCA, the restrictions were an attempt by Congress to justify keeping DCA open--it was supposed to close when IAD opened. Congressmen decided that it was "in the national interest" to keep DCA open when they found out that they were not going to get private parking spaces at IAD like they have at DCA, and they suddenly realized that IAD was out in the boonies.

At LGB and SNA, it is a local noise restriction, IIRC. It would probably be untenable in the courts to retroactively pass a noise ordinance to restrict access at this stage of the game--just to make the Love Field "agreement" seem legal. Also, a noise reduction ordinance does not restrict access to just two or three airlines. It just specifies how they will operate there for takeoffs and landings.

The Love Field agreement is nothing more than an attempt by SWA, AA, and the cities of Dallas and Ft. Worth to restrict access to Love to OTHER airlines. That smacks of restraint of trade and has strong anti-trust implications. I have my doubts as to whether this agreement will pass eventual muster with the courts. There is already resistance among members of Congress to the agreement on its face.

Quite frankly, I am surprised that AA agreed to this plan. Love already was pretty much SWA's City-of-Dallas-subsidized private airport. This makes it even more so.

If the WA is to be repealed then the only fair approach would be to open Love Field to all comers. SWA says they want to bring competition to the Dallas area, well let's make it real competition.

Then...
1. If there are insufficient gates, the current tenants have to give up gates in proportion to their current gate control numbers--i.e., SWA gives up gates to JetBlue and Airtran and whoever else wants space. (Gate use would have to be maximized. Unless an airline--including AA--uses a gate all day every day, they have to share a gate with someone else. There's no reason to punish poor SWA unnecessarily.)
2. City of Dallas guarantees all DFW bonded indebtedness. After all, they created this mess by charging miniscule landing fees to SWA for years--$0.35/1000lbs for the past 20 or 30 years until earlier this year when they raised the fee to a whopping $0.55/1000lbs. If, when SWA got the courts to grant them access to Love, the city had said "Fine, your landing fees will be the same as at DFW", I doubt SWA would have been as anxious to occupy an old, out-of-date airport terminal if they had to pay the same as for new, modern facilities.
3. City of Dallas subsidizes landing fees at DFW for all domestic operations; so that airlines at DFW can compete cost-wise with SWA. If the city allows SWA's International division (operating under the pseudonym, ATA) to fly a single International route out of Love, then the city would have to subsidize landing fees for all International flights into DFW. (City not responsible for other cost differences that airlines might have with SWA--just landing fees.)
4. No whining from SWA or city of Dallas regarding the fact that Love Field facilities are inferior to DFW's. SWA chooses to use that inferior airport, and the city chooses to grant a landing fee subsidy that seriously handicaps airlines using DFW.
5. City of Ft. Worth and other surrounding municipalities allowed to open any and all airport operations they want with no further responsibility to DFW. If we are going to gut DFW, "let's do it WRIGHT."
6. If they continue with this plan to demolish the former Legend terminal, then City of Dallas, SWA, and AA pay the current owners of that terminal what the current owners and an independent appraiser determine to be fair market value. No "eminent domain" cr*p allowed.
7. City of Dallas officials (such as the Mayor and the City Council members), SWA, and AA indemnify the taxpayers of Dallas from any and all lawsuits brought by other airlines wanting access, homeowners near Love who sue over the increased noise, etc.