Why Airlines Avoid Dallas/fort Worth Int'l Airport


Jun 13, 2005
It is undeniable that AA wants to keep the Wright Amendment intact. However, if it wants to prosper, the DFW Airport may want to reconsider its position and actually start supporting a repeal. Read this opinion piece by Mitchell Schnurman, business columnist for the Fort Worth Star-Telegram, the newspaper of AA's hometown:

Posted on Sun, Oct. 16, 2005

Why airlines avoid D/FW

It's not easy to defend the Wright Amendment, considering that it limits competition, stifles growth and costs consumers hundreds of millions of dollars a year.

But Dallas/Fort Worth Airport has found a way to frame the debate that seems reasonable, almost persuasive.

"Southwest has the freedom to fly anywhere from DFW," the ads proclaim.

True enough, but so does every other airline. And like Southwest, plenty are passing on the invitation, despite relentless marketing and big-dollar incentives.

Last week, JetBlue announced new service to Austin, rejecting repeated pleas from D/FW. Delta bailed out in January, closing most of its hub after losing money in nine of the previous 12 years.

AirTran was expected to become a big discounter here after Delta departed, but it has grown less than hoped and abandoned plans to add two routes.

Then there's Southwest, the target of a multiprong, multimedia, multimonth campaign by the airport and local politicians. Southwest hasn't budged. It's not coming.

So what's the problem at D/FW?

"We don't believe there is a problem," D/FW executive Kevin Cox said last week, ticking off the new service added in the past year.

We'll get to D/FW's highlights and lowlights later, but not even the spirited Cox is saying the airport looks good these days. Twenty-two gates are vacant, others are underutilized, passenger growth has trailed the national average, and the secretary of the D/FW board has fretted publicly about the $3.7 billion debt.

The only way to make these issues go away is to get more flights and more passengers, and to make better use of D/FW's pricey public infrastructure.

The Wright debate, heating up again in Washington, is primarily a consumer issue. But it also forces us to consider whether the law helps or hurts D/FW's prospects.

It's not a clear call. At first blush, opening Dallas Love Field to long-haul flights sounds like a blow to D/FW, because some business would move there. But competition has a way of growing the marketplace, while protectionism tends to shrink it.

In the past year, high fuel costs have been a major impediment to filling D/FW's empty gates. And the Wright fight has chilled some airlines -- not because they fear an unshackled Southwest, but because they'd rather fly to Love than D/FW.

Consider that for a moment. D/FW has almost 10 times the passenger traffic of Love, tons more runway and gate space for expansion, and a spiffy new terminal and people-mover. And Love has become the belle of the ball?

How can that be?

There's an elephant in D/FW's room, and nobody seems to want to talk about it: American Airlines and its subsidiary, American Eagle, have more than 800 daily departures and 84 percent of D/FW passengers.

Any carrier that wants a meaningful piece of the D/FW action has to take it out of American's hide. Good luck.

American's giant network covers about every significant destination, and its frequency swamps the number of flights at many other metropolitan airports combined.

That's great for travelers who covet nonstop connections, but it scares off new entries and keeps existing players from expanding in a big way.

Don't blame American for being a fierce competitor. But don't blame Southwest, either, for not wanting to step into American's cross-hairs.

Asking Southwest to move to D/FW, Southwest founder Herb Kelleher says, is like the spider asking the fly to lunch.

They won't be sharing dessert.

Southwest is strong enough to go head to head with any airline, and it spanks American in more than a few markets. But it didn't become the industry's most profitable carrier by being stupid.

It has thrived -- and reinvented the airline industry -- by picking fights carefully. For years, Southwest flew only to secondary airports, because it knew that giants like American and United would crush the upstart on their own turf.

Southwest is now the largest domestic carrier, and it has been growing into larger airports for a while. But it remains selective, and it's no accident that it avoids fortress hubs in Minneapolis, Atlanta and D/FW.

AirTran uses a different tack, taking on legacy carriers at big airports. It quietly established a foothold in Atlanta in the mid-1990s and steadily grew into a major player as it drove down fares.

When AirTran came to D/FW, many hoped that it would replicate that history.

That may still happen, but it has been tough sledding.

American took AirTran's threat seriously, adding flights, cutting fares, beefing up marketing and promoting its frequent-flier program.

When AirTran started two flights to Los Angeles, American matched its fares on 39 flights to five airports in the Los Angeles basin. American is leaving lots of money on the table to make a point: It will fight for every customer in its prime markets.

That's smart business. Delta carried 4.8 million fewer passengers through D/FW in the first eight months of 2005. American and American Eagle added 3.9 million.

AirTran added 187,000, but three other discounters had declines in traffic, so the low-cost group added a combined 109,000 passengers.

The big dog picked up almost 4 million new customers, and all the little guys combined added less than 3 percent of that.

According to D/FW's latest numbers, American and Eagle handled 84.3 percent of all the passengers in August, while six low-cost airlines moved 4.4 percent.

Cox says the more important number is that D/FW has seven discounters, including USAir, which recently merged with America West. They all influence fares on routes flown by American, which helps drive down prices.

He also points out that three carriers have committed to adding service. Mexicana is flying to three cities in Mexico, Alaska Air has two flights a day to Seattle, and Spirit is adding one daily flight to Fort Lauderdale.

D/FW has more low-cost competitors than any other major hub airport, Cox says. But their share of the market is much smaller than in most airports. And some, such as Chicago, Houston and San Francisco, have low-cost secondary airports nearby.

Cox complains that I never write about all the $100 one-way tickets sold at D/FW. More telling, I believe, are reports that show that D/FW remains one of the highest-fare airports in the country.

People can look at the same statistics and reach different conclusions, of course. Cox insists that Southwest can take on American at D/FW and succeed, and he sent me statistics to back the point.

They show that Southwest competes with American in 54 markets. But in the vast majority, Southwest has more flights and seats than American. In just one city, St. Louis, American has a major advantage in capacity, offering 66 percent more seats.

To me, the data prove a different point -- that Southwest doesn't pick a fight when the odds are against it.

If Southwest moves to D/FW -- or simply launches long-haul service there -- American would have at least five times more flights. And it would almost certainly add service, cut fares and boost marketing.

That's great for consumers, but Southwest won't walk into such a trap. Neither will JetBlue, for that matter. Even AirTran seems chastened by American's offensive.

If Southwest isn't coming to D/FW, Cox says, the best way for the Wright fight to end is for the political campaign to peter out, maybe in three or four years. Then carriers will accept that they have to go to D/FW if they want to tap the Metroplex.

My dream ending is frenzied competition from both airports, and permanently low prices that prompt millions more to fly. Love Field hits capacity quickly, and American competes primarily from D/FW, offering more flights, connections and high-end service.

American stops trying to destroy its rivals, a la AirTran in LA, because it has to take a more rational financial approach. And that leaves some room for other carriers to take a shot at D/FW.

The big hang-up in this scenario: If Wright goes away, American says it will move dozens of flights to Love to compete with Southwest.

As a threat, this is working. Leaders from D/FW and much of Tarrant County believe the doomsday scenario, which is bolstered by two studies that assume American shifts lots of flights.

I'd like to see a study on whether such shifting makes sense. Wouldn't a company that's entering a battle play to its greatest strength -- in this case, its hub?

At O'Hare in Chicago, American has 504 daily departures. It competes with Southwest and discounters at Midway, too -- with four daily flights.

In Miami, American has 226 flights and 21 at the discount airport in Fort Lauderdale. At LAX, American has 154 flights, with four in Burbank and five in Long Beach.

If American follows the same pattern in the Metroplex, we could have soaring traffic at two airports.

But Cox believes that American will follow through on its threat, and he asked if we should take that chance.

"Is it worth the risk?" Cox asked.

The odds are a lot better than getting Southwest to move to D/FW.