Wright Amendment
- Thread starter wnbubbleboy
- Start date
swflyer
Senior
Here's the whole thing, recently put together by the Dallas Morning News. Jim's right in a way, I have an exceptionally hard time listening to AMR's and DFW's arguments, which I feel are based on covering their asses (assets), not on what was the original intention of the law. The LFAC, mentioned at the end of the article, is funded by.........wait for it...............American Airlines.
I'll agree to disagree.
Wrestling over Wright
Monday, March 28, 2005
The battle lines were drawn long ago on the Wright amendment, and the war has only escalated in recent months.
We distilled the two sides' best arguments into talking points – four in favor of keeping Wright in place and four in favor of lifting it.
We then asked representatives from the major parties involved to argue against those talking points.
Speaking against keeping Wright are Southwest Airlines and David Glick, a Dallas-area mortgage broker and former FAA employee and Denton Airport Board member.
Speaking in favor of keeping Wright are American Airlines and Dallas/Fort Worth International Airport. Here's what they said.
AGAINST: In this corner, Southwest and a traveler challenge reasons for keeping it:
1. D/FW Airport, American Airlines and other businesses invested millions of dollars on the assumption that the Wright amendment was permanent.
Southwest: Nothing in either the airline industry or politics is permanent. When Wright was enacted, Braniff International was the primary carrier at D/FW. Along with Braniff, the original Frontier, Ozark, Texas International, Eastern, Continental, Delta and American were the airlines serving D/FW. The first five are out of business, and American is the now dominant carrier.
Wright was a bad law in 1979. Today, it's a shame. The "investment" to build D/FW was made in the 1960s. D/FW opened in 1974. How could the decision to invest be predicated on what was a bad law in 1979?
Glick: D/FW and American invested millions of dollars at D/FW based on their own business models. After 9-11, many other airports "mothballed" their terminal expansion projects, including Chicago O'Hare. D/FW and American management decided to move forward with a $3.5 billion expansion when wisdom dictated postponing.
If the records of any discussions or other documents, including those related to the bonds, were disclosed, I don't believe you would find the Wright amendment cited as rationale. It's a myth that any other business invested millions based on the Wright amendment staying in effect. People invested in Conestoga wagons and chariots with the assumption of permanency. Can't we learn from history, or would American and D/FW have us still listening to 8-track tapes?
2. Southwest could fly anywhere it wants today – from a level playing field at D/FW Airport.
Southwest: The thought that D/FW presents a "level playing field" is a myth. Delta finally realized this fact and threw in the towel against American. America West CEO Doug Parker told reporters that his airline would lose a lot of money if it tried to compete with American. This is the real reason no airline has taken up D/FW's offer.
D/FW is not a level field; it's a field littered with failed carriers – a group Southwest Airlines does not wish to join.
Glick: Level playing field for whom? Southwest is profitable, something we don't hear much from American or others at D/FW. I read that one of the main reasons this is true for Southwest is that its management determined long ago that they make money when their planes are in the air. Operating at D/FW would add significantly to their operating costs because planes spend so much time on the ground at D/FW going to and from the runways and terminals.
Southwest doesn't have this inefficiency at Love, which helps keep fares low.
3. If American were forced to split its resources between D/FW and Love, the result would be fewer options for North Texas travelers.
Southwest: So, why do it? That's bad business, by definition. The irony is that American allegedly wants Southwest to do the very same thing, i.e., split operations. American doesn't want a split operation any more than we do. It is detrimental to both customer service and the bottom line.
Across-the-board competition made possible by repeal of the Wright amendment, however, will mean lower prices and, in the end, more travel options for all North Texas air travelers. As the "Southwest Effect" has proven in 58 other cities we serve, lower airfares stimulate travel. Additional passengers bring more flight options, airport revenue and economic development.
Glick: If it's not cost-efficient for American to split its operations, why would management consider it? Do they think a repeal would mandate it? Maybe we're beginning to see the real reason American is losing billions, if management is making these kinds of decisions.
The second part of this argument is sillier still because it defies the law of supply and demand. How can more flights to different locations by different airlines at two airports lead to fewer options? Can anyone explain this in a logical way? This kind of sophistry deserves to be exposed for the hogwash that it is.
4. Creating a secondary hub airport at Love would weaken the primary hub at D/FW.
Southwest: To repeat ... so, why do it? Split operations are uneconomical – which is why we won't split our service from Love Field. (American moved flights to Love Field in 2000 to fly head-to-head against Legend Airlines. When Legend went bankrupt, American dropped Love like a hot potato.)
The question acknowledges that creating a "secondary" hub would, in fact, weaken the "primary" hub. So what business motive could there be to create a secondary hub?
Glick: This argument of hubs means what to the traveling public? This is very simple: North Texas travelers want and deserve cheaper fares. As long as American is protected from having to compete by the Wright amendment, we won't get them. American's dominance here is so pervasive that we won't get lower fares, and because of flight and expansion limitations at Love Field, it could never become a threat to D/FW, yet it successfully knocked Legend Airlines right out of business.
If D/FW and American management were not so myopic, they could see that opening up Love would help reduce fares, which would ultimately increase traffic at both airports because more people, with lower fares, would travel, including those for whom American's current fares are too high. D/FW and American may experience some pain, but most of that is due to poor management decisions unrelated to the Wright amendment. Ultimately, what's best for the public must prevail.
FOR: In this corner, American and D/FW Airport argue against reasons for lifting it:
1. Long-haul flights from Love Field would increase competition and lower fares for North Texas travelers.
American: Fares from D/FW Airport have come down dramatically in the last one or two years, and most of the country's low-cost carriers (including AirTran, ATA, Frontier and America West) now serve our region's international gateway airport. Southwest can begin service at D/FW any time it wishes to as many places as it chooses almost overnight, but concern prompted by Southwest that the Wright amendment may be altered or abolished is having the opposite effect, discouraging new competition at D/FW.
Southwest isn't the only airline able to bring low fares to North Texas, and the community needs to make it clear that D/FW is where new competition must make its home. As the industry's most profitable airline, Southwest is in the strongest financial position to take advantage of D/FW's gates and facilities, but it insists on special treatment from Congress to protect its monopoly at Love Field.
D/FW Airport: Competition between airports that are only eight miles apart actually will result in fewer travel options for North Texas and connecting travelers. D/FW carriers already offer low fares, and the fastest way to increase competition would be for Southwest to fly from D/FW, where everyone competes on a level playing field.
The airport offered free rent for a year and a $22 million incentive package to Southwest, but the airline refused. (The offer still stands.) Low-cost carriers are setting passenger records at D/FW, and Southwest has told the airport it can be profitable here. Southwest has simply chosen not to join the competitive battle in the skies, but instead wage a divisive legislative fight – hurting North Texas' travelers and economy.
2. D/FW may have once needed protection but, as the world's third-busiest airport, that is no longer the case.
American: The region's decision nearly 40 years ago to consolidate all air service at D/FW was not made to protect D/FW. It was a recognition that the region's travelers and economy were best served by one large airport, making the most of the schedule depth and breadth. That is even more true today.
The economics of airport hubs, where growth produces even more growth, argues for the consolidation of service at a single gateway airport. This maximizes the synergy of connecting traffic flowing over the hub location, increasing schedule opportunities for local customers.
Diverting local traffic to Love will have exactly the reverse effect, leaving local residents with fewer travel choices. By asking Congress to change the rules to harm D/FW economically, Southwest is doing exactly what the local community feared would happen if Love Field were left open.
D/FW Airport: Protection is not the issue. Refueling the economic engine of North Texas while promoting competition to benefit local travelers is the issue. Most recently, D/FW Airport and the North Texas economy were dealt a serious blow when 7,000 jobs and $800 million in annual economic impact were erased when Delta Air Lines closed its hub, leaving 24 empty gates.
Unfortunately, Southwest doesn't want other airlines to come here and compete, so the uncertainty it has created in the marketplace regarding Wright is scaring off additional carriers. Airlines have told us so. Taking passengers away from D/FW hurts the entire region and will cut travel options available to North Texans.
3. Most major U.S. cities are served by more than one airport.
American: Many are, and it is perhaps instructive that D/FW is bigger than LAX, JFK and Bush Intercontinental, international airports serving larger metropolitan areas. Cities with one close-in airport and a larger one farther out have mostly realized the logic and benefit of limiting flights from the close-in airport.
This is true with LaGuardia and JFK in New York and with Dulles and Reagan National in Washington. Other cities where existing airports were either closed or limited when the new airport was built include Denver, Seattle, Kansas City, Detroit, Minneapolis/St. Paul, Cleveland, Austin, Fort Myers, Hong Kong, Tokyo, Milan, Paris, Toronto and Montreal.
D/FW Airport: In the last 25 years, the overwhelming number of cities that have invested in and constructed new airports have either closed their older airport or severely limited its service. The most recent examples are Denver and Austin, where the older airports were closed the day the new airport opened.
Ironically, Southwest was at the negotiation table to make sure the old Austin airport was closed before it would agree to move to the new airport farther from the city. Sound familiar?
Opening up Love will create unhealthy competition between airports, and Southwest knows this. In fact, Herb Kelleher said in a sworn statement, "There is no city in the United States that has two full-fledged hubs competing against each other successfully."
4. The Love Field Master Plan, with a 32-gate limit, ensures it would not become a threat to D/FW Airport.
American: The Love Field Master Plan was written in full contemplation that Wright would remain in effect. It is inconceivable that the amendment could be lifted – ostensibly (though ill-advisedly) in the name of competition and free enterprise – and that the master plan would be invoked to protect Southwest's vested monopoly at Love.
If Wright is repealed, it is imperative that the master plan be rewritten to allow that competition at Love. With a huge base of customers nearer to Love Field than D/FW, American Airlines would absolutely seek to meet their needs. While that would preserve our competitive position, it would be done to the mutual detriment of American, D/FW Airport, Southwest, residents near Love Field and the region's economy.
D/FW Airport: Exactly the opposite is true. Love Field neighbors feel betrayed by Southwest. Area neighbors who make up the Love Field Action Committee have said the agreement was approved with the understanding that Wright would remain in place. Neighborhood leader Rudy Longoria: "Had we known that one of the key parties [Southwest] to the consensus would now try to transform Love Field into a national airport, we would never have invested the trust in the process that we did."
Southwest has used Wright for years as a protection to grow into a monopoly at an airport that was supposed to have been closed decades ago.
I'll agree to disagree.
Wrestling over Wright
Monday, March 28, 2005
The battle lines were drawn long ago on the Wright amendment, and the war has only escalated in recent months.
We distilled the two sides' best arguments into talking points – four in favor of keeping Wright in place and four in favor of lifting it.
We then asked representatives from the major parties involved to argue against those talking points.
Speaking against keeping Wright are Southwest Airlines and David Glick, a Dallas-area mortgage broker and former FAA employee and Denton Airport Board member.
Speaking in favor of keeping Wright are American Airlines and Dallas/Fort Worth International Airport. Here's what they said.
AGAINST: In this corner, Southwest and a traveler challenge reasons for keeping it:
1. D/FW Airport, American Airlines and other businesses invested millions of dollars on the assumption that the Wright amendment was permanent.
Southwest: Nothing in either the airline industry or politics is permanent. When Wright was enacted, Braniff International was the primary carrier at D/FW. Along with Braniff, the original Frontier, Ozark, Texas International, Eastern, Continental, Delta and American were the airlines serving D/FW. The first five are out of business, and American is the now dominant carrier.
Wright was a bad law in 1979. Today, it's a shame. The "investment" to build D/FW was made in the 1960s. D/FW opened in 1974. How could the decision to invest be predicated on what was a bad law in 1979?
Glick: D/FW and American invested millions of dollars at D/FW based on their own business models. After 9-11, many other airports "mothballed" their terminal expansion projects, including Chicago O'Hare. D/FW and American management decided to move forward with a $3.5 billion expansion when wisdom dictated postponing.
If the records of any discussions or other documents, including those related to the bonds, were disclosed, I don't believe you would find the Wright amendment cited as rationale. It's a myth that any other business invested millions based on the Wright amendment staying in effect. People invested in Conestoga wagons and chariots with the assumption of permanency. Can't we learn from history, or would American and D/FW have us still listening to 8-track tapes?
2. Southwest could fly anywhere it wants today – from a level playing field at D/FW Airport.
Southwest: The thought that D/FW presents a "level playing field" is a myth. Delta finally realized this fact and threw in the towel against American. America West CEO Doug Parker told reporters that his airline would lose a lot of money if it tried to compete with American. This is the real reason no airline has taken up D/FW's offer.
D/FW is not a level field; it's a field littered with failed carriers – a group Southwest Airlines does not wish to join.
Glick: Level playing field for whom? Southwest is profitable, something we don't hear much from American or others at D/FW. I read that one of the main reasons this is true for Southwest is that its management determined long ago that they make money when their planes are in the air. Operating at D/FW would add significantly to their operating costs because planes spend so much time on the ground at D/FW going to and from the runways and terminals.
Southwest doesn't have this inefficiency at Love, which helps keep fares low.
3. If American were forced to split its resources between D/FW and Love, the result would be fewer options for North Texas travelers.
Southwest: So, why do it? That's bad business, by definition. The irony is that American allegedly wants Southwest to do the very same thing, i.e., split operations. American doesn't want a split operation any more than we do. It is detrimental to both customer service and the bottom line.
Across-the-board competition made possible by repeal of the Wright amendment, however, will mean lower prices and, in the end, more travel options for all North Texas air travelers. As the "Southwest Effect" has proven in 58 other cities we serve, lower airfares stimulate travel. Additional passengers bring more flight options, airport revenue and economic development.
Glick: If it's not cost-efficient for American to split its operations, why would management consider it? Do they think a repeal would mandate it? Maybe we're beginning to see the real reason American is losing billions, if management is making these kinds of decisions.
The second part of this argument is sillier still because it defies the law of supply and demand. How can more flights to different locations by different airlines at two airports lead to fewer options? Can anyone explain this in a logical way? This kind of sophistry deserves to be exposed for the hogwash that it is.
4. Creating a secondary hub airport at Love would weaken the primary hub at D/FW.
Southwest: To repeat ... so, why do it? Split operations are uneconomical – which is why we won't split our service from Love Field. (American moved flights to Love Field in 2000 to fly head-to-head against Legend Airlines. When Legend went bankrupt, American dropped Love like a hot potato.)
The question acknowledges that creating a "secondary" hub would, in fact, weaken the "primary" hub. So what business motive could there be to create a secondary hub?
Glick: This argument of hubs means what to the traveling public? This is very simple: North Texas travelers want and deserve cheaper fares. As long as American is protected from having to compete by the Wright amendment, we won't get them. American's dominance here is so pervasive that we won't get lower fares, and because of flight and expansion limitations at Love Field, it could never become a threat to D/FW, yet it successfully knocked Legend Airlines right out of business.
If D/FW and American management were not so myopic, they could see that opening up Love would help reduce fares, which would ultimately increase traffic at both airports because more people, with lower fares, would travel, including those for whom American's current fares are too high. D/FW and American may experience some pain, but most of that is due to poor management decisions unrelated to the Wright amendment. Ultimately, what's best for the public must prevail.
FOR: In this corner, American and D/FW Airport argue against reasons for lifting it:
1. Long-haul flights from Love Field would increase competition and lower fares for North Texas travelers.
American: Fares from D/FW Airport have come down dramatically in the last one or two years, and most of the country's low-cost carriers (including AirTran, ATA, Frontier and America West) now serve our region's international gateway airport. Southwest can begin service at D/FW any time it wishes to as many places as it chooses almost overnight, but concern prompted by Southwest that the Wright amendment may be altered or abolished is having the opposite effect, discouraging new competition at D/FW.
Southwest isn't the only airline able to bring low fares to North Texas, and the community needs to make it clear that D/FW is where new competition must make its home. As the industry's most profitable airline, Southwest is in the strongest financial position to take advantage of D/FW's gates and facilities, but it insists on special treatment from Congress to protect its monopoly at Love Field.
D/FW Airport: Competition between airports that are only eight miles apart actually will result in fewer travel options for North Texas and connecting travelers. D/FW carriers already offer low fares, and the fastest way to increase competition would be for Southwest to fly from D/FW, where everyone competes on a level playing field.
The airport offered free rent for a year and a $22 million incentive package to Southwest, but the airline refused. (The offer still stands.) Low-cost carriers are setting passenger records at D/FW, and Southwest has told the airport it can be profitable here. Southwest has simply chosen not to join the competitive battle in the skies, but instead wage a divisive legislative fight – hurting North Texas' travelers and economy.
2. D/FW may have once needed protection but, as the world's third-busiest airport, that is no longer the case.
American: The region's decision nearly 40 years ago to consolidate all air service at D/FW was not made to protect D/FW. It was a recognition that the region's travelers and economy were best served by one large airport, making the most of the schedule depth and breadth. That is even more true today.
The economics of airport hubs, where growth produces even more growth, argues for the consolidation of service at a single gateway airport. This maximizes the synergy of connecting traffic flowing over the hub location, increasing schedule opportunities for local customers.
Diverting local traffic to Love will have exactly the reverse effect, leaving local residents with fewer travel choices. By asking Congress to change the rules to harm D/FW economically, Southwest is doing exactly what the local community feared would happen if Love Field were left open.
D/FW Airport: Protection is not the issue. Refueling the economic engine of North Texas while promoting competition to benefit local travelers is the issue. Most recently, D/FW Airport and the North Texas economy were dealt a serious blow when 7,000 jobs and $800 million in annual economic impact were erased when Delta Air Lines closed its hub, leaving 24 empty gates.
Unfortunately, Southwest doesn't want other airlines to come here and compete, so the uncertainty it has created in the marketplace regarding Wright is scaring off additional carriers. Airlines have told us so. Taking passengers away from D/FW hurts the entire region and will cut travel options available to North Texans.
3. Most major U.S. cities are served by more than one airport.
American: Many are, and it is perhaps instructive that D/FW is bigger than LAX, JFK and Bush Intercontinental, international airports serving larger metropolitan areas. Cities with one close-in airport and a larger one farther out have mostly realized the logic and benefit of limiting flights from the close-in airport.
This is true with LaGuardia and JFK in New York and with Dulles and Reagan National in Washington. Other cities where existing airports were either closed or limited when the new airport was built include Denver, Seattle, Kansas City, Detroit, Minneapolis/St. Paul, Cleveland, Austin, Fort Myers, Hong Kong, Tokyo, Milan, Paris, Toronto and Montreal.
D/FW Airport: In the last 25 years, the overwhelming number of cities that have invested in and constructed new airports have either closed their older airport or severely limited its service. The most recent examples are Denver and Austin, where the older airports were closed the day the new airport opened.
Ironically, Southwest was at the negotiation table to make sure the old Austin airport was closed before it would agree to move to the new airport farther from the city. Sound familiar?
Opening up Love will create unhealthy competition between airports, and Southwest knows this. In fact, Herb Kelleher said in a sworn statement, "There is no city in the United States that has two full-fledged hubs competing against each other successfully."
4. The Love Field Master Plan, with a 32-gate limit, ensures it would not become a threat to D/FW Airport.
American: The Love Field Master Plan was written in full contemplation that Wright would remain in effect. It is inconceivable that the amendment could be lifted – ostensibly (though ill-advisedly) in the name of competition and free enterprise – and that the master plan would be invoked to protect Southwest's vested monopoly at Love.
If Wright is repealed, it is imperative that the master plan be rewritten to allow that competition at Love. With a huge base of customers nearer to Love Field than D/FW, American Airlines would absolutely seek to meet their needs. While that would preserve our competitive position, it would be done to the mutual detriment of American, D/FW Airport, Southwest, residents near Love Field and the region's economy.
D/FW Airport: Exactly the opposite is true. Love Field neighbors feel betrayed by Southwest. Area neighbors who make up the Love Field Action Committee have said the agreement was approved with the understanding that Wright would remain in place. Neighborhood leader Rudy Longoria: "Had we known that one of the key parties [Southwest] to the consensus would now try to transform Love Field into a national airport, we would never have invested the trust in the process that we did."
Southwest has used Wright for years as a protection to grow into a monopoly at an airport that was supposed to have been closed decades ago.
Attachments
I realize that this is somewhat nitpicky, but this statement is inaccurate on a number of levels.Southwest Airlines said:
First, and most simply, Texas International is not out of business. It was just renamed "Continental" about 15 years ago.
But this leads to a more subtle observation. Is Continental (the one that existed before TI changed its name) out of business? What about Frontier I? Similarly, one could argue that Ozark lives on as part of AA.
Or, one could argue that only Delta and American remain from that list. After all, the others all filed for bankruptcy at some point along the way, effectively resurrecting as a new company.
I realize that it's all semantics in the end, but WN's statement rubbed me wrong there.
American Airlines said:
And perhaps it is not instructive, given that Bush IAH serves a metro area, which is, as much as it pains me to say it, smaller by several hundred thousand than the Metroplex. Shockingly, IAH has far more international passengers and service to many more international destinations in spite of the lack of restrictions on HOU. Perhaps it would also be instructive to note that LAX has 46% greater domestic O&D traffic than DFW in spite of competition from FOUR other aiports in its metro area (BUR, LGB, SNA, ONT) and to note that both EWR and JFK each have greater O&D traffic than DFW as well. But hey, AA wouldn't want accurate representation of the facts to get in the way, would they?
American Airlines said:
They left out a very important part of this statement. It should be: The economics of airport hubs, where growth produces even more growth, argues for the consolidation of service at a single gateway by the hubbing carrier.
I think it's difficult to argue that AA's traffic at ATL benefits from the Delta and AirTran hubs, nor does it seem that America West benefits from the AA and UA hubs at ORD. I'm not sure anyone other than Delta offers mainline service into CVG anymore. How does one explain the remarkable growth in the last decade at places like MDW, FLL, PVD, MHT, BWI, OAK, etc. -- which all lack network hubs?
DFW Airport said:
This would be what, two or three airports/cities? (I'm thinking AUS, DEN, and RSW/FMY.) Hardly a large sample on which to claim an "overwhelming number," and DEN was a ridiculous boondoggle.
American Airlines said:
What monopoly at Love Field? AA could fly from DAL to anywhere within the Wright/Shelby states TOMORROW if they wanted to, and they could deploy Eagle RJ's to dozens of destinations outside the perimeter as well. In 2001, there were five airlines serving DAL -- hardly a monopoly. When Terminal D opens, AA will control a greater percentage of gates at DFW than Southwest controls at DAL; does the Wright Amendment protect AA's "monopoly" there?
JS
Veteran
Loaded words in italics:
You have to have some faith in the stability of law. An economic environment with unstable regulations will not attract investment. Even cash requires some assumption of future expectations; otherwise, it's just worthless green paper.
I'm not saying that laws should never be changed, but I would like to counter the argument from Southwest that no one makes investments based on an expectation of laws/regulations being fairly predictable.
conjecture
opinion
see above comment on investment
Delta closed the DFW hub as part of their transformation plan, which includes increasing ATL flights (and de-peaking) to fight AirTran. AA does not operate a huge hub at CVG or SLC, so the decision to pick DFW as the one to lose Delta hub status was pretty easy and has nothing to do with the Wright Amendment.
Along similar lines, the Wright Amendment is not to blame for the failure of Braniff, Eastern, Pan Am, and so on.
The distance from terminal E to runway 17/35 L/R at DFW is about the same as it is for PHX, LAS, LAX, PHL and PIT. Or is Glick talking about traffic congestion? He should visit DFW today; the days of long lines of AA and Delta flights waiting for take-off is no more.
Most airlines, including Southwest at some of these, "split operations" at PBI/FLL/MIA, IAD/DCA/BWI, EWR/LGA/JFK, HOU/IAH, SFO/OAK/SJC, and LAX/BUR/ONT/LGB/SNA.
I realize AA is poorly run, but these kinds of sarcastic comments don't help your side.
Legend failed because they overestimated the size of the First Class market. Even without any competition from AA, they would never have survived the travel downturn after 9/11 or today's high fuel prices using those DC-9's with only 56 seats.
You have to have some faith in the stability of law. An economic environment with unstable regulations will not attract investment. Even cash requires some assumption of future expectations; otherwise, it's just worthless green paper.
I'm not saying that laws should never be changed, but I would like to counter the argument from Southwest that no one makes investments based on an expectation of laws/regulations being fairly predictable.
conjecture
opinion
see above comment on investment
Delta closed the DFW hub as part of their transformation plan, which includes increasing ATL flights (and de-peaking) to fight AirTran. AA does not operate a huge hub at CVG or SLC, so the decision to pick DFW as the one to lose Delta hub status was pretty easy and has nothing to do with the Wright Amendment.
Along similar lines, the Wright Amendment is not to blame for the failure of Braniff, Eastern, Pan Am, and so on.
The distance from terminal E to runway 17/35 L/R at DFW is about the same as it is for PHX, LAS, LAX, PHL and PIT. Or is Glick talking about traffic congestion? He should visit DFW today; the days of long lines of AA and Delta flights waiting for take-off is no more.
Most airlines, including Southwest at some of these, "split operations" at PBI/FLL/MIA, IAD/DCA/BWI, EWR/LGA/JFK, HOU/IAH, SFO/OAK/SJC, and LAX/BUR/ONT/LGB/SNA.
I realize AA is poorly run, but these kinds of sarcastic comments don't help your side.
Legend failed because they overestimated the size of the First Class market. Even without any competition from AA, they would never have survived the travel downturn after 9/11 or today's high fuel prices using those DC-9's with only 56 seats.
I don't recall anywhere where they said nobody does it. The point is that doing so carries an element of risk. In securities markets, that risk would typically be reflected in a discount.JS said:
Except that DFW has six runways. Compare that to the four at LAX, for example. In addition, LAX is more balanced, in that there are approximately the same number of gates on each side of the airport. DFW is heavily weighted toward the east side, resulting in a significant number of flights having to travel between east gates and west runways. The same comparison applies to PHX and PIT. PHL and LAS are one-sided airports, which keeps the taxi times down.
Legend probably would have failed because they overestimated the size of the First Class market, but they were never given the chance. No, Legend failed because they were beaten on incessantly by AA.
JS
Veteran
Of course operating a business carries risk. There is no such thing as a risk-free business.
DFW may have six runways (actually 7 when you include the short one on the east side), but the 13/31 pair is rarely used, and when there isn't a big rush, you can use either side. I just don't see what the BFD is with occasionally having to taxi over the other side of the airport.
DFW may have six runways (actually 7 when you include the short one on the east side), but the 13/31 pair is rarely used, and when there isn't a big rush, you can use either side. I just don't see what the BFD is with occasionally having to taxi over the other side of the airport.
ngneer
Advanced
- Aug 20, 2002
- 244
- 0
Yes, but this point is not in dispute. Where in the article does anybody say that the Wright Amendment is responsible for Delta's decision to close DFW? The speakers are quoted as saying that Delta's decision was based on tough competition from AA resulting in an uprofitable operation.JS said:
SWA's position is that, based on history, the best way to avoid having an unprofitable operation at DFW is to avoid having any operation at DFW. Yet, they also would like provide a broader range of services for their Dallas customers. Now, how can they achieve that? Hmmmmm.
JS
Veteran
ngneer said:
Well, then, pick one. Either offer long-haul service out of DFW and deal with AA, or let AA have the long-haul market.
I have a very difficult time believing that AA would crush Southwest at DFW.
KCFlyer
Veteran
JS said:
Read "Splash of Colors" by John Nance - all it would take to screw up WN's operations would be to put several AA jets on every taxiway - taxiing at their ever popular "brisk walk" pace.
swflyer
Senior
JS said:
Sorry to channel mweiss, but your "split airport" example is full of holes.
PBI/FLL/MIA-WN in two, each it's own market
IAD/DCA/BWI-WN only serves one (like DAL??)
EWR/LGA/JFK-WN in the 'split' market of ISP
HOU/IAH-WN now in only one (not economical for both)
LAX/BUR/ONT/LGB/SNA-okay, WN in four distinct O&D markets, you got me <_<
To use your own words, "conjecture" and "opinion", but this point has already been hashed.
Here's the opinion of PlaneBusiness' Holly Hegeman. I didn't think the idea of moving headquarters had any possibility or merit until I read this piece.
Wright Amendment: Southwest Starts Pushing the Economic and Political Hot Buttons
Suppose you owned an airline and all your recurrent training took place at your company's headquarters.
Okay, no big deal.
But also suppose that your headquarters was located next to an airport that you couldn't use to fly in employees from far-flung locations.
Well, at least not without at least one stopover.
How much time is lost because of this situation? How much extra money is spent?
And what if the city in which your headquarters was based, and to which you paid millions of tax dollars each year, refused to support your efforts to lift the current restrictions on flying in and out of that airport?
If you're Southwest Airlines, these are not insignificant questions.
There has been a lot of noise over the last few months about whether Southwest will succeed in having the Wright Amendment, which restricts where it can fly to from Dallas, removed. But for the most part, the noise seemed to be pretty much a rehash of the same old DFW International Airport/American Airlines political line in the sand.
Until now.
Tuesday, Southwest Airlines' CEO Gary Kelly said in an article in the Ft. Worth Star Telegram that the airline intends to pursue its campaign to repeal the amendment for as long as it takes, even if it takes years.
But down underneath the headline, came what I thought was the more important comment, "And [Kelly] also hinted that the company might be forced to relocate its corporate headquarters to another city if Love Field remains restricted."
Finally, if there was still anyone wandering around in the dark about the airline's new attack points, a quote by Southwest Airlines' SVP of Governmental Affairs Ron Ricks, summed it up nicely, as he said, "Southwest is a growing company, but it's not growing in Texas. The fact of the matter is, a shrinking market is not the best site to have a corporate headquarters."
This marks the beginning of a major shift in strategy.
But this was not the first time the airline had signaled the change.
First, for those who might have missed them, a little over a week ago the Dallas Morning News presented a "He said, He said" dueling pair of commentaries. In this corner, Herb Kelleher, chairman of Southwest Airlines.
In this corner, former AMR Chairman Bob Crandall.
The subject?
What do you think?
I think it would be safe to say there was not much new ground broken by Bob's comments. In fact, considering how much money American Airlines lost on its last Love Field "defensive" adventure, I had to laugh, when he wrote:
"In recent days, my successor, Gerard Arpey, has been criticized for allegedly 'threatening' to put more service into Love Field. In fact, Mr. Arpey is threatening no one. He is merely stating the obvious truth that if Dallas is to have two airports, any airline wishing to compete for Dallas travelers must serve Love Field. Moreover, Mr. Arpey knows -- as any thinking participant in the debate also knows -- that no successful business can grant a strong competitor a monopoly on the most desirable territory and hope to prosper."
No, Bob. This is simply not true. Or does American Airlines fly out of Midway Airport? And how much money did American lose as part of its "Legend" defense of Love Field? Do you have those figures handy?
But while I found Bob's commentary predictably protective of American, there were two very important new points of attack in Herb's comments. Gary's comments Tuesday simply restated them.
First, Herb said:
"But Southwest still cannot even provide one-stop, single-plane or normal connecting air service between its headquarters city and points beyond the Wright/Shelby amendment states (yes, the Wright amendment can be amended: Sen. Richard Shelby, R-Ala., amended it to add three more states)."
Secondly, just in case that one didn't hit home, he came back with:
"Dallas County reaped $15 million in taxes from Southwest in 2004, since Southwest's entire aircraft fleet is taxed in Dallas, not Fort Worth. Our air services are restricted, but our tax payments aren't."
Yes, nothing says that Southwest Airlines has to keep its headquarters in Dallas.
Last fall, I wrote here more than once about how we had the impression that everything at Southwest was "on the table." And I mean everything. While publicly CEO Gary Kelly admitted as much in any number of interviews, I'm not sure that many people really understood the level of introspection going on at the airline.
But in the last month the airline has begun to reframe the situation it finds itself in. And a major part of that reframing concerns the city of Dallas, Texas, which Southwest calls home.
First, there is no doubt in my mind that the preference for Southwest Airlines at this point in time would be for the Wright Amendment to be thrown out. The airline has also made comments of late that indicate this could be done on an extended timetable --over a period of five years for instance.
But let's take a closer look at the city that Southwest Airlines calls home.
Dallas, once a leading Southwestern U.S. economic powerhouse, is struggling.
In a 2004 economic report prepared by Booz Allen Hamilton, the consulting firm said, "By all rights, Dallas should be booming like many of its peer cities that experienced population growth above the United States average over the last 50 years -- Phoenix, Austin, San Jose, and San Diego. Instead, the city is lagging behind on many key indicators. More worryingly, Dallas is falling further behind with each passing year. The city is rapidly losing its position as the region's economic core, the quality of its workforce is relatively low, and it is increasingly home to a transitional population rather than a community of middle-class families that live and work here."
Pretty damning words.
But one of the more troubling comments in the firm's report alluded to a Dallas Morning News survey of area executives, which made it very clear that "Dallas is becoming an increasingly unfriendly place to do business."
One of the key reasons for this, according to the study, is the city's fragmented lines of responsibility, accountability, and authority at City Hall.
As a result of this haphazard legal structure, and a "placeholder" mayor that is a relatively weak participant in this structure, there has always been a historical "way of doing things" in Dallas. Needless to say, this type of situation, according to the BAH report, has led to a city government that suffers from little strategic long-range planning, and a lot of shorter-term reactive response.
As I write this, the city is now considering a change to the city's charter. The change would accomplish much of what the BAH study advocated, removing the position of city manager and beefing up the role of the mayor.
But, as one subscriber said to me this week, the unfortunate thing that has happened is that instead of voters understanding what they are voting for, the election has become more or less a referendum on the current mayor, Laura Miller.
As a result of the pending charter change election, the issue of a change to the Wright Amendment is not on the current political agenda. At least not for Laura Miller, who I suspect does not want to say anything publicly to complicate her position in the upcoming election.
But after this election is over, no matter which way it goes, we will see Southwest Airlines start to move even more aggressively to get the city to back its attempts to overthrow the Wright Amendment.
However, back to the bigger bombshell.
Why does Southwest even have to stay in Dallas?
As I said, I don't think the airline wants to move. Then again, can you imagine the feeding frenzy that would break out between cities if the airline did decide to seriously explore new locations?
Look at all the goodies Virgin America was able to extract from a number of governmental entities for their new headquarters and operations location -- and the airline has not even flown a single mile. Heck, they don't even have any major financial backing.
And hey, let's not forget why American Airlines is now headquartered in Euless, Texas. They are there because they got an offer they couldn't refuse in the late '70s, which caused them to move lock, stock and barrel from New York City. And believe me, when this happened, people were shocked that American would ever, EVER, consider leaving New York.
But the word "free" carries a lot of weight.
So let's just have some fun and consider some of the alternatives that Southwest could dangle in front of the folks in Dallas, to whom they pay between $15 million and $20 million a year in taxes.
First on the list would have to be either Houston or San Antonio. More than one person we talked to this week was very high on a potential move to San Antonio. The feeling seems to be that while Southwest could threaten to move elsewhere, it would be very hard for the airline to desert Texas entirely. And clearly leading the intra-Texas informal poll we did this week was San Antonio.
Both Gary Kelly and Herb Kelleher also have strong ties to the San Antonio area.
The city has an excellent reputation of late, in terms of working with businesses and understanding what businesses need. It just landed the Toyota manufacturing facility, and of course, big telecom player SBC is headquartered there. It also has a large military presence. Never a bad thing for business. Some this week argued strongly that San Antonio offers a better-rounded economic base than does the city of Dallas.
As for the question of hauling employees in for training, while the airline currently does not offer a large number of long-haul flights out of San Antonio, they could always add them.
Now with Houston, this gets interesting. Actually, for tax purposes, Southwest Airlines could "move" its fleet to Houston tomorrow if it wanted to. As I understand it, Texas law allows the airline to either use Dallas as its home for tax purposes, because its headquarters is there, or Houston, because it has more flights based out of there.
Just a bit more leverage to use if the airline finds it necessary to do so. City of Dallas, are you listening?
As far as Houston is concerned for a new headquarters? Ah, well... I don't mean to insult you Continental folks, but I really don't have much good to say about Houston. It's just as hot as New Orleans, without any of the accompanying "atmosphere."
But it is in Texas.
Austin? No. Can't see it. And neither could any of our other sources we talked to this week.
Then again, we go back to the "everything is on the table" concept.
Or, as one reader wrote this week, "[Chicago's] Mayor Daley would probably see the opportunity to have a major corporate headquarters near Midway to revitalize the South Side very alluring."
One PBB subscriber who lives in Orlando and who I swear works for the Chamber of Commerce on the side said, "Please note in PBB, Holly, that Florida has no state income tax, which would mean an instant raise for anyone moving here."
Uh-huh. Texas doesn't have one either, so you need to up the ante.
But you get the picture. It would be a feeding frenzy.
Whether Southwest is successful in eliminating the Wright Amendment or not, one thing is certain. The situation the airline finds itself in now is not conducive to positive long-term economic growth on down the line.
And while the cities of Dallas and Ft. Worth, and American Airlines, for that matter, can continue to haggle about the Wright Amendment forever, the real potential loser here is the city of Dallas.
It loses money now because Southwest (and no other airline) can fly long-haul from Love Field, which reduces the fees it can collect from the operation at Love Field, and it is going to lose in the not-too-distant future because Southwest is not going to sit around and continue to give Dallas $15 million to $20 million a year in tax payments for the privilege to stay headquartered at a location that is economically stagnant for the airline.
But it could lose even more.
There are other cities. There are other airports with no restrictions on where the airline can fly.
And they would all LUV to have Southwest call them home. After all, we are all free to move about the country, are we not?
JS
Veteran
swflyer said:
Criminy, Southwest can ferry a flight from anywhere to DAL if they want. The bitching is getting old.
I think the City of Dallas should close DAL to commercial traffic. This was the intent of 26(+) years ago. If there is to be any modification of the Wright Amendment, I think it should go in the direction of fulfilling the intent of the citizens and the Cities of Dallas and Fort Worth which created the problem in the first place.
Now that Delta is out of DFW, would seem to be an ideal time for LUV to move in... Since the airport has plenty of facilities.
Furthermore, to argue that DFW is delay prone is wrong. This is from the January 2005 Air Travel Consumer Report:
Airport/On-Time Percentage // WN at Airport OTP
BWI / 74.0 // 76.9
DFW / 78.3 // N/A
DTW / 73.9 // 78.5
FLL / 67.5 // 73.2
LAS / 69.6 // 71.9
LAX / 71.6 // 72.3
MCO / 74.7 // 80.1
MDW / 73.2 // 72.9
OAK / 74.3 // 75.0
PDX / 74.8 // 75.5
PHL / 58.6 // 65.6
PHX / 70.8 // 73.0
PIT / 73.0 // N/A
SAN / 71.1 // 72.9
SEA / 73.6 // 79.3
SLC / 74.3 // 72.6
STL / 74.8 // 77.5
TPA / 75.7 // 76.7
As you can see, none of these major airports served by Southwest has a better on-time performance than DFW. In fact, at only three, DTW, MCO and SEA, does Southwest's on time performance beat the DFW airports. So, to say DFW is delay-prone is simply not true.
Now, the reason why DFW performs so well could be due to the fact that AA has longer block times than WN. AA's blocks to DFW tend to be 5 to 10 minutes longer than WN's similar flights to DAL. This is the primary reason why LUV does not want to operate there.
But I stick by my earlier statement. The Cities of Dallas and Ft. Worth originally agreed to, essentially close their individual airports to commercial air service to consolidate air service at one centralized airport. Any changes need to go in that direction. Not because I favor AA or want to see WN harmed. I just simply think that is the spirit of the law and agreements originally approved, regardless of whether or not Southwest signed the agreement way back when.
Now that Delta is out of DFW, would seem to be an ideal time for LUV to move in... Since the airport has plenty of facilities.
Furthermore, to argue that DFW is delay prone is wrong. This is from the January 2005 Air Travel Consumer Report:
Airport/On-Time Percentage // WN at Airport OTP
BWI / 74.0 // 76.9
DFW / 78.3 // N/A
DTW / 73.9 // 78.5
FLL / 67.5 // 73.2
LAS / 69.6 // 71.9
LAX / 71.6 // 72.3
MCO / 74.7 // 80.1
MDW / 73.2 // 72.9
OAK / 74.3 // 75.0
PDX / 74.8 // 75.5
PHL / 58.6 // 65.6
PHX / 70.8 // 73.0
PIT / 73.0 // N/A
SAN / 71.1 // 72.9
SEA / 73.6 // 79.3
SLC / 74.3 // 72.6
STL / 74.8 // 77.5
TPA / 75.7 // 76.7
As you can see, none of these major airports served by Southwest has a better on-time performance than DFW. In fact, at only three, DTW, MCO and SEA, does Southwest's on time performance beat the DFW airports. So, to say DFW is delay-prone is simply not true.
Now, the reason why DFW performs so well could be due to the fact that AA has longer block times than WN. AA's blocks to DFW tend to be 5 to 10 minutes longer than WN's similar flights to DAL. This is the primary reason why LUV does not want to operate there.
But I stick by my earlier statement. The Cities of Dallas and Ft. Worth originally agreed to, essentially close their individual airports to commercial air service to consolidate air service at one centralized airport. Any changes need to go in that direction. Not because I favor AA or want to see WN harmed. I just simply think that is the spirit of the law and agreements originally approved, regardless of whether or not Southwest signed the agreement way back when.
That's it, in a nutshell. Taxi times are much longer at DFW, on average, than at DAL.funguy2 said:
And, incidentally, when you look at the other airports, you need to examine the alternatives available to WN. They did consider for a time serving BFI instead of SEA, but the facilities issues would have been substantial. Of the others you listed, WN serves the airports in the region best suited to short-haul, fast-turn flights, with one exception (LAX).
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