Wednesday, October 19, 2005

Not the Wright Solution

NOTE: Because there was no posting yesterday, you get two-for-the-price-of-one today!

Remember the song by The Clash a few years ago—“Should I Stay or Should I Go?” If the response to a Dallas Morning News poll are any indication, Southwest Airlines is likely to move their tents to a new encampment…65% say it just makes sense.

Dallas’ 5th largest taxpayer is making noises about relocating The Home Office someplace else if legislation choking Southwest’s operations at Love Field is not rescinded… a possible tactic to up the ante on the airline's drive to repeal the Wright Ammendment.

You can’t ignore a veiled threat in the comments of Southwest’s President, Colleen Barrett, who said it’s a little odd to have the airline’s center of operations at it’s smallest post in the Southwest system.

Southwest Chief Executive Gary Kelly said earlier this Summer that if Southwest were choosing a headquarters location from scratch, Dallas wouldn’t even make the first cut…


And you cannot ignore Chairman Herb Kelleher’s comments in The New York Times that the airline might oughtta start “casting about for a place that's more efficient to operate."

“You are clear for departure.”

This is the equivalent of the handwriting on the wall of Belshazzar’s palace in ancient Babylon, “Mene, Mene, Tekel, Parsin.” Only the common-day translation might be more like “eenie, mene, miney, mo—where might Southwest’s headquarters go--away from Dallas?

This continues to be an interesting debate…and everyone is weighing in.

Southwest has already amassed a list of signatures from 250,000 pro-repeal Texans...and then there are those trying to sit on the fence (or the tarmac?)

Dallas Mayor Laura Miller has gone so far as to propose a middle-ground solution that would phase out some of the restrictions of the Wright amendment, giving American Airlines and D/FW airport time to adjust to the idea… Guess when the government has subsidized your operations by restricting the competition for years, it’s a bit of a shock when the playing field is leveled.

Mayor Miller’s heart may be in the right place, but her solution is from the Wright playbook, still prohibiting international routes, and imposing a curfew to eliminate the potential for overnight flights.

A curfew? What—are the pilots all teenagers??
…maybe we need to send chaperones along for the flights, too??

As usual, Texas’ senators are remaining safely circumspect on this issue: Sen. Kay Bailey Hutchison wants the Senate to take “a thoughtful look at the Wright amendment," which was surely a gust of wind beneath the wings of both antagonists and protagonists on the issue. Senator John Cornyn’s office noted that they’re “always…happy to hear from constituents."

Bet they are.

The Dallas Morning News notes Southwest generated $15 million in tax revenues last year. It provides 5,000 jobs, and its activities at Love Field create $2 billion to $3 billion in annual economic activity.

Translation: Votes.

There are some very practical logistical issues to be considered…
Imagine trying to hold a meeting of your key people at The Home Office--for which your staff has to make two flight connections to attend, and carve out three days for a one day meeting, because of the restrictions imposed by the government?

Would it not be more efficient to move HQ to a place more easily reached by air?

Here’s another one: You want to do business in Dallas—you fly into Love Field, and you’re 20-minutes or less from your appointment by car. Why fly into D/FW for that meeting in Dallas, which is at least 30-minutes away, and then scurry to where you're wanting to go?

I’ve driven it…it’s ridiculous.

Wright is just wrong.


Anonymous said...

The real reason most politicans are against repeal of the Wright Ammendment is THEY get upgraded on American to business or first class when they fly and Southwest can't do that for them. If they come out for SW they will be blackballed by AA and be forced to pay more or ride coach. This is not only out of Dallas but all over the country and AA flys to more places than SW. AA also upgrades the families of the politico's.

Anonymous said...

Far more damning are Sen. Kay Bailey Hutchison's close financial ties with the DFW Airport Board.

Her husband has served as their attorney for nearly 40 years.

As goes DFW Airport, so goes KBH's checkbook.

Incredibly, she's refusing to recuse herself from the Wright Amendment hearing scheduled for Nov. 10.

Conflict of interest, anyone?

Ethics violation... anyone, anyone?

Han said...

We must ask why the Wright Amendment was put in place in the first place. The thinking was that the state did not want to pay for both Dallas and Fort Worth airports so both airports were supposed to close down to make way for the consolidated DFW. Then Southwest snuck in, seeing an opportunity at the now abandoned Love Field, and after much politics, the Wright Amendment allowed Southwest to stay at DAL (which should not have been their right to do) as long as abided by restrictions of flying to neighboring states. Now 30 plus years later, Southwest wants to capitalize on the monopoly they have at Love Field to fly to all other destinations domestically. So why doesn't Southwest just begin operations at DFW where all the other carriers are flying out of? Southwest says that since DFW is based on the hub and spoke system, it does not think the airport is viable to its point-to-point operations. Well then why would Southwest announce service at DEN beginning 2006 when DEN is a monstrous hub for United?? Southwest says it wants a free competitive market. If it moved to DFW (where ATA, another low cost carrier already operates), it will get its free competitive market.

So then what will happen to DAL if the Wright Amendment is repealed? Most likely, the Master Plan that restricts growth at Love Field will go away so that American, Continental and the like can come in and operate, competively. What's that mean to Dallasites? More traffic and congestion along the already congested highways and more air traffic noise. What could be good for local passengers is the available markets, especially international which would be served by airlines other than Southwest. Of course, one version of the bill will restrict travel from DAL to the US only, further solidifying Southwest's dominance in the domestic market. What many people don't know is that Southwest is not the small little airline anymore: Southwest is the largest domestic carrier based on passengers boarded.

What does this mean for connecting passengers? Well smaller and more unprofitable markets that depend on connectivity will most likely be dropped because flights will have to be spread out between DFW and DAL. Southwest contends that it is American's choice to drop these markets and it won't have much effect because some other carrier will come along and pick them up. Does this really make sense for any airline, with the state of the industry today, to pick up an unprofitable route if it can't leverage the connectivity through a large hub? So Southwest should really consider picking up those markets to allow Joe Six-Pack from Smallville, USA to travel, but Southwest of course wouldn't do that, using the excuse that it is P2P and small, unprofitable routes are the antithesis of its business model. Basically, Southwest is saying screw Lobbock, we need to get more seniors out to Vegas.

What about Mid-Cities residents? Sure DAL will grow and it will be quasi-more convenient to get to the airport (after fighting off the increased traffic). But there are a lot of travelers living in Fort Worth, Hurst, Bedford, Euless, Grapevine etc. that benefit from DFW's locality and the number of markets it serves. If a bunch of flights get shifted to Love, then Dallas will see an influx of disgruntled Mid Cities/Fort Worth travelers clogging up 183, 114, 635 etc. Then you have the DFW employees that will either be laid off or have to commute to DAL, which would congest traffic even more.

What should Southwest do? It should honor the agreement it made when the Wright Amendment was written. The airline has flourished while the other carriers are either bankrupt or close to it. If Southwest dominates the market anymore, that's good for Southwest, bad for travelers because that means many markets will be ignored and probably spit upon. Southwest should try its hand at DFW. There are plenty of gates, and with the number of carriers, there would be much more free competition than at the restricted Love Field. I have nothing against Southwest; I just don't want them to create a false image of themselves as the persecuted one, when in fact, they are the biggest domestic carrier and have been profitable for 32 consecutive years when other airlines are struggling to honor its pensions.

Anonymous said...

In response to Han, you say Southwest should honor the agreement made when the Wright Ammendment was written, but Southwest never agreed to it.
The Wright Ammendment was sneakily added to another bill by Jim Wright from Fort Worth to protect DFW and American Airlines from competition. American had tried for years to sue Southwest into bankruptcy before Southwest even took their first flight.
The courts continually agreed that Southwest had as much right to fly as anyone else and they even indicted several airline executives for harassing Southwest and conspiring to bankrupt them.
All Southwest wants is the right to compete--something that American is afraid to do.
As for why doesn't Soutwest fly out of DFW--it is more costly and delays are worse. Delta just pulled out of there because they couldn't make things work there either.
If the government told your favorite restaraunt they had to close because they were causing other places to lose money would you support that law. Why don't they close pass a law against Home Depot because Sears is losing money?
The bottom line is that no matter which airline you prefer or which airport you prefer, the Wright Ammendment prevents fair competition. It was designed with the sole purpose of putting Southwest out of business.
Southwest has managed to stay profitable and never lay off an employee while American has pulled out of markets and layed off many employees long before talk of repealing the Wright Ammendment.
Where there is a demand for air travel, someone will fill it. Should we all feel sorry for American and pass special laws to give them an advantage just because their executives can't figure out how to make things work? I don't think so.

Han said...

Here's a timeline to "anonymous 3" from the Dallas Morning News website concerning the Wright Amendment:

"1968: Dallas and Fort Worth, under pressure from the federal government, agree to build a regional airport to replace Dallas Love Field. The airlines serving Love pledge to move to the new airport.

1971: Southwest Airlines launches its flights to Houston and San Antonio.

1973: Dallas and Fort Worth sue to try to force Southwest to move to the new airport. A federal judge allows Southwest to remain at Love Field.

1974: Dallas/Fort Worth International Airport opens.

1978: Congress deregulates commercial aviation, allowing carriers to set their own fares and plan their own routes.

1979: In a compromise involving all the parties, Congress approves the Wright amendment, named after U.S. House Speaker Jim Wright of Fort Worth. The law limits flights to Texas and adjoining states but allows commuter planes with 56 seats or fewer to fly farther."

You can see from this timeline that Southwest was the one that snuck in, not Jim Wright, to service Love Field when all the other carriers agreed with the Federal Government to close down both airports in Dallas and Fort Worth.

Love Field should be closed. Southwest litigated to keep it open - D/FW was just protecting its federally mandated position from Southwest trying to get a monopoly out of Love. Even Southwest knew that they had won when the Wright Amendment was enacted: "Southwest chairman Herb Kelleher quoted in Financial World: 'Operationally, it’s extremely difficult, but I pledged we wouldn’t seek to overturn it,' in reference to the Wright amendment." (DMN)

Now they're just getting greedy.