"Wright Amendment: Herb Kelleher: Southwest: Let us fly - for the consumers' sake"

Friday, March 18, 2005

Herb Kelleher: Southwest: Let us fly - for the consumers' sake
By HERB KELLEHER 
The Dallas (TX) Morning News


As part of our series of commentaries on the Wright amendment debate, we
turn to the "old lions" of American and Southwest airlines to offer their
views. 

The old goofiness 

The goofiness of the Wright amendment is encapsulated by the passenger who
told me Southwest was an "idiot" because it was headquartered in Dallas but
didn't offer any air service between Dallas and Phoenix, even though he was
willing to connect in El Paso. 

Prior to the Wright amendment, Harding Lawrence, the CEO of Braniff, stated
on a radio show that Dallas/Fort Worth International Airport was already a
tremendous success, and that its principal problem was? Congestion! 

What 'deal'? 

Southwest located its headquarters in Dallas because Dallas had most of its
flights. But, today, Dallas is dropping fast in rank as Love Field traffic
and flights decline subsequent to 9-11. 

Immediately after Southwest began service at Love Field, the "D/FW parties"
began a series of lawsuits to oust Southwest from Love Field. 

This litigation was brought under the Dallas and Fort Worth 1968 Concurrent
Bond Ordinances. These ordinances did not provide that Love Field would be
"closed" (another urban myth). Instead, they provided that, if "legally
permissible," air carrier service would be "phased out" at Love Field. The
federal courts twice held that this provision of the 1968 Concurrent Bond
Ordinances was not "legally permissible." Thus, Dallas did not "welsh" on
any commitments to Fort Worth or D/FW Airport: The federal courts declared
those commitments legally unenforceable. 

Subsequently, in 1978, the airline industry was deregulated. Having lost in
the courts, the D/FW parties turned to Jim Wright, then the majority leader
of the U.S. House from Fort Worth, to restrict Southwest's Love Field
service. Southwest opposed any restrictions on Love Field air service and a
multi-month political battle ensued. Jim offered a "compromise" permitting
nonstop Love Field air service within Texas and the four states adjoining
it. Southwest was told by its congressional supporters that it was either
Jim's "compromise" or "nothing"; so Southwest took something over nothing.
There was no Wright amendment "deal." There was just the application of
political power to curtail Southwest's Love Field air service. 

Also, as Al Casey, then CEO of American Airlines, recounts in his memoirs,
American moved in 1979 solely to get much cheaper headquarters space in Fort
Worth due to a tax-free bond deal. 

The modern goofiness 

The Wright amendment was supposedly pushed through to protect D/FW Airport
(i.e., the carriers serving D/FW). That was 26 years ago; D/FW is now the
third-busiest airport in the world and dominated by American, the world's
largest carrier (no more Braniff and virtually no more Delta). 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). 

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. 

The Dallas Love Field Master Plan, approved by the FAA, limits Love Field to
approximately one-fifth the size of D/FW. All parties to the master plan,
including neighborhoods and American Airlines, approved this size for Love
Field and the amount of commercial air service it can support. 

Fares at D/FW are competitive within the Wright/Shelby amendment states but
are woefully noncompetitive beyond those states. 

According to a Dallas Morning News poll in 1997, an overwhelming majority of
the people in Dallas, Collin, Denton and even Tarrant counties favored
repealing the Wright amendment. Only D/FW lobbyists stand against the
people's will. 

A nonstop perimeter rule was adopted at Reagan National Airport to encourage
growth at Dulles International Airport. American Airlines lobbied
successfully to have the Reagan National perimeter expanded. Apparently,
what's good for the Northern Virginia goose is evil for the metroplex
gander. Furthermore, no perimeter rule has ever included the goofy marketing
and ticketing restrictions of the Wright amendment. 

American lowered its fares at Miami in order to compete with low-fare
service at nearby Fort Lauderdale and reported more passengers and revenues
by doing so. Why, then, will lower fares at D/FW, produced by modestly
enhanced competition from Love Field, harm either the airport or the
airline? 

Conclusion 

Southwest does not intend to harm D/FW Airport or any of its air carriers.
If that baseless concern persists, however, then the Wright amendment could
be gradually, in steps, phased out over a period of years, starting with its
unprecedented and goofy marketing and ticketing restrictions. 

Dallas has a reputation as a free-market, free-enterprise city. Does that
reputation square with the 26 years of restricting Love Field in order to
protect the carriers at D/FW so that they can impose higher fares on the
public? 

If the goofiness does not stop after 26 years of protectionism, when will it
end? 

The time is now! 

Herb Kelleher is co-founder and executive chairman of the board of Southwest
Airlines. 


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