"Wright Amendment: Robert L. Crandall: American: D/FW Airport keeps the region strong"

Friday, March 18, 2005

Robert L. Crandall: American: D/FW Airport keeps the region strong
By ROBERT L. CRANDALL 
The Dallas (TX) Morning News


Early agreements 

>From my vantage point in retirement, I have watched with great interest as
Southwest Airlines has replaced its long-standing neutrality about the
Wright amendment with an active campaign for repeal. 

Not so many years ago, in the late 1970s, Dallas and Fort Worth lobbied hard
to attract American Airlines, which was leaving New York and considering the
Dallas-Fort Worth area and Chicago for its new headquarters site. American
chose the metroplex, to the delight of both cities and their citizens. 

In the intervening years, the decision has been good for the metroplex, the
airline and the airport they jointly developed. Absent D/FW International
Airport and the American hub, the metroplex would be far less vibrant today.


Given that history, I find it astounding that so many in the metroplex are
prepared to abandon any pretense of fair play by endorsing both Southwest's
newfound desire to fly anywhere it wishes from Love Field and its continued
monopoly at Love Field. 

In the early '60s, the Civil Aeronautics Board and the Federal Aviation
Administration decided that supporting service to separate airports was
economically indefensible and required the two cities to reach agreement on
building a new airport as a condition of continued federal aviation support.
The cities did so and, to finance the new field, signed contracts with one
another and with all the airlines then serving either Amon Carter or Love. 

The airlines agreed to move to D/FW and to pay rent, which would pay off the
construction bonds. The cities agreed that each would take whatever action
was required to prevent competitive commercial airline service from any
airport other than D/FW. 

Unique advantage 

Since Southwest did not exist at the time the agreement was made, it was not
a signatory, and when D/FW opened, Southwest found a legal loophole in the
agreement that permitted it, and only it, to continue flying at Love. And
Dallas failed to fulfill its promise to end commercial airline service that
competes with D/FW, as it could have done by closing Love. Over the years,
the scope of that competition has increased, as the original limitations on
points that may be served from Love have eroded. 

Without detracting from Southwest's excellence in any way, I think it is
crystal clear that it would not have been as successful as it has been, and
might not have succeeded at all, had it not had the extraordinary advantage
of a monopoly position at an airport far more convenient for many Dallasites
than D/FW. 

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. 

It is a simple fact that having two airports will reduce the number of
flights offered to any given destination from D/FW, which will make D/FW
less attractive to connecting passengers than other hubs with more
frequency. (A person traveling from Wichita, for example, to New York will
always choose to go by way of a hub with 10 flights rather a hub with four
flights.) 

Bigger picture 

And it is also a fact that the host city of the bigger hub, offering more
flights to more places, will be perceived as a more desirable place to put
home offices, distribution centers and sales offices than a city with a
smaller hub. Thus, by opting to support Love, Dallas is choosing a smaller
place in the world than it otherwise could have. 

However, there is more now at stake. D/FW has just completed a $2.7 billion
upgrade of its facilities by constructing, among other things, a new
international terminal and an interterminal people mover. Passengers who fly
from Love rather than D/FW do not contribute to paying for those facilities,
and if the airport is unable to sustain either its high physical standard or
its credit rating, it will become an unattractive place for carriers other
than American to offer service. 

In the long run, that can only hurt every citizen, since all who live here
depend on the continued growth of the local economy. 

The debate about Love Field is not about low fares, since there are ample
gates at D/FW, available on very attractive terms, to accommodate all the
flying Southwest does or may wish to do. 

The debate is really about whether America's most successful low-cost
airline should continue to enjoy the unique advantage of a close-to-home
monopoly airport. It's about whether a deal is a deal. 

And it's about whether Dallas and its citizens still have the grand vision
of those who created D/FW so many years ago. 

Robert L. Crandall retired in 1998 after 25 years with American Airlines and
AMR Corp., the last 13 years as chairman and chief executive.


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