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"The Wrongs of the Wright Rule"

Sunday, June 5, 2005

The Wrongs of the Wright Rule
By George F. Will
The Washington (DC) Post

DALLAS -- Some things, said Marx, appear in history twice, first as tragedy,
then as farce. The airport here named Love Field entered America's
consciousness through the tragedy of assassination: Lyndon Johnson took the
presidential oath aboard Air Force One on Love Field's tarmac. Today Love
Field is again in the news, this time illustrating the farcical consequences
of the government's 10-thumbed attempt to manage an industry.

In 1971, after years of harassing litigation by two airlines averse to
competition, Southwest Airlines was born. It had just three aircraft and
flew only intrastate, between Dallas, Houston and San Antonio. This first of
the no-frills, low-cost airlines, under the leadership of its ebullient
founder Herb Kelleher, was to democratize air travel and revolutionize the
airline industry.
The cities of Dallas and Fort Worth, and the Dallas/Fort Worth airport,
which opened in 1974, tried unsuccessfully to force Southwest to move its
operations from close-in Love Field out to DFW, arguing that the new airport
depended on this. Today Kelleher laughingly recalls telling a judge: "If a
three-aircraft airline can bankrupt an 18,000-acre, nine-miles-long airport,
then that airport probably should not have been built in the first place."

But in Washington, reasonableness is no match for the routine and lucrative
corruption known as rent-seeking -- economic interests getting government to
impose handicaps on competitors. House Majority Leader Jim Wright, from Fort
Worth, rode to the rescue of the strong -- DFW and Fort Worth-based American
Airlines. In 1979 he muscled through Congress a measure designed to stifle
the growth of Southwest and punish it for not moving out to DFW -- an
expensive move that would have made it sensible for many Southwest customers
to drive rather than fly to their destinations.

The Wright Amendment restricted interstate service from Love Field to cities
in just four states -- Louisiana, Arkansas, Oklahoma and New Mexico. In 1997
senators wanting to bring Southwest's low fares to their constituents
amended the Wright Amendment to allow flights to Alabama, Kansas and
Mississippi. Today, if you want to fly Southwest from Love Field to Los
Angeles, you must buy a ticket to Albuquerque, collect your baggage there,
buy another ticket, go through security again and board another plane.

Today DFW is the world's sixth-busiest airport, and American Airlines is the
world's largest carrier. American is, like all the older airlines, losing
money. But is that a reason to punish Southwest? Unlike other airlines,
Southwest is not asking Washington to take on its pension burdens or to give
it other subsidies. It is asking only for liberation.

Southwest, which is now using only 14 gates for 117 flights a day at Love
Field, says it could use only 21 gates if the Wright restrictions were
repealed. This would put some downward pressure on the fares of American,
which by the end of the year may have almost 1,000 flights a day out of DFW.

That pressure would be good for travelers -- and probably for American, too.
When Southwest entered the Fort Lauderdale market, forcing American to cut
fares to and from Miami, American's passengers and revenue increased. The
Philadelphia Inquirer reports that since Southwest entered the Philadelphia
market just last May, driving down the fares of previously unchallenged US
Airways, travelers through that airport have saved $1.2 billion.

The Wright Amendment is now functioning in the context of an airline
industry crisis aggravated by government policies. The government is
subsidizing airlines that have unsustainable business models. By allowing
them to use bankruptcy as a strategy for enhancing competitiveness against
other high-cost airlines, it creates an incentive -- even a necessity -- for
those rivals to enter bankruptcy and dump pension burdens on Washington.

Government is preserving precisely what ails the industry -- excess
capacity. Suppose a major carrier were to go out of business. A salient fact
about the airline industry is, Kelleher says, that "its principal capital
asset travels at over 500 miles per hour." Which means: If one airline
fails, unserved markets will be served swiftly. He notes that on the
afternoon of May 12, 1982, Dallas-based Braniff Airlines -- one of those
that had urged government to strangle Southwest in its cradle -- went out of
business. The next morning at least five airlines started up on some Braniff

Ronald Reagan said that Washington's approach to intervening in industries
is: If it moves, tax it; if it keeps moving, regulate it; if it stops
moving, subsidize it. Regarding airlines, the policy is: If they are
failing, keep them flying; if they are prospering, burden them. But surely
Washington, although difficult to embarrass, is embarrassed enough to repeal
the Wright Amendment.

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