Southwest Expands Service from Home

DALLAS (AFX) - Moving quickly to take advantage of a new federal law, Southwest Airlines Co. says it will sell one-stop flights from its home airport near downtown Dallas to 28 new cities at introductory fares starting at $99 each way.

The move is virtually certain to trigger a fierce fight between neighboring airlines -- Southwest, the most profitable U.S. carrier, and American Airlines, the nation's biggest.

American hinted it would slash prices on flights from nearby Dallas-Fort Worth International Airport, although American is likely to charge more for its nonstop flights.

For 37 years, a federal law called the Wright Amendment limited flights at Southwest's home base of Dallas Love Field for travel to Texas and a few nearby states. Southwest served 18 cities in that region.

Last week, President Bush signed a bill that allows immediate one-stop flights and, by 2014, unrestricted nonstops.

Southwest Chief Executive Gary Kelly announced that beginning Thursday, Southwest will for the first time sell tickets linking Dallas with Los Angeles, Chicago, Las Vegas and 22 other cities. It will also sell seats on partner ATA Airlines' flights to New York's LaGuardia Airport, Honolulu and Maui, Hawaii.

The flights must stop in Texas or a nearby state -- that was one vestige of the Wright Amendment that Congress wouldn't abolish until 2014. The Hawaii trips will take two stops. American won't actually add flights; it will merely change the way they are sold and priced.

'The days of high fares for North Texas are about to be past,' Kelly declared. 'In most cases, full coach fares will fall hundreds of dollars each way.'

The $99 tickets must be bought 14 days in advance and cover only a limited number of seats -- Kelly wouldn't say how many on each flight. The airline said competitors are charging between $116 to $219 for similar tickets.

Kelly suggested the expanded service from Dallas will generate enough new traffic to bring in $50 million in annual revenue. Southwest will have to control costs to do it profitably, he said.

American fought to keep the 1979 restrictions on Love Field, fearing repeal would damage its lucrative hub at DFW Airport 10 miles away. American and American Eagle operate 800 flights a day there, dwarfing Southwest's 120 or so daily flights at Love Field.

But Southwest spent the past two years lobbying Congress to repeal the old law. The mayors of Dallas and Fort Worth, tired of fighting over airports, cut a deal to repeal the 1979 limits in eight years. Southwest and American signed the agreement, and most Texas lawmakers supported it.

Now American faces the price war it hoped to avoid.

'We will be competitive' on fares, American Airlines spokesman Tim Wagner said. That is airline industry code for matching rivals' fares out of fear of losing customers. Wagner added that American believes it can charge more for its nonstop flights from DFW Airport, although he wouldn't say how much more.

American, a unit of Fort Worth-based AMR Corp., operates nonstop service from DFW to every city on Southwest's list and then some -- a total of 126 U.S. cities and 33 foreign destinations, Wagner said.

American also operates a few flights at Love Field, and will sell connecting tickets through St. Louis to other cities.

Some passengers at Love Field reacted happily to the prospect of a fare war.

'A hundred bucks is great,' said Ferrule Rose, who owns a Dallas-based music news Web site and sometimes sends writers and photographers to events.

'Six of us were supposed to go to L.A. on the 31st to see a show, but it was going to be at least $500 each so we had to cancel,' she said. 'If we had this, we'd be going.'

Faye Breeden of Frisco, Texas, was scanning the arrival board for her mother-in-law's Southwest flight from Orlando, Fla., via San Antonio. 'I had to buy her two separate tickets to get here,' Breeden said.

Dallas-Orlando is one of the routes on Southwest's one-stop $99 list.

'We go to Orlando quite often, so this will be great,' she said.

Southwest shares fell 22 cents to close at $16.35 on the New York Stock Exchange, while AMR shares lost 15 cents to finsihed at $24.10.

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