American Airlines Expected to Take Part in Wright Amendment Talks

In upcoming talks on the future of the Wright Amendment, no party has more to lose than American Airlines. That fact weighs heavily on the company's executives as they craft their negotiating strategy.

The airline plans to participate fully in talks sponsored by Fort Worth and Dallas, according to several people familiar with the airline's strategy on the issue. Those discussions are expected to begin soon, although no dates have been scheduled.

American executives want to demonstrate that they are willing to work with local officials, despite the risk that sitting down at the bargaining table could speed the eventual loosening of the amendment.

"By cooperating, it's a sign of good faith," one source said. "Keep in mind, American could be throwing more attention to this, which isn't necessarily in the airline's best interest."

The sources, all of whom asked not to be identified because they were not authorized to speak publicly for the airline, said American will approach the talks with several goals in mind, including:

Keeping Dallas Love Field as small as possible if flight restrictions are lifted. "The size of Love Field is a huge, huge issue," one source said.

Distributing gates equally among American, Southwest Airlines and any other interested carriers. That could be accomplished either by adding more gates, and possibly even a new terminal if the airport expands, or by forcing Southwest to give up some of its gates if Love shrinks.

Supporting a regional airport authority that would set equal landing fees at Love and Dallas/Fort Worth Airport.

An official spokesman for Fort Worth-based American declined to comment on the upcoming talks.

But the sources said the airline's executives first want to emphasize to local officials how badly the company could be hurt by repeal of the Wright Amendment, which limits most passenger flights from Love to Texas and several nearby states. American, North Texas' largest employer, has estimated it could lose hundreds of millions of dollars in revenue annually if Love is opened to more long-distance flights.

American officials also plan to propose closing Love entirely, perhaps making the land available to private developers, as has been done with shuttered airports in other cities. The airline has argued that the airport should be closed to commercial passenger traffic.

But interviews with the sources knowledgeable about American's strategy make it apparent that the airline also is considering its options if Fort Worth and Dallas decide that the time has come to repeal the Wright Amendment.

American doesn't want to be in a place where the airline is "just stalling and stalling year after year" on the Wright Amendment, one source said.

Still, it's highly unlikely that American would agree to simply lift the restrictions. American executives clearly want to minimize Love's ability to compete with D/FW Airport, and to limit Southwest's growth as much as possible.

"American needs to lock Southwest in at Love Field," said Mike Boyd, an airline consultant with the Boyd Group of Evergreen, Colo.

"Once Southwest is unable to expand, then they can't really do that much damage to American," said Boyd, who has studied the Wright issue and wrote a report on it last year.

Fort Worth and Dallas have agreed to hold talks in coming weeks on the amendment's future. The discussions are likely to be completed by June 14, a deadline set by the Dallas City Council.

And American and Southwest will be debating the issue publicly this week in Omaha, Neb., giving presentations before that city's airport board, which has urged Nebraska's congressional delegation to support repeal efforts.

Making their case

Southwest officials, who have agreed to participate in the talks, said they will welcome American to the negotiating table.

"We've always hoped they would enter into talks with everyone in good faith," said Ed Stewart, a spokesman. "Certainly from a [public relations] standpoint, they have something to gain, because I don't think they're winning that battle."

The Wright Amendment, a 1979 federal law, limits most passenger service from Love to Texas and adjacent states. Kansas, Alabama and Mississippi were later added, and flights to Missouri were approved by Congress last year.

But the law still restricts Southwest, because it operates only at Love, from providing nonstop, one-stop or connecting service from North Texas to most of its largest markets, like Chicago, Phoenix and Florida.

Southwest, which is based in Dallas and dominates Love Field, refuses to operate at D/FW, where American is the dominant carrier.

Wright critics say the law crimps competition and keeps airfares high in North Texas. They argue that lifting the restrictions would lower fares from the region as Southwest and American compete for customers. Supporters of the law say a repeal would cause D/FW to lose passengers to Love and could hurt American and the area economy.

American executives have long been among the strongest defenders of the law, because it protects the airline's D/FW hub from competition at Love.

Some analysts say American has little to gain from any compromise on the Wright Amendment.

"American has no incentive whatsoever to support any kind of phaseout" of the law, said Scott Hamilton, an aviation consultant with Leeham Cos. of Sammamish, Wash. "It would be to their benefit to delay it as long as possible."

But the prospects of keeping the limits in place over the long term have dimmed over the past year. Although American still believes that a full repeal is unlikely soon, the company's executives are worried that other states could follow Missouri's lead and push to be exempted.

The airline will abide by a "cease-fire" on Wright-related lobbying until June 14, a deadline set by the city of Dallas. Southwest has also agreed to halt its lobbying until then.

If the issue is unresolved this year, the dynamic in Washington could change. Rep. John Mica, R-Fla., is campaigning to be chairman of the influential House Transportation and Infrastructure Committee. Mica is an outspoken Wright critic and could move a repeal bill through the committee.

"That would change the dynamic considerably," said Rep. Jeb Hensarling, R-Dallas, who is sponsoring a repeal bill.

American executives had previously expressed reservations about cooperating and said that sitting down with Southwest could raise antitrust issues.

But the sources familiar with American's strategy say the airline now believes that discussions that focus strictly on airport policy and possible legislation on the amendment would be allowed.

They plan to make their case to local officials that lifting the amendment is the wrong move for the community and that the best solution is to close the airport entirely.

That would force Southwest to move to D/FW, they will argue, and strengthen the larger airport while still fostering competition between the two airlines.

Southwest officials dismiss that idea. "It would be about a three-second conversation," Stewart said.

Size matters

If closing Love isn't an option, American executives apparently feel there is some value in helping to shape any compromise. Chief among the airline's concerns are the size of Love and the scope of Southwest's operations.

The airport is capped at 32 gates under the Love Field Master Plan. Southwest operates 14 and holds leases on seven more. Continental Airlines has two gates, and American has three. Six gates, in the old Legend Airlines terminal, aren't under lease.

American executives would like to have as many gates as Southwest. If the size of the airport is unrestricted, that could mean building a new 21-gate terminal, the sources said.

"The model that American wouldn't like, but could accept, is a significantly larger Love Field with a lot of operations by American and other airlines," one of the sources said.

But the airline would prefer the airport stay at its current size or even shrink.

"Every additional gate [at Love] magnifies the problem," the source said. "Every fewer gate minimized the problem."

If Love is restricted, American would still want equal access to gates. That would mean Southwest would have to give up some of its gates to other airlines.

That will be a tough sell: Southwest holds leases on its gates, and would have to agree to relinquish them. Generally, an airport gate can host up to 10 flights daily. Today, Southwest operates about 120 flights a day to 14 cities from Love.

Southwest is noncommittal on the question of whether it would give up gates, but Stewart indicated that the airline will be reluctant.

"It's really too early to say for sure, because we don't know how things are going to play out," he said. "But we've made a substantial investment over the years at Love Field, and it's hard to imagine us giving up anything."

American's strategists apparently believe that the size of Love, and the distribution of gates, are more important issues than the timing of a Wright Amendment phaseout.

Some parties, such as the North Dallas Chamber of Commerce, have suggested phasing out the restrictions over several years. But American executives are more concerned about keeping the airport small.

"American would rather see a smaller Love Field sooner, as opposed to a bigger Love Field a few years down the road," the source said.

American executives are also interested in the idea of a regional airport authority that would oversee both airports. That plan has been suggested by both cities.

American would support a regional authority if it set equal landing fees at both airports. That would eliminate one advantage for airlines at Love Field and help keep D/FW's fees from rising as quickly.

Regardless, the source said, the airline wants to convince North Texans that it is serious about negotiating, and it plans to work with Southwest, the cities and the local congressional delegation to come up with a solution.

But don't expect American to give up easily.

"I can't imagine a situation where American would go along with something that would do a lot of damage," the source said. "If it isn't in their interest, of course they'd fight it."

Washington correspondent Maria Recio contributed to this report.

IN THE KNOW

The Wright Amendment

Critics say the 1979 federal law, passed by Congress to protect the then-new Dallas/Fort Worth Airport from competition at Love Field, crimps competition and keeps North Texas airfares high. It has come under increasing attack in Congress, pushing Fort Worth and Dallas into talks.

Fort Worth Star Telegram


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