Study: Wright Amendment Repeal Would Harm D/FW

A new study commissioned by American Airlines concludes that Dallas/Fort Worth Airport could lose hundreds of flights to scores of destinations if the Wright Amendment is repealed.

The report, which American released Monday, was written by Eclat Consulting, an airline consulting firm based in Reston, Va. It says that if the Wright restrictions were eliminated, D/FW would lose 218 daily departures, while Dallas Love Field would gain about 125 flights.

That would give North Texas a net loss of 93 flights. Most of the cities losing service would be in small markets, like Springfield, Mo., Lawton, Okla., and Waco. But the region could also lose nonstop service to several international destinations, including London, Paris and Buenos Aires, Argentina, as feeder routes are cut back.

"The ramifications reach well beyond the D/FW metropolitan area," Randy Babbitt, Eclat's chief executive, said at a news conference in the Grand Hyatt at D/FW Airport's new Terminal D.

The battle over the amendment could soon return to the spotlight in Washington, D.C., said Will Ris, American's senior vice president of government affairs. Ris said the Senate Commerce Committee might hold hearings on the Wright issue by the end of the year.

Gerard Arpey, American's chief executive, would like to testify, Ris said. "He's looking forward to the chance to talk about it," he said.

A spokesman for the committee could not be reached for comment Monday.

Officials with Southwest Airlines dismissed American's report as a scare tactic that doesn't hold up to scrutiny.

"This is more of the sky-is-falling syndrome," said Southwest spokesman Ed Stewart. "They're in the business of threats; we're in the business of low fares."

American's Wright Amendment study is the fourth report this year to examine the effects of repealing the Wright Amendment.

A previous study for Dallas/Fort Worth Airport reached a conclusion similar to American's. A competing study conducted for Southwest said air service in the region would increase, rather than fall, if the amendment is repealed.

An independent report by the Boyd Group, a Colorado consulting firm, concluded that the overall effect on air fares and service would be minimal. That report stated that American would be better off competing from D/FW rather than moving flights to Love, if the amendment is repealed.

The Wright Amendment is a 1979 federal law that limits service at Dallas Love Field airport to cities in Texas and adjacent states. Mississippi, Alabama and Kansas were later added.

Last year, executives at Dallas-based Southwest began a drive to repeal the law, declaring that it was outdated and anti-consumer. Southwest operates solely from Love, saying D/FW does not fit its business model.

That means Southwest and American, which operates its largest hub at D/FW, don't compete on long-haul flights from North Texas.

Officials from D/FW Airport and American have strongly opposed any change, arguing that lifting the restrictions would damage the airport and the area economy.

Southwest and D/FW have both run television and print ads on the issue in recent months. Southwest's ads have ridiculed the law, while D/FW's have urged Southwest to move its operations to the larger airport.

With the release of the study Monday, American appears to be taking a higher profile on the issue. In the past, the airline focused most of its energy on lobbying Congress rather than battling to win public opinion.

According to the Eclat study, American would shift 45 daily flights to Love to compete with Southwest if the restrictions were eliminated. That would force the airline to cut additional flights at its D/FW hub, because it would need fewer passengers at its connecting hub.

Other airlines would shift an additional 33 daily departures to Love, the study concluded, creating a 20 percent reduction in D/FW's total service, according to airport officials.

D/FW has drafted contingency plans that take "fairly drastic measures" if the Wright Amendment is repealed, said Kevin Cox, chief operating officer at D/FW. He declined to give details.

"We have a serious problem on our hands if the repeal is successful," said Cox, who added that airport costs would double based on American's projected loss of flights. "Obviously you can't have your costs double without having a major blow to the economic engine that has served this community well for the last 32 years."

American would need to move flights because it risks losing customers who live closer to Love or who wish to travel closer to downtown Dallas.

"Dallas Love Field certainly wins here," said William Swelbar, a managing partner at Eclat who wrote the report. "But it comes at the expense of D/FW."

During the news conference, American officials took some potshots at Southwest, the nation's largest low-fare airline and the only major carrier that is still profitable.

"We have no cute slogans, no one is passing out petitions and we have no one in hot pants," Ris said, referring to Southwest's anti-Wright petition drive, which has featured employees in 1970s-style flight attendant outfits.

Swelbar dismissed Southwest's claim that repealing the amendment would stimulate more air traffic in North Texas, because fares would drop and more people would fly. That's what typically happens when Southwest enters a new market, a phenomenon dubbed the Southwest effect.

Swelbar said the gap in fares offered by Southwest and major hub airlines such as American has already closed significantly, and new Southwest service no longer spurs additional travel demand. Rather, it steals traffic from nearby airports and other airlines, he said.

"The revered Southwest effect is ancient history," he said.

Southwest officials disagreed.

"Just ask people in Philadelphia and Pittsburgh. They'll tell you the Southwest effect is alive and well," Stewart said. He said traffic in both cities has risen substantially since the airline began service.

Swelbar argued that many of those travelers would have otherwise flown from Baltimore/Washington or Newark, N.J.

Consultant Boyd said he doubted that American would move a substantial number of flights to Love, arguing that the airline could better compete from D/FW.

"American owns the D/FW Metroplex, and Southwest is locked in at Love, where it can't grow," he said. "American is in the catbird seat."

American officials would not disclose how much they paid Eclat for the study. They did acknowledge that they knew before hiring the firm that Eclat officials agreed with their position on the Wright Amendment.

Much of the public interest in the Wright issue focuses on airfares. Fares on long-haul flights from D/FW are among the highest in the nation, according to the U.S. Department of Transportation -- about 25 percent higher than the national average during the first quarter of 2005.

Southwest executives promise that fares on competitive routes will drop significantly if the amendment is repealed. In its study, the airline concluded that North Texas consumers could save $700 million annually.

A D/FW study concurred that fares would drop, although that report stressed that the airport and the regional economy could be hurt in the meantime.

The American study did not take a hard look at the effect on fares. Instead, the study pointed out that fares at D/FW have been dropping since 2001 even without long-haul competition against Southwest.

"Only very modest decreases in airfares should be expected should the Wright Amendment be repealed," the study concluded.

The Boyd study, similarly, did not anticipate a substantial drop in fares if the amendment is repealed.

Boyd called American's news conference "a 90-minute suicide note," arguing that the airline would only hurt itself by damaging its most successful hub if it moves flights to Love.

D/FW officials, who have been leading the public fight to preserve Wright, welcomed American to the battle.

"I think it was necessary and appropriate for American to step up and explain from an independent source what would happen if the Wright Amendment went away," Cox said. "It dovetails quite nicely with the study we've done. Unfortunately, it's a very ugly conclusion, which we all knew was quite likely."

Bob Kolba, a past chairman of the D/FW Airport Board, suggested that Southwest needs to move to the larger airport.

"What is best on a macro basis and best overall is not to leave it as is, but to do everything we can to join hands and get Southwest over to D/FW," Kolba said. "I just don't see these actions and retaliations helping anyone."


Four studies, four conclusions

Reports on the repeal of the Wright Amendment offer conflicting predictions.

American Airlines Study

Conducted by: Eclat Consulting

Major conclusions: D/FW loses 218 daily departures, including international service and small markets. Love Field gains 125 flights. Fares would drop modestly.

Southwest Airlines Study

Conducted by: Campbell-Hill Aviation Group

Major conclusions: Southwest adds 15 destinations from Love while American competes from D/FW. Both airports gain traffic. Consumers save $700 million annually on lower airfares.

D/FW Airport Study

Conducted by: Simat, Helliesen & Eichner

Major conclusions: D/FW loses 204 daily flights and 21 million passengers annually. Love traffic triples. Fares on competing routes drop by as much as 50 percent, but the local economy suffers as the region loses service to many destinations.

The Boyd Group Study

Conducted by: The Boyd Group

Major conclusions: The effects would be minimal. Southwest would add about 12 cities from Love, but fares overall would not fall substantially, and D/FW would not lose a substantial number of flights. American Airlines, competing from D/FW, would retain an advantage over Southwest because of customer loyalty and the strength of its hub operation.

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