Dollar Figure is Put on Repeal of Wright

Southwest Airlines would gain millions in profits from repeal of the Wright Amendment, an independent financial analyst has calculated, while rival American Airlines would take a hit.

Ed Stewart, Southwest's spokesman, said it appeared to be a valid study and agreed that the Houston comparison was a good one. He added that Southwest officials believe that lower fares would result in American gaining passengers, not losing them.

King does not claim his five-page report is an exhaustive look at the changes that would result from repeal of the amendment. He based his study on publicly available Transportation Department passenger and revenue data.

He looked to Houston, where Southwest flies out of Hobby Airport and Continental dominates George Bush Intercontinental Airport, to project what would happen in the Dallas-Fort Worth market.

Continental and Southwest have co-existed profitably for years in Houston, King said. Continental still enjoys higher revenue per passenger on its flights than Southwest.

King said the Wright Amendment, by restricting competition, results in higher fares for flights out of D/FW. Transportation Department figures show American's revenues in 16 of the top 23 markets it serves out of D/FW average 24.62 cents per passenger per mile. On the rest of its routes, where it faces more competition, American averages 11.61 cents.

King estimates that American's revenue premium would drop 16 percent, or 4 cents, to about 20 cents per passenger per mile, without the amendment in place.

A loss of 1 million passengers by American would represent less than 2 percent of the 55 million passengers that use D/FW. That is a far smaller decline than projected in the recent report commissioned by the airport.

That study predicted that the airport could lose up to 204 daily flights and 21 million passengers because American would shift flights out of D/FW to Love Field.

King says he can't foresee that happening.

"It wouldn't be smart," he said. "They'd have to charge the same fares as Southwest. They would be committing suicide."

But Cox of D/FW said that assumption ignores the competitive history of the U.S. airline business. Major carriers traditionally respond to new competition by aggressively adding flights and slashing fares.

D/FW Airport officials say that if American shifts flights to Love Field, it would seriously impair the airport's finances and damage the North Texas economy.

The airport's study also predicted that competition from Southwest would result in a sharp decline in average airfares paid by D/FW travelers, and that fares would decline even without repeal if more discount airlines come to D/FW.

We Recommend