Time for Dallas airfares to come down

"If you need to travel between Nashville, Tenn., and Dallas, the
lowest unrestricted, nonstop fare is $1,291 on American Airlines. But
if you want to fly between Nashville and Houston nonstop, you'd pay no
more than $356 for a round-trip ticket on Southwest."

THE WALL STREET JOURNAL / November 30, 2004

Wright Amendment Is Wrong
By SCOTT MCCARTNEY

You may have never heard of the Wright Amendment, but if you've ever
flown to Dallas, you've probably paid for it.

The Wright Amendment is a federal law that puts heavy limits on
commercial flights out of Dallas Love Field: Airlines can fly large
planes from Love Field only to states that surround Texas. This
bizarre rule was established in 1979 to protect the big new
international airport built 10 miles west of Love Field, Dallas-Fort
Worth International Airport.

The discount carrier Southwest Airlines, preferring Dallas Love for
its closer location to the city, refused to move its operations to
DFW. So a regulatory fence was built around Dallas Love.

For years, the status quo was comfortable for everyone -- but now as
Delta Air Lines closes its DFW hub and low-cost airlines gain clout,
Southwest is challenging the law. It's a move that has significant
ramifications for air travel nationwide since Dallas is a key
destination.

The law is one of the strange quirks of aviation that sometimes
confound and cost travelers. For instance, if you need to travel
between Nashville, Tenn., and Dallas, the lowest unrestricted, nonstop
fare is $1,291 on American Airlines. But if you want to fly between
Nashville and Houston nonstop, you'd pay no more than $356 for a
round-trip ticket on Southwest. Southwest can fly to Nashville from
Houston, but not from Dallas.

Studies have shown repeatedly that travelers going to and from Dallas
pay a hefty premium for the lack of a free market. In fact, from
Dallas, Southwest can't even sell a connecting ticket to cities
outside the bounds of the Wright Amendment.

Southwest's decision to try to tear down this regulatory fence is
sparking a nasty debate in the industry. Local officials, DFW Airport
and AMR Corp.'s American are fighting to keep it; some in Congress
living outside the fence are trying to punch holes in it. It's another
case where the interests of airlines and airports clash with
consumers. Congress will get to decide.

Over the years, the Dallas restriction has benefited both American and
Southwest. American's huge hub at DFW has been protected against
long-haul competition from Southwest, and American has been able to
charge higher prices.

At the same time, Southwest has benefited because the restriction has
left it a virtual monopoly at Love Field. The inability to fly longer
trips beyond Texas and nearby states kept other airlines out, and
helped Southwest make a lot of money shuttling folks between Dallas
and Houston, and points nearby. For years Southwest has professed to
be "passionately neutral" about the fence.

Now, however, with Delta closing its DFW hub, Southwest sees a big
opportunity to grow in Dallas. With Delta's move remaking the
landscape, Southwest now says the Wright Amendment has outlived its
purpose of protecting DFW Airport and should be killed.

"It is anticompetitive," says Southwest Chief Executive Gary Kelly.

At the least, a new hole is likely to be cut in the fence. In 1997,
Congress added Kansas, Alabama and Mississippi to Love Field's
large-plane reach. This fall, the Tennessee congressional delegation,
which includes Senate Majority Leader Bill Frist, introduced a measure
to allow flights from Love Field to Tennessee. That would bring
cheaper fares to Nashville.

DFW Airport, on the other hand, has rallied local politicians to
oppose any change. Even Republicans who tend to loathe government
interference in business embrace this restriction. "A deal is a deal,"
says Kevin Cox, DFW's chief operating officer.

Mr. Cox claims that Southwest's rumblings have already hurt DFW's
chances to bring in new discount-airline service. Right after Mr.
Kelly told a local chamber-of-commerce breakfast he wanted changes,
one discount airline quashed talks with DFW about leasing some of
Delta's soon-to-be-vacant gates, Mr. Cox says.

"None of the low-cost carriers are interested in a substantial
increase in service as long as Southwest is threatening to end the
Wright Amendment," he says.

That reluctance has a lot more to do with American than with
Southwest, however. Executives from the likely suspects -- America
West Airlines, Spirit Airlines and JetBlue Airways -- all said in
interviews they had no interest in building a DFW hub, regardless of
the Wright Amendment. Battling American at its home fortress is a
tough challenge.

AirTran Airways is tangling with American right now, bringing
inexpensive fares on some routes like Dallas-Los Angeles. But AirTran
has seen a very strong response from American. AirTran's prospects
might improve once Delta shuts down its hub, but for now, AirTran has
pinned its growth prospects on Chicago, where it is trying to buy
gates currently leased to bankrupt ATA Airlines. AirTran will have to
battle Southwest at Midway, preferable to battling American at DFW.

Rather than banking on another discounter tangling with American,
Dallas would be better served letting Southwest pick up the slack left
by Delta's pullout. If Southwest were able to offer cheaper long-haul
service, American would be forced to bring its prices down. That would
stimulate more traffic, which, in the long run, is good for both
airports and consumers.

After all, airports collect more revenue when more people are
traveling. Standard & Poor's airports analyst Kurt Forsgren says
opening up Love wouldn't have a big impact on DFW's credit. And UBS
airline analyst Robert Ashcroft goes further: "DFW's objections seem
particularly odd to us -- we believe eliminating the Wright Amendment
might be the best thing that ever happened to DFW."

But the biggest beneficiary "would be John Q. Business Traveler," says
Tom Parsons, president of Bestfares.com. "I'm not sure why we have to
protect the third-largest airport in the world [in terms of flights]."

Many big metropolitan areas, including New York, Los Angeles, Chicago,
Houston and Washington, have extensive service from two or more
airports. Growth at Long Beach, Calif., hasn't hurt Los Angeles
International; growth at Chicago Midway hasn't caused a shortage of
service at Chicago O'Hare. Often a nearby airport is the best way to
give people a low-cost carrier option even when there's a fortress hub
in town.

Competition is good for businesses, and for travelers. It's time for
aviation fences, and artificially high fares, to come down.

=======================================