George Will on the WA

[enigma]

[font=Verdana, Arial, Helvetica, sans-serif][font=Verdana, Arial, Helvetica, sans-serif][/font][/font]
[font=Georgia, Times New Roman, Times, serif]Love Field[/font]
[font=Georgia, Times New Roman, Times, serif]George Will [/font][font=Georgia, Times New Roman, Times, serif](archive)[/font]


[font=Georgia, Times New Roman, Times, serif]from Townhall.com[/font]

[font=Georgia, Times New Roman, Times, serif]DALLAS -- Some things, said Marx, appear in history twice, first as tragedy, then as farce. The airport here named Love Field entered America's consciousness through the tragedy of assassination: Lyndon Johnson took the presidential oath on Air Force One on Love Field's tarmac. Today Love Field is again in the news, this time illustrating the farcical consequences of the government's ten-thumbed attempt to manage an industry.[/font]

[font=Georgia, Times New Roman, Times, serif] In 1971, after years of harassing litigation by two airlines averse to competition, Southwest was born. It had just three aircraft and flew only intrastate, between Dallas, Houston and San Antonio. This first of the no-frills, low-cost airlines would, under the leadership of its ebullient founder Herb Kelleher, democratize air travel and revolutionize the airline industry.[/font]

[font=Georgia, Times New Roman, Times, serif] The cities of Dallas and Fort Worth, and the Dallas/Forth Worth airport that opened in 1974, tried unsuccessfully to force Southwest to move its operations from close-in Love Field out to DFW, arguing that the new airport depended on this. Today, Kelleher laughingly recalls telling a judge: ``If a three-aircraft airline can bankrupt an 18,000-acre, nine-miles long airport, then that airport probably should not have been built in the first place.''[/font]

[font=Georgia, Times New Roman, Times, serif] But in Washington, reasonableness is no match for the routine and lucrative corruption known as rent-seeking -- economic interests getting government to impose handicaps on competitors. House Majority Leader Jim Wright, from Fort Worth, rode to the rescue of the strong -- DFW and Fort Worth-based American Airlines. In 1979 he muscled through Congress a measure designed to stifle the growth of Southwest and punish it for not moving out to DFW -- an expensive move that would have made it sensible for many Southwest customers to drive rather than fly to their destinations.[/font]

[font=Georgia, Times New Roman, Times, serif] The Wright Amendment restricted interstate service from Love Field to cities in just four states -- Louisiana, Arkansas, Oklahoma and New Mexico. In 1997, senators wanting to bring Southwest's low fares to their constituents amended the Wright Amendment to allow flights to Alabama, Kansas and Mississippi. Today, if you want to fly Southwest from Love Field to Los Angeles, you must buy a ticket to Albuquerque, collect your baggage there, buy another ticket, go through security again and board another plane. [/font]

[font=Georgia, Times New Roman, Times, serif] Today DFW is the world's sixth-busiest airport and American Airlines is the world's largest carrier. American is, like all the older airlines, losing money. But is that a reason to punish Southwest? Unlike other airlines, Southwest is not asking Washington to take on its pension burdens, or to give it other subsidies. It is asking only for liberation.[/font]

[font=Georgia, Times New Roman, Times, serif] Southwest, which is now using only 14 gates for 117 flights a day at Love Field, says it could use only 21 gates if the Wright restrictions were repealed. This would put some downward pressure on the fares of American, which by the end of the year may have almost 1,000 flights a day out of DFW. [/font]

[font=Georgia, Times New Roman, Times, serif] That pressure would be good for travelers -- and probably for American, too. When Southwest entered the Fort Lauderdale market, forcing American to cut fares to and from Miami, American's passengers and revenues increased. The Philadelphia Inquirer reports that since Southwest entered the Philadelphia market just last May, driving down the fares of previously unchallenged US Airways, travelers through that airport have saved $1.2 billion.[/font]

[font=Georgia, Times New Roman, Times, serif] The Wright Amendment is now functioning in the context of an airline industry crisis aggravated by government policies. The government is subsidizing airlines that have unsustainable business models. By allowing them to use bankruptcy as strategy for enhancing competitiveness against other high-cost airlines, it creates an incentive -- even a necessity -- for those rivals to enter bankruptcy and dump pension burdens on Washington.[/font]

[font=Georgia, Times New Roman, Times, serif] Government is preserving precisely what ails the industry -- excess capacity. Suppose a major carrier were to go out of business. A salient fact about the airline industry is, Kelleher says, that ``its principal capital asset travels at over 500 miles per hour.'' Which means: If one airline fails, unserved markets will be served swiftly. He notes that on the afternoon of May 12, 1982, Dallas-based Braniff Airlines -- one of those that had urged government to strangle Southwest in its cradle -- went out of business. The next morning at least five airlines started up on some Braniff routes.[/font]

[font=Georgia, Times New Roman, Times, serif] Ronald Reagan said that Washington's approach to intervening in industries is: If it moves, tax it; if it keeps moving, regulate it; if it stops moving, subsidize it. Regarding airlines, the policy is: If they are failing, keep them flying; if they are prospering, burden them. But surely Washington, although difficult to embarrass, is embarrassed enough to repeal the Wright Amendment.[/font]

[font=Georgia, Times New Roman, Times, serif]©2005 Washington Post Writers Group[/font]
​

 

[doh]

I think I wrote this before, but here goes. In 2004, GWB said "if you want it to flourish, don't tax it." In 2005 he proposed raising taxes on airlines in the form of added security fees. So why do you think he doesn't want the airlines to flourish?

 

[Juvat]

Super article. This pretty much sums it up. The Wright Amendment is a perfect example of government run amok.

 

[AFcitrus]

The last part of the article is great. The part about the larger
"failing business model" airlines benefiting from bankruptcy and other loan gurarantees while the successful smaller airlines are held back. However, there are two concepts that this article fails to address:

1) I seem to remember reading about "Herb" saying as long as he was alive he would not challenge the WA. Reason being - It benefited SW. In the past SW's business model was that of lots of short hops across the country. It was a model that few other airlines used and as such had no use for Love Field. Now that SW feels the need to do transcon flying (presumably to keep up with successful industry concepts), the WA is an "outdated legislation that must go".

and 2) How many gates will Love Field reserve for EVERY other airline when the WA is repealed. Surely SW is already "in bed with" the Love Field airport authority to insure that SW would get the lion's share of the gates. I don't know how many gates Love Field has but I can't imagine they have enough for every interested airline to get 21 gates. I'm sure American would love 21 gates. I think AAI would like a few as well. If the government is going to change the rules of the "game" after the "game" has started (repealing WA) then the "game" should be started over with the gates being divided up equally amongst all interested parties.

If Herb is going to call in all the favors from his "friends" in Washington, he needs to stop trying to get the rules changed to benefit only SW. Instead he should use his leverage to convince gov't to treat failing airlines of today the same way it treated failing airlines throughout history. (i.e - Eastern, Pan Am, Braniff). We all know how little government helped them out.

Okay All you SW luvers - let me put up my shield before you start pelting me with responses. Ok, I'm ready now.

 

[labbats]

Biased media. How novel.

 

[Jeff Helgeson]

I totally disagree

Super article. This pretty much sums it up. The Wright Amendment is a perfect example of government run amok.

This is a very one-sided and inaccurate article.

The Wright Ammendment came to be after getting the existing airlines at the time to leave Love Field and move to DFW. The existing airlines at the time had to sign an agreement not to operate out of Love.

SWA enters the picture and starts operating out of LOVE. The airlines that signed the agreement protest. Thus the Wright Agreement as a compromise. The spin was since SWA didn't sign the agreement, was not operating at that time, that they would be allowed to operate within Texas, or at least have to land some where in TX before continuing.

The agreement all the other airlines signed was in effect to have ALL Dallas airline operations move to the new facility at DFW. SWA worked a deal around the agreement. That's about as simple as it can be explained.

DIA/DEN: Remember all the problems with DIA, cost over-runs, delayed opening, the white-elephant luggage system that failed, etc. The cost to the airlines that operated out of Stapleton more than tripled to move to DIA. Many of the airlines didn't want to move to DIA with all the troubles and increased expense. So in stead of working out a Wright-type Ammendment, they chisled up the runways and now are building over priced housing in it's place. I guess if they had bulldozed Love Field, we might not have LUV today?! It's all subjective.

I like SWA and they a great airline. I am just tired of the spin of the Wright Ammendment and they failure to explain how and why it exists. It wasn't to stiffle SWA. It was to give SWA an exemption to operate out of LOVE, while all others had to move to DFW and cease all operations out of Love Field (DAL).

So in effect, SWA was given an unfair or uneven advantage to compete by being allowed to operate out of DAL. This is a prime example of the government manipulating the airlines like a public utility and then saying you are private industry and must make a profit on your own.

Now, if you say the Wright Ammendment is antiquated and should be abolished, then make that arguement, but don't distort the facts. All the spin about the Wright Ammendment is just a little hard-ball to improve SWA business model. SWA rocks with or with out Wright. It's ironic though, that the argument was SWA only has three little planes and will only operated within Texas; they are small and need the exemption to compete. They needed the Wright Ammendment to get started. Now SWA want Wright to disappear and the argument is the big guys......or the guys that used to be big can't compete!

Where are the midnight bulldozers when you need them! I should have bought a condo at Stapleton; now I'm priced out of the market.

Again, this isn't flamebait. SWA is a great airline. I say who cares about Wright. Let them build up ATA, code share to Hawaii, buy more widebodies and bring the troops and other PAX from Europe to BWI and feed their system......."I think I just said, don't mess with Texas!?" Bring back all the ATA furloughees and show the world how a merger/buy-out is done. Make a profit, utilize all your resources for total world domination. All this while maintaining happy employees......exept for a few of you Morris Air guys that were stapled, but those retirement accounts should ease your pain.

It's the wright thing to do!

 

[LUVChild]

The last part of the article is great. The part about the larger
"failing business model" airlines benefiting from bankruptcy and other loan gurarantees while the successful smaller airlines are held back. However, there are two concepts that this article fails to address:

1) I seem to remember reading about "Herb" saying as long as he was alive he would not challenge the WA. Reason being - It benefited SW. In the past SW's business model was that of lots of short hops across the country. It was a model that few other airlines used and as such had no use for Love Field. Now that SW feels the need to do transcon flying (presumably to keep up with successful industry concepts), the WA is an "outdated legislation that must go".

and 2) How many gates will Love Field reserve for EVERY other airline when the WA is repealed. Surely SW is already "in bed with" the Love Field airport authority to insure that SW would get the lion's share of the gates. I don't know how many gates Love Field has but I can't imagine they have enough for every interested airline to get 21 gates. I'm sure American would love 21 gates. I think AAI would like a few as well. If the government is going to change the rules of the "game" after the "game" has started (repealing WA) then the "game" should be started over with the gates being divided up equally amongst all interested parties.

If Herb is going to call in all the favors from his "friends" in Washington, he needs to stop trying to get the rules changed to benefit only SW. Instead he should use his leverage to convince gov't to treat failing airlines of today the same way it treated failing airlines throughout history. (i.e - Eastern, Pan Am, Braniff). We all know how little government helped them out.

Okay All you SW luvers - let me put up my shield before you start pelting me with responses. Ok, I'm ready now.

Actually, you bring up some good points.

Herb originally took the stand that he wasn't going to challenge the Wright Amendment. Because while it did limit destinations from Love Field, it did also made Love Field very unattractive to other carriers. Nobody wanted to fly out of the there, so Southwest did begin to own those markets. So yes, in that sense, I would say that the Wright Amendment had something of a silver lining. However, I still believe Southwest would have done far better had the Wright Amendment never been passed in the first place. And keep in mind, by 1979, we'd been in over a decade of legal battles. It was time to focus on the business.

After 9/11, however, the short haul traffic - particularly out of Love Field - has dropped off. Given the security hassles, many people would just as soon drive to HOU, SAT, or AUS as fly. So while the Wright Amendment in the past was just a bureaucratic hassle, now it's severely impeding our ability to make money. We've cut flights out of Love Field. And because of the Wright Amendment, we can't make the necessary adjustment to our business model.

As far as #2 goes, I believe it's the city of Dallas who owns those gates? I remember when AA came into Love in 1998, they tried to harass the city of Dallas into giving them some of Southwest's gates. However, because we were using all of our gates (and at a high capacity as well), the city of Dallas refused to have us hand over gates. So instead, AA bought one of our Love Field parking areas out from underneath us. AA engaged in a lot of tit-for-tat when they came to Love Field.

What would happen if Love Field were opened to long haul traffic? I think AA still has use of three gates at Love Field (somebody please correct me if I'm wrong). However, I don't see them carrying through with their promise to start inundating Love Field with AA flights. It doesn't make good business sense to split operations like that, no more than it makes good sense for Southwest to start flying out of DFW. If AA starts trying to put a sizable operation out of Love Field, then their ego is trumping their business sense, IMHO. I think the same goes for AirTran. But hey, if they really want to, then I think that's for the city of Dallas to sort out who gets what gates.

"If Herb is going to call in all the favors from his "friends" in Washington, he needs to stop trying to get the rules changed to benefit only SW. Instead he should use his leverage to convince gov't to treat failing airlines of today the same way it treated failing airlines throughout history. (i.e - Eastern, Pan Am, Braniff). We all know how little government helped them out."

First of all, this is NOT about Herb - let's make that clear. Gary Kelly runs the show now. It wasn't until Gary stepped up that Southwest changed our stance on the Wright Amendment. People keep attributing this to Herb, and the truth is, this is attributable to Gary Kelly.

In regards to getting the rules changed to benefit Southwest, I would say we're just trying to level the playing field...a field that was tilted against Southwest in the first place, in a amendment meant to protect an airport that is no longer in need of protection. So I'm not sure how you can see this as Herb trying to get the rules changed just to benefit Southwest. The passing of the Wright Amendment was changing the rules to impede Southwest.

As far as the bankruptsy laws, well...I had the pleasure of hearing Herb talk about those, and he's none too happy about them. As he told it, it used to be that a corporation could only declare bankruptsy once every five years, I believe. Now, a corporation can pretty much declare bankruptsy all it wants, so long as some financer is willing to bail them out. As I remember Herb telling it, we have bankruptsy lawyers to thank for that little change in the bankruptsy laws, because bankruptsy lawyers are one of the few who benefit when a corporation declares bankruptsy. Get it?

However, DFW wants to paint Southwest to look like an opportunistic vulture for asking for the repeal of the Wright Amendment. How do you think Southwest would look if we asked for a change to bankruptsy laws so that these bankrupt carriers would actually die and promote the health of the remaining carriers? Good grief. I could only imagine.

 

[Jeff Helgeson]

You make some good points as well, however...

Actually, you bring up some good points.

Herb originally took the stand that he wasn't going to challenge the Wright Amendment. Because while it did limit destinations from Love Field, it did also made Love Field very unattractive to other carriers. Nobody wanted to fly out of the there, so Southwest did begin to own those markets. So yes, in that sense, I would say that the Wright Amendment had something of a silver lining. However, I still believe Southwest would have done far better had the Wright Amendment never been passed in the first place. And keep in mind, by 1979, we'd been in over a decade of legal battles. It was time to focus on the business.

After 9/11, however, the short haul traffic - particularly out of Love Field - has dropped off. Given the security hassles, many people would just as soon drive to HOU, SAT, or AUS as fly. So while the Wright Amendment in the past was just a bureaucratic hassle, now it's severely impeding our ability to make money. We've cut flights out of Love Field. And because of the Wright Amendment, we can't make the necessary adjustment to our business model.

As far as #2 goes, I believe it's the city of Dallas who owns those gates? I remember when AA came into Love in 1998, they tried to harass the city of Dallas into giving them some of Southwest's gates. However, because we were using all of our gates (and at a high capacity as well), the city of Dallas refused to have us hand over gates. So instead, AA bought one of our Love Field parking areas out from underneath us. AA engaged in a lot of tit-for-tat when they came to Love Field.

What would happen if Love Field were opened to long haul traffic? I think AA still has use of three gates at Love Field (somebody please correct me if I'm wrong). However, I don't see them carrying through with their promise to start inundating Love Field with AA flights. It doesn't make good business sense to split operations like that, no more than it makes good sense for Southwest to start flying out of DFW. If AA starts trying to put a sizable operation out of Love Field, then their ego is trumping their business sense, IMHO. I think the same goes for AirTran. But hey, if they really want to, then I think that's for the city of Dallas to sort out who gets what gates.

"If Herb is going to call in all the favors from his "friends" in Washington, he needs to stop trying to get the rules changed to benefit only SW. Instead he should use his leverage to convince gov't to treat failing airlines of today the same way it treated failing airlines throughout history. (i.e - Eastern, Pan Am, Braniff). We all know how little government helped them out."

First of all, this is NOT about Herb - let's make that clear. Gary Kelly runs the show now. It wasn't until Gary stepped up that Southwest changed our stance on the Wright Amendment. People keep attributing this to Herb, and the truth is, this is attributable to Gary Kelly.

In regards to getting the rules changed to benefit Southwest, I would say we're just trying to level the playing field...a field that was tilted against Southwest in the first place, in a amendment meant to protect an airport that is no longer in need of protection. So I'm not sure how you can see this as Herb trying to get the rules changed just to benefit Southwest. The passing of the Wright Amendment was changing the rules to impede Southwest.

As far as the bankruptsy laws, well...I had the pleasure of hearing Herb talk about those, and he's none too happy about them. As he told it, it used to be that a corporation could only declare bankruptsy once every five years, I believe. Now, a corporation can pretty much declare bankruptsy all it wants, so long as some financer is willing to bail them out. As I remember Herb telling it, we have bankruptsy lawyers to thank for that little change in the bankruptsy laws, because bankruptsy lawyers are one of the few who benefit when a corporation declares bankruptsy. Get it?

However, DFW wants to paint Southwest to look like an opportunistic vulture for asking for the repeal of the Wright Amendment. How do you think Southwest would look if we asked for a change to bankruptsy laws so that these bankrupt carriers would actually die and promote the health of the remaining carriers? Good grief. I could only imagine.

I agree with you about the WA was to make Love unattractive and that is help mold the SWA model of point-to-point flying. However, the WA was a protectionism/exemption to allow SWA to operate out of Love in the first place. The government was trying to help create competition in the private sector.

As far as AA goes, (and I am not coming to their defense, trust me on this one!) try to see the WA from AA's point of view. The government has them and all other airlines sign an agreement not to fly out of Love and move to DFW. SWA starts with 3 planes, AA and others say hey no fair, the gov. says they are small and we (big "G") will only allow them to puddle jump, etc. Now, SWA is huge in AA's backyard and AA is not happy. SWA is using it's political clout as is AA to try to promote their respective positions.

 

[NEDude]

It wasn't to stiffle SWA. It was to give SWA an exemption to operate out of LOVE, while all others had to move to DFW and cease all operations out of Love Field (DAL).

You are incorrect in your arguments. According to "Hard Landing", Southwest was able to remain at Love due to the fact that it was not regulated by the CAB. The bonds that Dallas and Ft. Wort issued for the building of DFW stated that all "Certificated" airlines had to cease operations at Love. When DFW opened in 1974, SWA refused to move under the grounds that they weren't party to the original agreement signed in the late 1960's. The city of Dallas and the other airlines went to court to force the issue citing the bonds that were issued. At the time, the only place the word "Certificated" was used in reference to airlines was in the reglatory wording from the CAB. As Southwest did not cross state lines, they were not regulated by the CAB, and thus nowhere referred to as a "Certificated" airline. Thus the courts ruled that Southwest was not covered under the provisions of the bonds and was allowed to remain at Love, operating only within Texas.

Four years later deregulation comes along and now Southwest is free to expand outside of Texas without governmental approval. The CAB is disbanded and no airline is "Certificated" by the CAB anymore. American, Braniff and Texas International all fearing Southwest will do to them outside of Texas what they did inside of Texas, use their political clout to stop Southwest from expanding outside of Texas. About this time Southwest had begun its first few steps outside of Texas initiating Dallas to New Orleans. As they could not force Southwest to give up routes already established outsid of Texas, the Write Ammendment probited them from growing any more, which is why it limited them to the four neighboring states.

For interesting reading, I highly suggest "Hard Landing". It gives a very detailed account of airline history in the US and how it dealt with de-regulation. The Southwest part is only a small ammount of what is in there. But make no mistake, the Write Ammendment was totally about stiffling Southwest. It came about five years after DFW opened, and five years after the courts ruled that Southwest could remain at Love - they needed no excemption to remain there. The Write Ammendment came about because American, Braniff and Texas International saw what SWA was able to do to them in Texas without regulation,and they wanted to keep them from doing it to them in other markets.

In short the 1979 Write Ammendment was not in response to DFW opening in 1974, it was in response to de-regulation in 1978.

 

[Jeff Helgeson]

Not exactly.

You are incorrect in your arguments. According to "Hard Landing", Southwest was able to remain at Love due to the fact that it was not regulated by the CAB. The bonds that Dallas and Ft. Wort issued for the building of DFW stated that all "Certificated" airlines had to cease operations at Love. When DFW opened in 1974, SWA refused to move under the grounds that they weren't party to the original agreement signed in the late 1960's. The city of Dallas and the other airlines went to court to force the issue citing the bonds that were issued. At the time, the only place the word "Certificated" was used in reference to airlines was in the reglatory wording from the CAB. As Southwest did not cross state lines, they were not regulated by the CAB, and thus nowhere referred to as a "Certificated" airline. Thus the courts ruled that Southwest was not covered under the provisions of the bonds and was allowed to remain at Love, operating only within Texas.

Seperate from the WA, the airlines that operated previously at Love singed an agreement not to use Love and moved to DFW. Love was still there and then came SWA. The WA was more of a stop-gap measure to limit the use of Love. The spirit of the law was to move operations to DFW and move away from Love. Love Field was like a weapon of war left over after the piece treaty was signed. Is it fair that a new enemy should be able to use it against those that signed the agreement.

I didn't bring deregulation in the mix. You mentioned a lot of details, CAB, etc. If it were truly deregulated, than the agreement that was singed by the former airlines at Love should have been nullified, and the government should have had some responsibilty to the airlines that were forced to move to DFW.

If this were the retail industry, it would be as if the government force the big carriers to move to a big mall and leave the aging strip-mall/lemonaid stand behind and not set up shop there again. Then a new retailer, SWA, Sets up a lemon aid stand out in front of the new mall or opens up shop at the former strip-mall. Remember Legand? They tried to start a DC9 operation with 70 seats. American responded with RJ service. This was AMR trying to close down a lemon aid stand in fron of the new mall.


Four years later deregulation comes along and now Southwest is free to expand outside of Texas without governmental approval. The CAB is disbanded and no airline is "Certificated" by the CAB anymore. American, Braniff and Texas International all fearing Southwest will do to them outside of Texas what they did inside of Texas, use their political clout to stop Southwest from expanding outside of Texas. About this time Southwest had begun its first few steps outside of Texas initiating Dallas to New Orleans. As they could not force Southwest to give up routes already established outsid of Texas, the Write Ammendment probited them from growing any more, which is why it limited them to the four neighboring states.

For interesting reading, I highly suggest "Hard Landing". It gives a very detailed account of airline history in the US and how it dealt with de-regulation. The Southwest part is only a small ammount of what is in there. But make no mistake, the Write Ammendment was totally about stiffling Southwest. It came about five years after DFW opened, and five years after the courts ruled that Southwest could remain at Love - they needed no excemption to remain there. The Write Ammendment came about because American, Braniff and Texas International saw what SWA was able to do to them in Texas without regulation,and they wanted to keep them from doing it to them in other markets.

It would be unfair to hold the airlines to certain rules and routes and then after deregulation say it is a free market, go make a profit without taking responsibilty to level the palying field with new competitors. The airlines that moved to DFW incurred expense to do so and it would be costly to have moved back to Love.

Pan Am was mostly relegated to international flying by the CAB before Deregulation. They were destined to fail without a domestic feed of their own.

If the airline industry were truly deregulated, than why would airlines still buy routes from other carriers? Why can't AA, UAL and all other carriers have all their flights depart from ORD at the same time, etc.

The government will always have control over the airlines in one way or another.

In short the 1979 Write Ammendment was not in response to DFW opening in 1974, it was in response to de-regulation in 1978.

I agree with what is is in red.