It could turn into the stuff of which legends are made - a US startup, with a flamboyant and outspoken chief executive, exploiting a legal loop-hole to challenge the majors for their premier passengers. But so far, after several false starts, Legend has yet to get off the ground and live up to its name.
The idea behind Legend is not new. The airline will offer a first-class only service and management believes it can fill a niche by operating out of a secondary airport that is conveniently close to the centre of a major US city - in this case, Dallas, Texas.
But if Legend does finally succeed in launching operations this year, it will have negotiated more than the usual hurdles. In its wake is a legal and bureaucratic minefield that has required a near governmental decree to clear the path.
"Starting an airline is tough," says straight-talking Legend chief executive Allan McArtor. "And it should be tough. But you can't begin to imagine the amount of crap we've had to put up with in the past couple of years." McArtor says he and his embryonic airline have faced a barrage of legal pressure that no other start-up has had to face in the USA, with the possible exception of Southwest Airlines, when it announced launch plans back in the 1970s. In both cases, the airlines centred their intentions on one of the USA's most problematic airports - Love Field, Dallas.
Legend was sued in 1997 by the nearby city of Fort Worth over launching out of Love Field. The city claimed that the airline would "drive a stake through the economic heart" of the north Texas region.
"I mean please," says McArtor. "We hadn't even applied to be an airline at that stage. They tried to say that even the very idea of us flying beyond the state from Love Field would irreparably harm the city. We got sued because we had an idea."
Since then, one decision in favour of Legend has see-sawed with another one against it: the Fort Worth side relying on local district court decisions and Legend falling back on Federal Law. But a final, set-in-stone decision, is due in May from the US Department of Transportation (DoT) which will almost certainly give the green light.
Solid ground
"We've always known we were on solid legal ground, but it is helpful to have the DoT come out and say so. I think they know they can't prevent us from starting, but they will still try and delay us," says McArtor, referring also to neighbouring giant Dallas-Fort Worth (DFW) airport and American Airlines, which are suing Legend too.
The seeds of the conflict were sown 30 years ago, when the two cities of Dallas and Fort Worth signed an agreement to build a common airport. To protect it, the agreement introduced a seven-state perimeter rule out of Love Field and Fort Worth's Greater Southwest Airport, effectively preventing long haul routes out of either so that traffic would move to DFW.
Then, with deregulation, came the 1979 Wright amendment, confirming the old agreement and limiting services out of Love Field to Texas and four adjoining states. But importantly, and with turboprops clearly in mind, it also allowed aircraft with 56 seats or lower to fly without restriction.
McArtor spotted this loophole but in 1996, when he sought permission for Legend to start flying DC-9s reconfigured with only 56 seats, the DoT said the aircraft had to fly with their original configuration. Not discouraged, Legend persuaded a US senator, Richard Shelby, to sponsor a bill that would permit reconfigured aircraft to fly outside the immediate Texas area. The Shelby amendment, as it is now known, was approved in October 1997, seemingly giving the go-ahead for Legend to start flying long haul out of Love Field. It also added four more states to the perimeter rule.
The triumvirate of DFW Airport, American and the city of Fort Worth then sued Legend as well as the city of Dallas for violating the 1968 agreement."We had to put up with one of the most massive mis-information campaigns," says McArtor. "I was often discouraged by all this, but I was never about to give up."
McArtor, whose previous career includes two years as Administrator at the Federal Aviation Administration, says the strategy of US major carriers towards new entrants is to "aggressively destroy them and get them out of the market as quickly as possible". But he insists that Legend will get off the ground because it is a concept based on "a fundamentally good idea".
Investors, he adds, only doubted the "when - not the if", and whether the fledging carrier would be able to weather the storm long enough to ultimately fly. "Most of our investors entered a pretty fast courtship," he says. "They loved the idea and signed up pretty fast."
Launch delays
Starting operations, however, has been anything but fast. Three times Legend's launch date has been postponed, with the latest date scheduled for October or November this year. These delays were caused not by the law suit per se, acknowleges McArtor, but by the stigma and uncertainty that came with it. "The lawsuit confusion created a cloud over Love Field, and left our investors asking 'can these guys do what they want to do?' It was hard raising money with this. The investors said: 'We have every confidence in your idea, but we're going to wait for the ruling'."
But Love Field is the key to success, says McArtor. The airport sits in a catchment area that includes almost the entire metropolis of Dallas. In addition, Legend plans to develop an old maintenance base on the perimeter of the airport as its own terminal. Ironically, the new terminal building, which McArtor describes as the "long pole in the Legend tent", is now the project that is delaying the launch date. "We could fly tomorrow if we wanted to, but why open a top class restaurant with only half a menu?" he says.
Capacity at the main Love Field terminal is almost full, so Legend's own terminal building might prove to be the card that comes up trumps. It will be difficult for Legend's competitors to flood Love Field with capacity because of the main terminal's gate restrictions.
Business travellers
Legend will be targeting business class passengers who need to travel at short notice and do not want the hassle of travelling to DFW airport, but also want attractive fares. "The typical passenger for Legend is me," says McArtor. "I'm the typical guy - the spontaneous traveller who is worried about costs, uses his time and doesn't want to schlep all the way out to DFW."
The airline has not declared its route intentions yet, but the first destinations are likely to include major business centres such as Chicago, Boston and Denver. "There is nothing really secretive about this, but if we tell everyone six months before we start, then our competitors will have six months to prepare," he says.
Legend is expected to begin with six aircraft and serve one or two destinations well, rather than spread its net too thinly. Eventually, up to 35 aircraft are envisaged, but this will not happen for another five years at least. "You've got to have at least five frequencies a day to be attractive to the business traveller. You can't open up new markets without having the fleet to accommodate several frequencies a day," says McArtor.
Doubts remain about Legend's long term success. Analysts question whether Legend will be able to attract sufficient business traffic while warding off the competition. They point out that few major carriers would try what Legend is proposing - to launch an airline in the home territory of low cost king, Southwest. And with a recent surge in applications from potential startups being considered by the FAA - maybe in response to the DoT's new pro-competition stance - Legend's lost time to a launch date may prove costly.
Even McArtor admits that the Legend concept is not risk free, but his enthusiasm is undiminished. "American could figure out a way of effectively competing against us, I guess. But the more it does this the more it draws attention to the fact that people would rather fly out of Love Field," he says.
That leaves Legend with the engines revving, but still at the starting blocks. The stuff of legends, this potential airline is discovering, may be dogged determination.
Source: Airline Business
