The move by Southwest Airlines to fly more from its home base of Dallas Love Field is yet another example of how the airline-airport relationship is suffering in the USA
The often contentious airport relationship with airlines, suppliers and neighbours is now openly hostile. As the US capacity crunch coincides with the airport-funding shortfall, airlines and airports have begun to shove with sharp elbows when they have disagreements.
The tone and dynamic is far more elevated than traditional disputes between landlords and tenants or the long-standing love-hate bipolarity of the airline-airport relationship. In fact the anger shown in various exchanges between the two sides has become the public face of the industry at a time of public discontent with transport services and government-provided infrastructure in general.
Atlanta’s Hartsfield Jackson, for instance, took the unprecedented step of firing the design team for its international terminal, bringing its simmering battle with world-respected architects into the headlines. At Fort Lauderdale in Florida, the local community owners are contemplating an end to the airline incentives that have made it the fastest-growing airport in the nation, a move that would be dramatic for a region that depends on tourism for much of its revenues. Finally, in Chicago, the long-anticipated approval of an O’Hare expansion plan brought not just court filings to block construction, but threats to physically block building work.
Against the backdrop of these intense public-private disputes comes the highest-profile airline-airport dispute in many decades. Nowhere is the spat more public than in the case of Southwest Airlines and one of its large hubs. Frustrated at rising enplanement costs forced on it by an ambitious Seattle/Tacoma International airport expansion, it threatened to pull out all its flights and shift to a smaller airport, potentiality hobbling Seattle’s growth plans. And the airline has begun a high-stakes battle against the Wright Amendment limitations on flights to and from its home base at Dallas Love Field in a headline-grabbing campaign that, the discount king says, will show that flight restrictions raise airport charges and costs.
Southwest’s bare-fisted approach to airport relations is more than the aggressive stance of one airline and its executives. It represents the cutting edge of a trend as airlines demand lower costs in every one of their dealings. Just as airlines have turned to bankruptcy so they can use its compelling overriding force to wrest savings from labour, and just as they have turned to the courts to cut leasing costs, so they are turning to force in their dealings with airports.
They are using one of the few instruments at their disposal that can work with airports: the threat to leave. Southwest did more than threaten. It prepared to move all of its flights from Seattle to King County International, commonly called Boeing Field, several kilometres closer to Seattle. It planned to use that as its exclusive terminal for the city.
Southwest vice-chairman Gary Kelly says the airport was more than ready to spend $130 million on a new eight-gate terminal at the airport. Kelly says that “this wasn’t a threat. This was what we planned to do” to avoid rising costs at Seattle. Southwest’s 85 flights, along with competitive moves with which Alaska Airlines would respond, could have overwhelmed the smaller airport, King County executive Ron Sims said when he blocked the plan. Kelly backed down but swears to continue to fight for lower airport costs. “It’s as important to us as savings in any other big area,” he says.
National debate
The Boeing Field ambit pales in comparison with Southwest’s bold bid to topple the 26-year-old Wright Amendment, the statute that limits flights at Love Field. This has shaken cross-town rival American Airlines and its hub Dallas/Fort Worth International airport (DFW) and become a national debate. In Texas, Southwest can fly non-stop between Love and only seven states, the surrounding states plus Alabama, Mississippi and Kansas. All other Love-bound flights require a connection, often at Houston Hobby, that city’s smaller airport.
So travellers can fly from Baltimore to Houston on Southwest, but not directly from Baltimore to Dallas. That service requires a change at Houston. The same goes for Cleveland or Chicago Midway services to Dallas Love. Most Love flights suffer even more onerous restrictions on how they may be marketed and sold.
Southwest has not said exactly where it would add service if the restrictions were lifted and admits that Love, surrounded by city roads on three sides and a railroad on the fourth, has its limits. If Wright is written off, however, Southwest would add flights to at least a dozen new cities from Love.
But DFW has responded with more than concern: it says it is fighting for its life. The addition of many long-distance Love flights would force dominant American Airlines to respond by shifting some service from DFW across town to Love. That step would seriously deteriorate the network value of the hub. In fact, American projects Love Field would gain 251 daily flights without Wright, but that DFW would lose 436 daily flights with a Wright rewrite. That net loss would reduce connecting options at DFW and would have the most impact on passengers flying in and out of small airports. Shifting just 90 daily flights away from DFW to Love, as American says it would have to do as a competitive response, would have a domino effect in dozens of cities across 22 states. At some of these cities, such as Champaign in Illinois, American’s Eagle regional unit may be the only option in or out of town.
Southwest’s out-of-character attack on the Wright Amendment has put the much liked airline into conflict with much of the business and civic establishment of its home town. It has taken on not just the DFW airport authorities but the larger business establishment of both Fort Worth and Dallas. The airline’s selling point of more low-fare flights from Love Field within the Dallas City limits has faded behind the larger counterpoint. That counterpoint is no less than the possible collapse of the region’s transport infrastructure, the economic stability of its main hub and, by American’s own testimony, the viability of the airline, the engine of the north Texas economy.
Wright repeal
American’s senior policy executive, Will Ris, suggests that the true bottom line of Wright repeal and the inevitable competitive response would push American closer to bankruptcy. Consumer groups too see this as a national issue. Air Travellers Association chief David Stempler says that the supposedly lower fares that would come from a Wright repeal make it a broadly compelling issue.
Southwest will not relent in its attack, although DFW airport officials have politely invited the carrier to start services there in addition to its Love flights. In the dark days following Delta’s early 2005 pullout from DFW, the airport even offered Southwest incentives such as a year’s free rent to move some flights over. Southwest said it could not afford the airport’s costs.
The airline argues that the artificial and choice-limiting Wright restrictions have a deeper insidious effect as well. It believes the limits on Love Field constrain competition so much that they have allowed DFW to become a high-cost airport – too high for Southwest itself. In October, when Southwest announced it would start service to Denver (from Chicago, Las Vegas and Phoenix), DFW officials accused the airline of hypocrisy on airport costs since, by almost any measure, its enplanement costs of about $8.30 per passenger are lower than Denver’s $9-14.50. DFW chief operating officer Kevin Cox says: “Southwest needs to come clean.”
Now this debate has thrust itself onto the national stage and taken up far more congressional attention that either party had expected. This is, in part, because the debate encompasses the very facts that make airports unique. Both are integral parts of a national system and cannot be viewed as islands or discrete unconnected nodes within a network. “The right to fly is a national, American right,” says representative Jeb Hensarling, a republican from the Dallas area.
However, airports are also keenly aware of the dependence of their communities on jobs within their boundaries on “blue-collar” unskilled jobs which are rapidly being lost. As American Airlines retiree Charles Scott said, in an open letter to his senator: “The real issue isn’t air fares: it’s the potential cost to our state’s economy,” and also on north Texas jobs should DFW lose flights.
That may be so, but from Southwest’s point of view it continues to pay the costs of its enforced limitations.
DAVID FIELD/WASHINGTON
Source: Airline Business
