Dallas Morning News column - July 13, 2005
Don't let affinity for Southwest cloud your views12:16 AM CDT on Wednesday, July 13, 2005
In the debate over the Wright amendment it is easy to get carried away with Southwest Airlines' argument. North Texans call Southwest their "company plane." The airline's on-time departures, quirky flight attendants, excellent customer service and Texas connections have endeared them to Texans.
By replicating the model in other cities across the country, Southwest has emerged as an extremely profitable airline.
However, Southwest's success is based on the same legislation they are seeking to eliminate today – the Wright amendment. When Southwest elected to stay at Love Field, in spite of opposition, all airlines including Southwest sponsored a legislative compromise to protect Dallas/Fort Worth International Airport. That effectively gave Southwest carte blanche to create a monopoly at Love Field.
Southwest accepted the compromise and prospered from it. To its credit, Southwest cleverly identified a niche in the market – short hops to Texas cities and later to surrounding states. That point-to-point model, in contrast to the hub-and-spoke model of other major airlines, is a natural evolution of the company's origins. Southwest was so successful in executing its plan that, as it grew, it strategically incorporated that model in expansion plans.
Which brings us to our current state of affairs – is Southwest really worried about competing with other airlines at D/FW Airport?
I doubt it – they are successful, have a proven business model and operate in more than one airport in several cities – Houston (until recently), New York, Washington, D.C., Miami area, Silicon Valley, and Los Angeles. I have never heard a cogent argument from Southwest that clearly articulates its position.
It is not clear that a Wright amendment repeal would lead to lower fares, either. Savvy travelers are already taking advantage of Southwest's lower fares by connecting to Houston or other Southwest cities. With the advent of Internet bookings and discount travel sites like Travelocity and Expedia, it is difficult to visualize lower fares.
Southwest has no incentive to price their seats at anything but a profit.
Anyone remember Legend Airlines? That airline made headlines a few years ago by trying to exploit a loophole in the Wright amendment and even had Sen. Richard Shelby, R-Ala., sponsor an amendment allowing Southwest to fly to two more non-contiguous states. Not many travelers were in favor of their business model and they failed. What is different now?
We also have the issue of capacity – Love Field has only 16 more available gates. Those gates will also have to be made available to other airlines. Rationing out gates to other airlines would make the situation inherently uncompetitive. All airlines would expect to have a minimum number of gates to operate profitably at an airport.
The odds are in favor of Southwest to extend its monopoly at Love Field. How is this in the consumers' interest? How many more flights do we expect from 16 additional gates to make radical difference to fares? And how would it be worth it for Collin County travelers, who will have even easier access in future years to D/FW Airport through State Highway 121 and the completed Bush Turnpike?
If we are to believe press reports, it appears that Southwest is committed to repealing Wright. If the reports are true, it is troubling that Southwest would renege on a commitment that has benefited the entire region.
I am an avid fan of Southwest's management. In the aftermath of recent corporate scandals, we need corporate symbols like Southwest to assure us that old-fashioned values of commitment and trust are still relevant in our society.
Without a doubt, D/FW Airport has elevated the region's standing nationally. The evolution of Dallas-Fort Worth from oil town to a preeminent financial, retail and technology business center could not have happened without it.
As taxpayers, we have subsidized the expansion of both airports – most recently the multi-billion-dollar international terminal at D/FW. We have an obligation to preserve this financial investment. We can ill afford to let our goodwill for Southwest cloud our judgment.
It is said that even God stops at D/FW on his way to Heaven (or to watch his team through the hole in the roof at Texas Stadium!). Let us not give God any reason to change his travel plans.
Mahesh Shetty is a Richardson finance executive and a former Voices of Collin County volunteer columnist.
posted by Mahesh Shetty @ 10:10 PM
0 comments
