Southwest’s forthcoming expansion will offset AA-US consolidation

Southwest Airlines has begun a one year countdown to the day the Wright Amendment will disappear.

The Amendment, named after former US House Speaker Jim Wright, restricts Southwest’s ability to fly from in-town Dallas Love Field. Originally Southwest was restricted to Texas and the immediately adjacent states. The Amendment has been modified several times. Today the carrier may fly anywhere within the US beyond the exceptions with one stop. Love Field is now restricted to 20 gates; Southwest controls all but a few of them.

The restrictions were put into place to protect the then-new Dallas-Ft. Worth Regional Airport, which was constructed mid-way between the two cities. All the airlines at the time served Love Field and when DFW was created, they all agreed to move to the new airport and close Love Field to airline traffic. Except Southwest, which didn’t exist at the time of the agreement but which began service from Love in the interim between the signing of the agreement and the opening of DFW. The attempts by Braniff International Airways and Trans Texas International (nee TRANS Texas) to put Southwest out of business are industry folklore.

The fear was that Southwest and Love would hurt DFW and the airlines competing from the distant airport, including American Airlines. When Southwest a few years ago launched a full-scale attack on the Wright Amendment, American led the charge to block the effort. The compromise was the gate restriction, the one-stop service and a five year phase out.

Who could have foreseen that this now could help come to the rescue of American and US Airways as they fight the US Department of Justice’s attempt to block the merger of these two carriers?

Here’s why.

DOJ is concerned about market consolidation. Although most of the focus is on obscure, one-stop city pairs, major routes between AA and US hubs were also listed as those threatened by the merger.

Southwest’s forthcoming ability to fly unfettered from Love Field will open new competition to the combined, new American Airlines. We have no inside knowledge at Southwest, but we’ve followed the company for more than 30 years and know well the thinking there. Much of its expansion over the decades comes from connecting the dots. So look for Southwest to connect these major-market dots from Dallas Love Field, all of which will provide new competition for American:

  • Chicago Midway
  • Los Angeles
  • Phoenix
  • Baltimore
  • Atlanta
  • New York
  • Washington
  • Denver

These are just for starters.

This new competition won’t, by itself, rescue American and US Airways from DOJ’s ill-advised lawsuit, but it will help. Southwest Airlines carriers more US domestic passengers than any other airline, and it will continue to do so after the AA-US combination. This is a powerful argument that gets more powerful one year from today.

8 Comments on “Southwest’s forthcoming expansion will offset AA-US consolidation

  1. WN is a LCC, the new AA will not be. They offer different products. WN cannot expand at DAL beyond the 15-18 gates they already have. AA has almost all of Terminal A, C, and about half of Terminal D at DFW. The US flights at Terminal E will be absorbed into the AA terminals.

  2. Then eliminate the Wright amendment and allow SWA add more gates at Love Field. They are using most of their gates today, limited their ability to expand in the future.

    • The Wright amendment was the most anti-competitive airline law ever passed. No other airport has been hamstrung as DAL was and the number of gates should not be limited. Let WN do its thing and compete with other airlines and airports as they have done all over the country to the benefit of the flying public.

  3. The lines between SWA and AA have been blurring more and more (domestically they might as well be interchangeable for the average flyer, each with it’s own advantages). The opening of Love Field will pose a serious challenge to AA. Love Field just has so many advantages, being close in to Downtown Dallas, right off the tollway, and with the smaller size, it’s a breeze to fly out of. Personal experience from a couple years back was that it saved me about an hour VS DFW coming from north Dallas area. (It was a sad day when Eagle cancelled DAL-AUS.) SWA has had every chance to move out to DFW, but (smartly) wants to keep it’s own mini fortress at DAL. The problem with the current agreement is that it basically perpetuates Southwest’s unassailable position at this prime city-center airport. Lifting the number of gates is the right move, but only if it will drive competition within Love Field as well as between DFW and DAL. Maybe they should just lift the gate restriction altogether and instead slot restrict DAL, split 50% up by current ratio, and then put the rest up for grabs.

  4. Dr. Hamilton remains as insightful as he was in the 1990s when he was editing CAR.

    I’ll go a step further in reading the minds at LUV (Love Field is so deeply baked into their consciousness that it was the inspiration for their stock symbol): they’re positively salivating at the opportunity to grow at Love. Like many organizations, Southwest has become something of a victim of its own success; it has expanded to the point where its best opportunities for high-margin growth are mostly in the rear-view mirror. Growth at Love is exception, one they would have plucked long ago but for the Wright Amendment.

    For what it’s worth, I think DOJ will find some way to make itself happy with the AA/US combination as the alternative consigns both carriers to death spiral that may take decades to complete but will be inexorable.

  5. Sorry to change the blog Air India 787 loses panel on landing in Bagalore leaving a large hole inear the cargo hold.

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