Battle in the air
Whether Reno would benefit from the repeal of an anti-competitive amendment is debated
Annie Opitz Olsen and her husband, Al, once owners of the Chalet and Shamrock motels on Center Street in Reno, now live in a small town outside Dallas and often fly back to Nevada to visit family and friends.
“Well, I would probably fly on Southwest except that it’s such a nuisance because you can’t get there from here, you know,” she says. “So I see it as an inconvenience to us for the destination that we have.”
Her problem is the Wright Amendment, a congressional measure that effectively applies only to Southwest Airlines. It limits midsize and large airliner passenger service out of Dallas’s Love Field to Texas and neighboring states. Southwest is the only major airline that operates out of Love.
The restrictions don’t prevent people from flying out of Texas to distant states like Nevada, but it does mean they must stop in the ring of neighboring states before going on to their final destinations. No other airline must operate under such restrictions.
The amendment is a product of a dispute over operations at Love versus operations at Dallas/Fort Worth Airport. Before Southwest existed, airlines operating at Love agreed to move their passenger operations to DFW. Then, when Southwest came on the scene as a no-frills, low-cost airline, it chose to operate at Love.
U.S. Rep. Jim Wright of Texas, a Democrat who represented Fort Worth where DFW was located, slipped an amendment banning air commerce from Love Field into an unrelated bill. The measure passed the House, but the Senate changed it to create the present restrictions. No public hearings were held.
Last year, Southwest mounted a campaign to repeal the amendment, and other airlines—particularly American—have fought back.
In November, American chair Gerard Arpey told the Senate Commerce Committee, “Southwest wants to have its cake and eat it, too. It champions the free market, but will not compete at DFW. It wants to lift restrictions on what it can do at Love Field, but opposes changes to the Love Field master plan that would let airlines like American challenge its dominance there.
“Southwest’s campaign to repeal the Wright Amendment imperils the economic health of the entire region. Repeal would be unfair to the Greater North Texas community, to DFW Airport, other airlines and to investors who spent billions of dollars assuming that the rules of the game Southwest helped create—and has benefited from for many years—would remain in place.”
American has announced it will be “forced” to move back to Love if the Wright Amendment is repealed.
In October, Wikipedia, the reader-written online encyclopedia, carried an entry on the Wright Amendment that described Southwest as “a notoriously litigious company constantly seeking to change laws to gain an advantage.” The entry was deleted by the site’s monitors and was traced to an American-owned domain, though American denied being involved.
American is using its in-flight magazine to sell its position. The current issue carries an article, “Lose Wright, Lose Service,” which cites a study by aviation firm Eclat Consulting that says releasing the amendment “would trigger a chain reaction leading to significant losses in the number of flights and designations served” at DFW. The Eclat study was paid for by—American Airlines. American also claimed that Southwest would withdraw from some markets if the amendment were repealed.
But congressmembers may be more impressed by actual than predicted effects of repeal. In November, in a big victory for Southwest, Congress exempted Missouri from the Wright Amendment, and fares dropped like a rock overnight.
And Southwest responded to American’s Eclat study with a statement:
“As to American’s claim that Southwest also would abandon markets with repeal of the Wright Amendment: We certainly thank American for its advice but prefer to run our business the way we have since 1971, making a profit by offering low fares to all of our customers, not just those we are forced to by our competitors.
“American’s ‘study’ provides another key point we have long held: Southwest and American are starkly different airlines that are best served by a different type of airport. DFW International was built for the classic ‘hub and spoke’ carrier (with a majority of connecting passengers) that American is, whereas Love Field is a textbook example of what a ‘point-to-point’ (mostly local passengers) carrier like Southwest looks for. Love Field does not work for American and DFW does not work for Southwest, as the American study illustrates.”
Southwest has erected billboards in Texas that read, “We support what’s right, and it’s not Wright.”
Half a dozen congressional measures dealing with the Wright Amendment have been introduced, including one repeal measure sponsored by U.S. Sen. John Ensign of Nevada.
Last year, the Reno Gazette-Journal ran an editorial calling the Wright Amendment unfair but also suggesting that Reno had no horse in the race and that local airport officials should stay out of the fight and “watch from the sidelines.” That prompted former Washoe County state senator Coe Swobe to respond to the newspaper in a guest essay: “This newspaper’s stance is one of weakness and short-sightedness. … Sen. Ensign is not choosing Southwest over American Airlines. Rather, he is choosing consumers over government regulators. The law has the intended effect of driving up the cost of travel between Texas and Nevada. One authoritative study said that getting rid of the Wright Amendment would save Nevada fliers over $14 million each year. Competition would create over 110,000 new Nevada passengers, for a total economic benefit to our state of $44 million each and every year.” (Swobe’s essay was also posted on a national Republican Web page at www.nrsc.org/newsdesk/article.aspx?ID=843.)
Richard Velotta of In Business Las Vegas, a business publication, reported in December, “One of the legislation’s biggest opponents, American Airlines, has stated publicly that service could be reduced to some cities if the Wright Amendment is repealed. Reno is believed to be one of those cities that could be affected if American has to cut corners to stay profitable.”
Velotta says he got that information from American officials.
“American has pretty much put out a general statement saying, ‘We would have to cut back.’ … When I spoke to some of the people at American, they said [the cuts would be] system wide. When I said, well, does that mean Las Vegas, does that mean Reno? They said, ‘Well, probably not Las Vegas, but Reno.'”
But Velotta also said he discounts much of that kind of talk.
“I think a lot of that is scare tactics, trying to get people like [Reno airport manager] Kris Bart on their side.”
Velotta also humorously noted that the Missouri exemption suggests another way around Wright.
“Representatives from each state seeking direct flights should just sponsor their own exemption legislation.”
For Annie Olsen, while the airline titans battle it out, the problem remains. Besides taking trips to Nevada, she and her husband and children sometimes fly to other locations like Florida.
“It’s always farther than the next contiguous state,” she says.