The government has been meddling with Dallas Love Field to benefit large airlines and hurt consumers since the early 1970s.
When Dallas Fort-Worth Airport was constructed, the existing tenants agreed to move there and abandon commercial service from Love Field. But Southwest Airlines wasn’t an existing Love Field tenant and made no such agreement to abandon the close-in airport more convenient to downtown Dallas.
Southwest’s business model was intra-Texas flying, and dependent on making flying more efficient than driving. So a close-in airport was needed. Incumbent airlines sued to stop Southwest from taking off. Eventually Southwest prevailed, but was cordoned off by House Speaker Jim Wright (D-American Airlines) and the Wright Amendment which limited flying from that airport using aircraft with more than 56 seats to Texas, Louisiana, Arkansas, Oklahoma, and New Mexico.
In 1997 the list of allowable states was extended to Alabama, Kansas, and Mississippi. In 2005 Missouri was added.
Former FAA Administrator T. Allen McArtor founded Legend Airlines in 2000 which bypassed the Wright Amendment by offering all business class service on 56-seat DC9s to Los Angeles, New York, Las Vegas, and DC. They were out of business by 2001, in part collapsing under mounting legal fees.
In 2006 legislation was passed to eliminate restrictions on where an airline could fly from the airport starting in late 2014. However the federal government also cut the number of gates at Dallas Love Field from 32 to 20 in order to reduce competition. Public policy is often cronyist, benefiting incumbent businesses. In this case it benefited Southwest, which controlled 16 of the remaining 20 gates. That was part of the law which allowed flights from that airport to fly beyond neighboring states, also benefiting Southwest.
When US Airways was taking over American Airlines, the government disrupted Love Field even further. At the time the gates were split:
- 16 for Southwest
- 2 for United
- 2 used by Delta under a sublease from American
The government required American to divest its gates to Virgin America as part of a deal to allow the merger. That left Delta without gates. On a short-term basis they used a United gate. United didn’t want them, and was basically squatting on them with Houston regional jet flights going out empty.
Southwest then leased the United gates and sought to kick Delta out. Delta squatted on the gates. Everyone went to court.
- Southwest’s position is that they have a valid lease on the gates and should be able to use them
- Delta’s position is that they should have to be accommodated, because competition. (Delta loves competition when the position benefits them, hates it whenever it doesn’t
The federal government — which created this mess in the first place and in the second place — sided with Delta.
It’s been three years of winding through the courts, and the City of Dallas has a new proposal that nobody likes hoping to resolve the matter.
The city’s proposal put forward last week would establish a more formal process for evaluating requests by airlines to serve the airport that would weigh available space, the proposed destination and the number of passengers that would be served.
If space is available and the requesting airline is approved, that carrier would be able to operate for three years. After that point, the airline could request space again, a new airline could be given the space instead, or the gate space could be turned back to the leaseholder — currently either Southwest or Alaska.
What no one is discussing, however, is that airlines want to offer more air service from Love Field — indeed American Airlines asked for gates at Love Field, and they’d operate flights there if given the gates even though I doubt they really want to — passengers would benefit from more competition, more airlines, more flights so the airport should be permitted to have more gates, perhaps the number it used to have…
Of course Southwest likes limited gates at Dallas Love Field, because it limits competition for their flights where they’re the dominant player. And American likes limited gates at Dallas Love Field, because it prevents more convenient competition against their Dallas Fort-Worth flights. So don’t expect the situation to change soon. And don’t delude yourself into thinking that when the government regulates airlines, or other large businesses, that it’s doing so for your benefit.
When American did have the gates there, they didn’t get good use out of it. I remember flying an American Eagle flight from DAL to ORD a couple of times. The flights were basically me and 2 other people. So as much as I would like to see AA there, it doesn’t make sense if they can’t actually make them profitable.
Given that Jetsmarter now operates DAL to New York, Los Angeles, Austin, and Houston, I can’t see why I would fly AA out of DAL anymore.
True. Our “pay for play” government was/is complicit in creating this mess.
Oh, and separately, for those who have found my (frequent) use of the word “Oligopoly” objectionable in comments posted elsewhere I have some news to share:
Last week, in an Opinion column written for the NY Times, noted Columbia University Law Professor and acclaimed expert in Anti-Trust, Tim Wu, also referred to our airline industry as being…
…wait for it…
Ta-Dah: an OLIGOPOLY!!!
(Or in referring to the “Big 3” cartel, a “Triolpoly”)
In fact, Professor Wu cited the plague of worsening service (aka “Race to the Bottom”), product degradation, and overall, higher fares within the airline industry as competition was eliminated as the reason why last week’s proposed T-Mobile/Sprint merger is a “terrible idea”.
Yeah, that’s right, this expert in Anti-Trust not only cited the airlines as a textbook case of an oligopoly – he used the airlines as the “poster child” for everything wrong that happens when competition is eliminated to make his case against a proposed merger in another industry.
Ha!
I may NOT have Tim Wu’s credentials or expertise in Anti-Trust matters – but it sure does feel good now that an acclaimed expert who is qualified to state with authority that our airline industry IS an Oligopoly (or “Triopoly” when referring to AA, DL & UA) has, in fact, also said our airline industry IS an…
O-L-I-G-O-P-O-L-Y !!!
Wheee! Whoo-Hooo! Sure. Does. Feel. Good.
Hehehe 🙂 & 😉
That’s “Triopoly” in the above – minus the typo “l”
And regarding higher fares, it’s also the diminished value proposition where increases are back doored through product/service degradations, etc.
Open DAL back up to 32 gates again and let airlines have gates that they want and can operate profitably. Side with competition and let the consumers decide.
Some of the best neighborhoods in Dallas are inline with the runways at LUV field including the one I live in. I personally luv the fact that gates and flights are limited so plane noise isn’t an issue plus spotting there is a waste since it’s only the same boring 737s. Southwest is so expensive these days anyways I’d much rather fly out cheaper out of DFW and get lounge access.
Well, perhaps if Southwest actually had competition at DAL they wouldn’t be as expensive as they and the others have become in this upside-down era when people think competition is a bad thing, and the LACK of competition (aka the “O” word some hate to see written here! 😉 ) is a “good thing”.
I agree with @RF, restoring DAL to 32-gates would be a great thing.
Alas, problem is, they tore down the old terminal as soon as they could to make doing any kind of gate restoration as difficult, time consuming, and expensive as possible.
So, with crony capitalism, corruption, payoffs and graft all the rage these days, it’s hard to imagine additional competition in the airline industry, let alone expansion of DAL to offer more flights to competitors at that airport, happening anytime soon.
Maybe in the future when we get our collective heads reattached in this country, and a return to common sense and sanity returns whereupon competition is once again viewed as the good thing that it really is.
But who knows when THAT will finally happen. And right now, it sure does not seem likely to be happening anytime soon 🙁
The current situation heavily favors Southwest and slightly favors Alaska. The moment Love Field opens up, Alaska will start to fold up at Love Field. Still, Love Field should be open to all domestic flights as well as preclearance flights from certain airports in Canada, Bahamas, Ireland, and Abu Dhabi.
Let Etihad fly DAL-YYZ-AUH and reverse (or AUH-DAL and DAL-xxx-AUH)! ha ha
Seriously, DFW should be the airport for AA and ULCC (like Spirit and Allegiant). DAL should be the airport for everyone else unless they want Fort Worth business.
The way DAL is now is corruption, like Nigeria, Zaire, and shithole countries.
As much as I dislike DAL for lack of lounges and WN for well the cattle call, it’s pretty darn convenient for anyone that works or has a meeting downtown. I can usually find similar price tickets to the east coast from DFW but unless they are $100 or more cheaper (which they aren’t) it makes no sense for me to drag ass to DFW. Happy for anyone to break in to DAL and try it but doesn’t make sense for the international carriers given the DFW structure (lounges) so its down to DL which hub flies to where I don’t want/need to do or AA which continues to not care about DAL. Maybe United could make a legit go at this?
And since folks don’t know me here let me clarify that all airports seem to be totally anti-competition and downright rigged. Now, I still don’t see why DAL is worse than many others. I find it funny that we talk politically about deregulating the ATC when really, it should be about airports themselves and letting airlines come into whatever airport they want (let them pay for gates) or building new airports for that matter. With few exceptions, most airports aren’t short of legitimate expansion reasons. And to the noisy neighbor complainers. I mean, who was in operation first? I’m in the process of buying a home next to a landfill but i’ll get their land use changed so I can put them out of business and look out on a nature preserve.
That’s why I think Jetsmarter should do really well at DAL. For those of us who can afford to not fly with WN cattle class, there are 3 Signature Support terminals at DAL. If you live in Bluffview, you could probably jog over there and they’re no more than a 5-8 min uber from the Park Cities.
People who live near Love and complain about the noise crack me up. 1) commercial jets are quieter then ever and 2) if you don’t like airplane noise you shouldn’t have bought a house near the airport
Btw, Parker is exploring putting 5 people on your 3 cushion sofa
RE: Btw, Parker is exploring putting 5 people on your 3 cushion sofa
Yeah, baby! Love it!
Great comment @Johnny!
Woke up to see a columnist at “Seeking Alpha” (nb: site that’s to investors & analysts as this is to flyers & credit card mileage junkies 😉 ) embracing the “O” word in his discussion of Delta Air Lines!
Yeah, that’s right!
Give me an “O”!
Give me an “L”!
Give me an “I”!
Give me a “G”!
Give me an “O”!
Give me a “P”!
Give me an “O”!
Give me an “L”!
Give me a “Y”!
What does it spell?
OLIGOPOLY!!!
So, that makes an acclaimed Law Professor and respected expert in Anti-Trust at a prestigious Ivy League Academic Institution, Columbia University, Tim Wu (who also writes Opinion columns for the NY Times)…
…and now a respected columnist in the financial universe, Tim Dunn…
…on consecutive weeks kicking off the month of May (right after 1Q’18 earnings season)…
…embracing the “O” word as concerns our airlines!!!
I took some heat recently for using that term, so for those who said those disparaging words, eat your hearts out!!!
Or rather, I hope you’re enjoying the raw eggs on your face – plus the taste of your feet in your mouths!!!
But for everyone else, remember, you saw the comments that described OUR airlines as acting, behaving, and in fact, having become an OLIGOPOLY where?
Yep, that’s right – tedious though it may have been…
…with that “O” word horse beaten well beyond dead many times over to the point it was as if mushy pulp (!!! Hehehe)…
…to the point of being as irritating and annoying as a broken record!!!
…but only for a reason: because the signs were there…the stars were coming into alignment…
…but with my professional airline industry writing and analysis last having been a long time ago (as a regular contributor to PlaneBusiness Banter ~1999-2004) it was easy to overlook – or even be dismissed out of hand as a troll or crackpot (someone actually called me crazy in these parts a while back)…
So, the repetition was necessary – if only because it has been a long time since my work was featured in a publication that would otherwise confer “expertise” enabling me to speak with the same authority as those like Gary (or the many other excellent contributors here at View From the Wing or its sister publications)!
But, now that it’s becoming accepted wisdom from experts whose reputations vastly exceed mine that our airline industry is, in fact, an OLIGOPOLY, I will assume going forward that this is now an agreed upon fact, and there is no need to beat that horse any further in an of itself!
Yes, my dears, our airline industry is an Oligopoly. And yes, my dears, those product degradations, teeny tiny seats, no legroom rows, micro bathrooms, atrociously (and inappropriately) “densified” planes (especially those hideous Boeing 777 & 787 monsters we expected to squeeze into for 5-15 hours if we’re NOT in ‘Privileged’ class),
highly restrictive fares, those excessive penalties and punishments, too, plus the out of control proliferation of ancillary fees…
…all of which have been “alternative facted” as being “passenger demanded/pleasing, etc., improvements” that we all know and (so NOT) love as the industry’s “Race to the Bottom” really are the very determinative aspects that one would expect to see in industries that are desperately lacking competition.
So, now that my work “proving” an Oligopoly exists in the airline industry is largely done, the obvious question is:
Is this (an Oligopoly) really what we want? And is it in our best interest to have an Oligopoly in an industry as critical to our economy as our airlines are?
Using the example of the situation at Dallas Love Field (and many other airports/regions in our country), I like to think NOT.
Having the legacy carriers operating out of DAL might be a good idea if they add new destinations, or at least add frequency to existing ones, but what is much more likely to happen is that existing schedules would just get split between DFW and DAL. This is bad news for people connecting through Dallas since it reduces options (unless they want to change airports) and is equally bad news for O&D traffic since you run the risk of ending up back at a different airport from where you started, which restricts ground transportation options.
Much better to leave DAL to just WN, with their unique operating model and customer base, and put all the big boys at DFW.
I thought DL’s gates at KDAL we’re via a sublease agreement with UA a or not AA?
@Kenneth Bryant – Delta had been using the American gates. When the government took those gates away and handed them to Virgin America, Delta picked up a United gate briefly. But then Southwest grabbed the United gates from Delta.
Unfortunately, I have an even worse example of how the federal government overtly interfered in the marketplace to pick winners and losers by building an un-level playing field through unfair tax policy, excessive regulatory power, and subsidies to only exacerbate our transportation issues.
After WWII, the feds eagerly committed the treasury to fund airports and the air traffic control system. Air line growth also impressively benefited from developments for the military. As well, the federal treasury built the interstate highway system. Historically, the airlines have never paid their full user fees, particularly for air traffic control. Bus and truck firms have greatly benefited from not paying anything close to an appropriate level of user fees.
Concomitantly, the privately-owned railroads were clobbered on every side-excessive, 19th century regulations denied the railroads pricing power to compete against each and in the marketplace. Every local and state jurisdiction taxed all railroad property and buildings, as well as their own right-of-way maintained by the railroads. Government subsidy for the airlines, bus, and truck firms infrastructure devastated the railroads as a passenger conveyance and hauler of time freight.
When the feds allowed the US Post Office in 1967 to discontinue the railway post office and bulk mail trains, turning these profit centers over to the trucks and airlines, the passenger trains could not survive without those payments for moving the mail. This triggered reduction in passenger services and increased train-off petitions. The bankruptcy of the Penn Central in 1970 (a result of high taxes, heavy regulations, a victim of short haul freight and passenger services) created a fear that this bankruptcy of the largest railroad would be a contagion spreading to the other railroads.
Panic forced the feds to react to prevent a nationalization of all the railroads by relieving them of their passenger trains by creating Amtrak, to be a national operator for passenger trains. Unfortunately, Congress never funded Amtrak to the degree required to craft a viable route system; replace equipment; increase frequencies. Foisting the Northeast Corridor upon Amtrak in 1976 to protect Conrail further exacerbated Amtrak’s financial issues; as the owner of the Corridor, Amtrak was also responsible for repairing the deferred maintenance and allowing the commuter lines of the Northeast to operate for free without paying their operational and infrastructure depreciation costs (until 2016).
Desperate for a source of funding to cover its growing subsidy for the Northeast Corridor which was consuming funding and revenues from all the long distance and state corridors, Amtrak convinced Congress to pass the Passenger Rail Investment & Improvement Act of 2008 (PRIIA). In essence, all states, other than those along the Northeast Corridor, were required to begin paying in 2013 85% of costs per Amtrak’s own cost methodology (equivalent of going to a butcher shop where they put both thumbs on the scale) for all corridors under 750 miles (note between Boston-Washington is but 457 miles!).
Despite creating this issue for the majority of the nation, Congress has refused to interpret PRIIA; thus, Amtrak has filled in the vacuum by declaring itself as the sole monopoly power, as a true state-owned enterprise it has evolved into. The problem created by the feds is their must be options for states to not being forced to rely only on Amtrak, but to serve their markets with franchise bidding and open access.
Otherwise, between Amtrak and the feds that protect its belligerent approach to every region but its focus upon the Northeast Corridor, mobility and economic development will be hindered, just as the ability to inter-connect intra-state and interstate regions, as currently accomplished by rail in California (Joint Powers Authorities) and North Carolina (DOT).
Good piece gary.
More generally, a new rule should be promulgated that would require any airline with more than 32% of the ates to cede them on request by another carrier to begin service (or expand to 32%). That would deal with situations like the AA monopoly at DFW.