Southwest Airlines is escalating its battle against a law restricting its right to fly from its home airport, but cross-town rival American Airlines is adamant about keeping the controversial law in place.

At stake are hundreds of millions of dollars Southwest stands to gain if it is allowed to fly to cities like Las Vegas and Pittsburgh from Dallas Love Field, as well as American's dominance of its most profitable airport hub.

The 1979 law, known as the Wright Amendment, was designed to protect the then-fledgling Dallas/Forth Worth International Airport from competition from Love Field, an older, smaller airport about 10 miles (16 km) closer to the city.

It restricts flights from Love Field to nearby states, thereby protecting American from cut-price competition on long-haul routes, critics say.

"My opinion is that the chances are good" for repealing the amendment, Southwest Chief Executive Gary Kelly said in an interview. "Wright is wrong and I think most people can reach that conclusion without too much difficulty very quickly."

"There is certainly interest in repealing a very outdated, anti-competitive, antiquated piece of legislation," he said.

The battle pits American Airlines, the largest US airline by traffic, against Southwest, a one-time upstart that now has the top market value of any US carrier.

Kelly shocked American late last year by abandoning Southwest's longtime position of "passionate neutrality" on the law and starting a campaign to repeal it, a move analysts estimate could reap USD$500 million in revenue for the airline.

Dallas/Fort Worth Airport (DFW) is American's largest hub. It controls about 80 percent of the gates at the airport where some rivals have struggled to build operations.

Delta Air Lines closed its competing hub at the airport earlier this year in a bid to stem losses.

Lately, Southwest has shifted its public relations campaign against the Wright Amendment into high gear. But American's Chairman and Chief Executive Gerald Arpey pledged to fight to preserve the law.

The Wright Amendment "has made DFW the economic engine that powers this region and made this region the envy of many other communities around this country," Arpey said in an interview last week. "Bending that successful public policy to serve Southwest's interests I don't think would be a sensible thing to do."

DFW airport itself commissioned a USD$100,000 study that says allowing Southwest to expand at Love Field would cost it 21 million passengers a year.

DFW officials also accuse Southwest of reversing itself from statements by founder and Chairman Herb Kelleher in support of protecting the airport by limiting Love Field flights.

"The issue is whether you want to put at risk this economic engine," airport Chief Operating Officer Kevin Cox said in a press conference. "We think that's a heck of a risk to run."

The Wright Amendment only allows intrastate flights from Love Field if the planes have fewer than 57 seats, while larger planes can only fly to adjoining states. The law was modified in 1997 to allow flights to Alabama, Kansas and Mississippi.

A spokesman for US Senator John Ensign, confirmed that the Republican from Nevada is considering legislation to repeal the Wright Amendment. Texas' US senators have yet to take a stance on the issue, which has split airline industry analysts.

"To the extent that we'd like to see an unregulated airline industry, the Wright amendment is a pretty antiquated piece of legislation," said Chris Lozier, an analyst with Morningstar. "It's something we consider when we model Southwest."

Others lean toward American's point of view.

"I'm a little leery of getting rid of the Wright Amendment at Love Field because AMR will sue to gain access and that could create a lot of traffic," said Ray Neidl, analyst at Calyon Securities. "It's in a congested part of the city and that could create a lot of local problems."

"Both airlines are doing what's in their interest," he said.
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