Speculation from the Travel Weekly regarding AA's move to DAL. They have put to paper what several of us have conjectured in this forum.


Full article (requires registration):
http://www.travelweekly.com/articles.aspx?articleid=49547


.....CreditSights analyst Roger King thought he knew. In a well-reasoned argument, he issued a report in late November in which he predicted American wouldn’t move any of its flights to Love Field because it didn’t make financial sense. King predicted that Southwest’s new service would cost American as much as $115 million in annual revenue. But for American that amounts to “chump change,” he said.

American has been telling everyone that removing the Love Field restrictions would force American to split its operations between its DFW hub and Love, which is closer to many of its customers.

That, in turn, would mean a reduction in service to small communities from the Dallas/Fort Worth area, because many of those routes can only be financially justified when they are feeding traffic to other routes at the hub, American said. The shift also could mean flooding Love Field with more flights than nearby residents, who are concerned about noise and traffic, can tolerate.

American emphasized that potential consequence to make its case against lifting restrictions at Love, which would strengthen a formidable competitor. King called American’s warnings a “transparent smoke screen” and a bluff.

“There is no way American can economically justify a satellite operation at Love,” King said.

Here’s why.

In spite of recent cost-cutting, the cost per available seat mile (CASM) for most major network carriers is still significantly higher than for their low-cost competitors. That certainly remains true for American and Southwest, whose respective CASMs were 10.62 cents and 7.85 cents in the third quarter.

“American would never be able to compete profitably against Southwest at Love Field. Their respective CASMs are not even in the same zip code,” King reasoned.

Further, fortress hubs such as DFW are network airlines’ first line of defense against low-cost carriers, King said.

“These hubs are massively expensive operations and require maximized traffic volumes for profitability,” he said. Network carriers such as American have to focus on attracting high-end business through their hubs with increased international and regional connections, King added.

“Pulling capacity out of DFW would diminish its value and profitability,” King said. “Losing money on two fronts is not in AMR management’s game plan.”....

.....American responded to Southwest by announcing it will launch service to Kansas City and St. Louis from Love on March 2, as well as American Eagle regional jet service from San Antonio and Austin, Texas, to Love to feed traffic to those Missouri flights.

American also said that in conjunction with the shift, it will be removing 31 daily flights from DFW. That includes reducing frequencies to St. Louis, Kansas City, San Antonio and Austin. It also includes eliminating or reducing DFW service to cities with a dubious connection to the Love Field additions -- Lima, Peru, and Long Beach, Calif., for example -- but which already were, at best, barely making a profit.

If King is correct, American’s shift to Love Field doesn’t make economic sense. Then why did American do it?

Political strategy is a strong possibility. Southwest says the new service to Missouri, which should generate an increase in travelers from Dallas/Fort Worth to St. Louis and Kansas City, will demonstrate the benefit other states would also get if Congress would eliminate the Wright Amendment.

By shifting service to Love and cutting services at DFW, American can counter: See, this is what will happen, but on a much bigger scale, if the restrictions are removed.

“I don’t think they’ll make any money at Love Field. They’re just going there to plant the flag,” King said. “It’s just to make a statement. They said they would do it.”

American, in other words, is willing to lose money to prove a point.....

Quoting DALNeighbor (Thread starter): American, in other words, is willing to lose money to prove a point.....

When did this become this news? AA has long been one of the most aggressive and retaliatory operators in the industry. Remember Legend at Love Field? I wonder how much it cost AA to put them out of business.

I have a question about all this - How come ORD (a huge AA hub) gets along so well MDW (large WN operation with AA flights) and no restrictions like Wright Ammendment?

Quote: I have a question about all this - How come ORD (a huge AA hub) gets along so well MDW (large WN operation with AA flights) and no restrictions like Wright Ammendment?

I think the answer to that question lies in O&D numbers - I am certain Chicago has always had higher numbers of passengers arriving and departing from Chicago, so AA and UA both can make money both on connecting passengers and on Chicago-bound passengers.

Dallas and Ft Worth, both major cities, do not have as many O&D passengers percentage wise, and therefore AA has made DFW a fortress hub. Since the demise of Braniff, AA has ruled the roost, and will not tolerate anyone touching its turf.

It is kind of the same thing in MSP - WN and NW compete against each other at DTW, and always have. But mention the name Southwest in Minnesota, and Henny Penny comes running out screaming that the sky is falling. Why? It's a fortress hub for NW - always has been, and if NW has their way, it always will be.

Quoting Mikesairways (Reply 2): I have a question about all this - How come ORD (a huge AA hub) gets along so well MDW (large WN operation with AA flights) and no restrictions like Wright Ammendment?

From AA's perspective, I'd argue that ORD doesn't get along as well as DFW. AA can charge much higher fares per seat mile out of DFW than it can out of ORD. Nonetheless, there is no legitimate reason for the government to artificially restrict the marketplace and create a monopoly environment for AA to operate in.

Quoting Mikesairways (Reply 2): I have a question about all this - How come ORD (a huge AA hub) gets along so well MDW (large WN operation with AA flights) and no restrictions like Wright Ammendment?

Because a U.S. Congressman -didn't- stick his nose in it...  

Quoting DALNeighbor (Reply 4): Nonetheless, there is no legitimate reason for the government to artificially restrict the marketplace and create a monopoly environment for AA to operate in.

I'm irritated with AA for shifting service to DAL, but what are you talking about here? Are you talking about restrictions on flights from DAL? How on earth does that create a monopoly environment for AA?

Quoting N844AA (Reply 6): I'm irritated with AA for shifting service to DAL, but what are you talking about here? Are you talking about restrictions on flights from DAL? How on earth does that create a monopoly environment for AA?

By virtue of the restrictions placed on DAL, AA operates exclusive non-stop service between DFW and 50+ markets. Without the Wright Amendment, there would be significantly fewer markets exclusive to AA on a non-stop basis.

American is willing to lose money to prove a point...

And who exactly are they going to send to Wall Street to convey this message?

'Dumb & Dumber II' is starting filming this month; casting call to all AA shareholders.

Quoting DALNeighbor (Reply 7): By virtue of the restrictions placed on DAL, AA operates exclusive non-stop service between DFW and 50+ markets. Without the Wright Amendment, there would be significantly fewer markets exclusive to AA on a non-stop basis.

But what's preventing WN from operating out of the Metroplex's designated long-haul airport? I don't want to start yet-another-rehash of the pros and cons of the WA. I just think it's inaccurate to characterize it as a government-enforced monopoly, and doing so undermines your point (which is a good one.)

Quoting ChrisNH (Reply 8): 'Dumb & Dumber II' is starting filming this month; casting call to all AA shareholders.

http://finance.yahoo.com/q/bc?s=AMR&t=6m&l=on&z=m&q=l&c=

Quoting N844AA (Reply 9): But what's preventing WN from operating out of the Metroplex's designated long-haul airport?

Some sound business sense...   

Quoting OPNLguy (Reply 10): Some sound business sense...

Point well taken; I really should have posted a 30-year LUV chart above as well.

Still, for entirely selfish reasons, I do wish WN would move to DFW -- I wish it fit into their business model because I'd like to have that option. Since it rarely makes sense for me to fly into DAL when I'm going to the Metroplex, usually AA it is.

[Edited 2006-01-11 21:31:50]

Ask Independence Air how a strategy based on loosing money but gaining volume works out in the long run.

Quoting N844AA (Reply 9): But what's preventing WN from operating out of the Metroplex's designated long-haul airport? I don't want to start yet-another-rehash of the pros and cons of the WA. I just think it's inaccurate to characterize it as a government-enforced monopoly, and doing so undermines your point (which is a good one.)

I'm not saying the government has crafted law that specifically designates AA as the only carrier to operate certain routes. What I'm saying is that by placing restrictions on operations at DAL, a monopoly "environment" is created. I don't think anyone could argue that more competition would exist in the Dallas - Ft. Worth market if the Wright Amendment were removed. So yes, it is inaccurate to charachterize it as a government-enforced monopoly.

Quoting OPNLguy (Reply 5): Because a U.S. Congressman -didn't- stick his nose in it...

Actually, it is mostly because the City of Chicago owns both airports and doesn't want either to be restricted (hence, they didn't beg one of their representatives to restrict Midway) while Dallas only owns half of DFW. Whether we like it or not (and I don't, though I do like Jim Wright otherwise) Congress had every right to do what they did.

Quoting N1120A (Reply 14): while Dallas only owns half of DFW.

Dallas owns 7/11 of DFW. Point is still valid, just wanted to clear up the amount of ownership.

I think since day one of being on this forum I've maintained that it makes no sense for AA to move any ops to DAL as it would split their strongest asset.

AA is determined to prove that they will lose money going to DAL.. well duh. They just need to prove now why they NEED to move anything at all to DAL.

All they are proveing with this stunt is that stupid buisness decisions lose money.

Not a very sound financiAAl study if you ask me.

Quoting DALNeighbor (Reply 4): From AA's perspective, I'd argue that ORD doesn't get along as well as DFW. AA can charge much higher fares per seat mile out of DFW than it can out of ORD. Nonetheless, there is no legitimate reason for the government to artificially restrict the marketplace and create a monopoly environment for AA to operate in.

Sort of like how the WA created a niche market for WN at DAL that they are willing to do anything to protect? AA is going into DAL to screw the works up for WN nothing more and nothing less. If they can create enough traffic at DAL to make WN surrender gates until new ones are built knowing full well that Dallas voters will not approve an expenditure for that airport. That is what is all about. If they make money great but I doubt that is all that AA has in mind anyway.

Quoting Cjpark (Reply 17): No More Love for WN shut Love down!

How would shutting down DAL benefit the traveling public? How would shutting down DAL benefit you?

Quoting MDorBust (Reply 16): I think since day one of being on this forum I've maintained that it makes no sense for AA to move any ops to DAL as it would split their strongest asset. AA is determined to prove that they will lose money going to DAL.. well duh. They just need to prove now why they NEED to move anything at all to DAL. All they are proveing with this stunt is that stupid buisness decisions lose money. Not a very sound financiAAl study if you ask me.

Just simple economics and you would realize that sometimes it is the financiAAly better idea to take short term losses in prediction that it will amount to long term gains. This is clearly what American Airlines is doing. It is a risk, because you can't determine the long term gains ahead of time, but it is a very common thing to do, some people just don't realize it. Retail stores are infamous for doing it. Ever notice how cheap new release DVDs are at Best Buy, Circuit City, etc. on release week? They take a risk by accepeting a loss on that product in hopes that you will walk in and buy something else, or, in the future, come and purchase a big ticket item from them, like a new flat screen TV or computer. AA isn't doing anything ridiculously stupid.

Lets see by shutting DAL down we gain 5 miles or so of undeveloped land ripe for development. New homes and business just think about it. New taxable properties inside the city of Dallas!

Shutting Love down and forcing all the airlines to DFW means more flights and that wonderful word that WN throws out all the time competition. Competition means lower fares for everyone.

With DFW as the central airport for the region finally we can develop the municipal transportation network build around the airport as the center point.

How would it benefit me well the same as it would benefit everyone else lower fares and airline competition.

Quoting Cjpark (Reply 17): If they can create enough traffic at DAL to make WN surrender gates until new ones are built

They'd need to put another 60-70 flights into DAL to make WN surrender any of the gates they're actively using. Southwest has a half-dozen or so gates which are currently used as office space; there are also six gates available to any comer at the Love Field Executive Terminal.

I suppose AA can bleed itself into bankruptcy if desired, but it's not really good business sense.

Quoting Cjpark (Reply 20): Lets see by shutting DAL down we gain 5 miles or so of undeveloped land ripe for development. New homes and business just think about it. New taxable properties inside the city of Dallas!

oh, yes, along with all that wonderfully polluted ground that will take years and $Billions to clean up.

Quoting Cjpark (Reply 20): Shutting Love down and forcing all the airlines to DFW means more flights and that wonderful word that WN throws out all the time competition. Competition means lower fares for everyone.

Freeing Love from restrictions would create the same level of competition without forcing an airline to move its entire operation from one airport to another (Which really causes lots of headaches).

Quoting Cjpark (Reply 20): With DFW as the central airport for the region finally we can develop the municipal transportation network build around the airport as the center point.

Most municipal transportation systems I've seen are either horribly mismanaged or have multiple focus points. Or both.

Quoting Cjpark (Reply 20): How would it benefit me well the same as it would benefit everyone else lower fares and airline competition.

As I pointed out above, this would exist if the Wright Amendment were repealed, and already does exist in markets allowed by Wright Amendment restrictions.

NEXT!

(And just to be clear, I'm not a WN fanboy, I've never flown them, never intend to unless they have the lowest fair and no one else has a matching one, in fact my preferred Carriers are Continental and Frontier. But the Wright Amendment is, to borrow a phrase, Wrong. I've also never, amazingly enough, flown American.)

Quoting Cjpark (Reply 20): Lets see by shutting DAL down we gain 5 miles or so of undeveloped land ripe for development. New homes and business just think about it. New taxable properties inside the city of Dallas! Shutting Love down and forcing all the airlines to DFW means more flights and that wonderful word that WN throws out all the time competition. Competition means lower fares for everyone. With DFW as the central airport for the region finally we can develop the municipal transportation network build around the airport as the center point. How would it benefit me well the same as it would benefit everyone else lower fares and airline competition.

1. Shutting down DAL and turning it into a residential development would decrease the tax revenue generated from that property. Bad move.

2. You can shut down DAL, but you can't force anyone to move to DFW. WN would abandon the Dallas area and with it would go the only glimer of hope for the traveling public.

3. Competition does not work at DFW, look at the history of failed airlines. Look at we are left with now. One airline has more then 85% of the DFW market. Doug Parker has said he is not interested in any more service at DFW, despite the wonderful incentives. JetBlue is not coming and AirTran is pulling down LAX and BWI (we'll see how long MDW lasts).

4.Making DFW the central point of a transportation network does nothing. What's so great about that?

All failed and horrible ideas.

Quoting MAH4546 (Reply 19): Just simple economics and you would realize that sometimes it is the financiAAly better idea to take short term losses in prediction that it will amount to long term gains.

The long term gain prediction would only result if they beat Southwest at their own game on their own turf... Something AA can't do.

How will splitting their hub ever result in any gain?

Would you take an AA flight that would require a DAL/DFW aircraft change?

I don't think you would.

AA can't hub DFW/DAL and they won't beat Southwest for the O&D buisness.

Guys guys guys

I don't think many of you get what is going on here. AA is playing politics, rather than business.

You see, AA keeps up the spin line: "look you've forced us into this...and now, we're going to have to dump these regional routes because we can't consolidate our Dallas operations at one airport....".

Then they'll have a press releases claiming service to city XYZ on American Eagle ends in 1 month.... they may even actually suspend a few of these services. Then what happens is people living in XYZ get shitty, particularly local small business people, professionals etc... and put pressure on their local congressman to keep AA's former operation. This is basically just another form of political lobbying.... and it will of course cost AA money, but, if it keeps the existing legislation in place, AA will be better off for it in the long run.

BA is doing a similar thing at LHR.

Quoting DALNeighbor (Reply 4): From AA's perspective, I'd argue that ORD doesn't get along as well as DFW.

That has zip to do with it. The Chicago O&D demand is what makes ORD/MDW possible.

Quoting DALNeighbor (Reply 23): JetBlue is not coming and AirTran is pulling down LAX and BWI (we'll see how long MDW lasts).

No, JetBlue is pending both airports, and will opt for DAL should Wright be pulled and Virgin is looking at DFW.

Quoting DALNeighbor (Reply 23): 1. Shutting down DAL and turning it into a residential development would decrease the tax revenue generated from that property. Bad move. 2. You can shut down DAL, but you can't force anyone to move to DFW. WN would abandon the Dallas area and with it would go the only glimer of hope for the traveling public. 3. Competition does not work at DFW, look at the history of failed airlines. Look at we are left with now. One airline has more then 85% of the DFW market. Doug Parker has said he is not interested in any more service at DFW, despite the wonderful incentives. JetBlue is not coming and AirTran is pulling down LAX and BWI (we'll see how long MDW lasts). 4.Making DFW the central point of a transportation network does nothing. What's so great about that? All failed and horrible ideas.

Sorry dalneighbor, all you have done is make excuses for the status quo. I thought you wanted competition and low fares. Seems like all you are interested in is making sure that WN does not have to compete with anyone.

Quoting ChrisNH (Reply 8): 'Dumb & Dumber II' is starting filming this month; casting call to all AA shareholders.

Off-topic, but "Dumb & Dumber II" actually happened, and I dare say that your vision would have been funnier.  

Wright amendment aside CJpark, DAL will not ever face the wrecking ball. Even if it loses all commercial service it is far too important as a corporate airport, with alot of general aviation traffic, and the CEOs who would have to get their limos for a longer drive will compain. For that reason, using wright to justify it closing is nothing more than a red herring. The only way for DAL to face the wrecking ball is if Richard Daley moves to Dallas and gets elected mayor, and then sends the trucks in against an faa order to bulldoze the airport, to build casinos and stuff.

Losing revenue is not the same as losing money.

If you can improve profit margins by a lot at the expense of a small amount of revenue then you are in a better position than if you sacrifice profit margin to revenue.

Quoting Cjpark (Reply 27): Sorry dalneighbor, all you have done is make excuses for the status quo. I thought you wanted competition and low fares. Seems like all you are interested in is making sure that WN does not have to compete with anyone.

So you're saying that we have more competition by keeping the Wright amendment than we would without it? That dog don't hunt.

Maybe you should take some reading and comprehension classes with your buddy 2h4.

Your question.

Quoting DALNeighbor (Reply 18): How would shutting down DAL benefit the traveling public? How would shutting down DAL benefit you?

My reply.

Quoting Cjpark (Reply 20): Lets see by shutting DAL down we gain 5 miles or so of undeveloped land ripe for development. New homes and business just think about it. New taxable properties inside the city of Dallas! Shutting Love down and forcing all the airlines to DFW means more flights and that wonderful word that WN throws out all the time competition. Competition means lower fares for everyone. With DFW as the central airport for the region finally we can develop the municipal transportation network build around the airport as the center point. How would it benefit me well the same as it would benefit everyone else lower fares and airline competition.

Your reply to my reply.

Quoting DALNeighbor (Reply 23): 1. Shutting down DAL and turning it into a residential development would decrease the tax revenue generated from that property. Bad move. 2. You can shut down DAL, but you can't force anyone to move to DFW. WN would abandon the Dallas area and with it would go the only glimer of hope for the traveling public. 3. Competition does not work at DFW, look at the history of failed airlines. Look at we are left with now. One airline has more then 85% of the DFW market. Doug Parker has said he is not interested in any more service at DFW, despite the wonderful incentives. JetBlue is not coming and AirTran is pulling down LAX and BWI (we'll see how long MDW lasts). 4.Making DFW the central point of a transportation network does nothing. What's so great about that? All failed and horrible ideas.

My reply to your tired WN company line.

Quoting Cjpark (Reply 27): Sorry dalneighbor, all you have done is make excuses for the status quo. I thought you wanted competition and low fares. Seems like all you are interested in is making sure that WN does not have to compete with anyone.

Your attempt to spin your way out.

Quoting DALNeighbor (Reply 31): So you're saying that we have more competition by keeping the Wright amendment than we would without it? That dog don't hunt.

What I have been saying all along keeping the WA and having WN at DFW instead of DAL is the answer to bringing more competition to the North Texas region.

Answer your question for you yet?

Quoting DALNeighbor (Thread starter): The shift also could mean flooding Love Field with more flights than nearby residents, who are concerned about noise and traffic, can tolerate

Put a fleet of AA MadDogs over at DAL and the surrounding residents will raise cane.

Honestly, they should have shut down DAL to commercial traffic at the get go. Now, both airlines would be head-to-head at DFW. Nothing against WN, they have great people there and I have enjoyed flying them several times. I have flown AA and would choose WN, unless, of course, I was in a position to fly biz. Then I would probably go UA. None of that really matters, but this DAL vs DFW thing has gotten out of hand.

M

Quoting Cjpark (Reply 32): My reply to your tired WN company line. Quoting Cjpark (Reply 27): Sorry dalneighbor, all you have done is make excuses for the status quo. I thought you wanted competition and low fares. Seems like all you are interested in is making sure that WN does not have to compete with anyone.

You are oblivious. You insinuate that I don't want low fares and competition because I disagree with closing an airport. That's simply not true. It's an easier path to low fares and competition by removing the Wright restrictions than it is to shut down DAL and hope that some airline challenges AA's dominance. History time and time again has proven that competition and low fares WILL NOT WORK at DFW. DFW is littered with the tombstones of airlines that dare enter AA's castle. It's not an attractive opportunity and Southwest wouldn't attempt it even if you shut down DAL.

You've made it painfully obvious that your agenda is to shield AA from competitive service at DAL. That only hurts the traveling public and the local economy.

I get back to the territorial limits of the continental United States (excluding tropical possessions, of course) only to find CJPark and Boeing7e7 spouting the same nonsense as always.

I guess that's why I am over in Iraq, fighting for the American way of life, freedom for peoples throughout the world, and the right of selected individuals in America to stay and do stupid things.

In a way, the Wright thing is beginning to remind me of Hitler and "the BIG LIE".

Big Lie #1 - The Wright Amendment created a profitable niche and "allowed" Southwest to prosper.

Truth: Southwest, a 3 airplane airline, spent a ton of money litigating their right to remain at Love Field all the way to the Supreme Court. Braniff (in particular) and to a lesser extent Texas International stayed at Love Field after DFW's opening only to have their butts severely kicked by Southwest's superior service. The Wright Amendment hamstrung Southwest growth opportunities for over 25 yrs. The only "niche" it created is it made Love Field a less desirable location for other airlines.....although that never prevented American from coming in to offer DAL-AUS service 14 times a day with MD80s in one of their previous business moves which ranks right up there with the decision to produce and air the TV series "My Mother The Car."

More on big lies later. But here is the real truth. Missouri was just the first chink in DFW's armor. More to follow. Once upon a time I expected AZ and NV to fall next, as well as TN. I am beginning to think it may be CO and NE. Nonstop service from Love to Omaha, anyone?

Quoting ChiGB1973 (Reply 33): Honestly, they should have shut down DAL to commercial traffic at the get go.

They tried the "selective closure" route way back when but it was knocked down in the courts, including that big one up in DC...

Quoting DALNeighbor (Reply 34): You've made it painfully obvious that your agenda is to shield AA from competitive service at DAL. That only hurts the traveling public and the local economy.

Funny that you are forgetting that AA is bringing the fight to WN's door step to compete at DAL since WN will not compete with AA or any of the other airlines at DFW.

Quoting TxAgKuwait (Reply 35): I get back to the territorial limits of the continental United States (excluding tropical possessions, of course) only to find CJPark and Boeing7e7 spouting the same nonsense as always.

We all appreciate your service and I am glad you have made it home safely.

And I am sure that a man in your position is not used to be told he is full of it but personally I think your are so full of it your eyes are brown.

Quoting TxAgKuwait (Reply 35): Truth: Southwest, a 3 airplane airline, spent a ton of money litigating their right to remain at Love Field all the way to the Supreme Court. Braniff (in particular) and to a lesser extent Texas International stayed at Love Field after DFW's opening only to have their butts severely kicked by Southwest's superior service. The Wright Amendment hamstrung Southwest growth opportunities for over 25 yrs. The only "niche" it created is it made Love Field a less desirable location for other airlines.....although that never prevented American from coming in to offer DAL-AUS service 14 times a day with MD80s in one of their previous business moves which ranks right up there with the decision to produce and air the TV series "My Mother The Car."

Actually, the ruling was that one airport operating agency could not impose it's authority over another. Meaning DFW Airport Authority could not legally compel the City of Dallas to alter it's operations at DAL. The rest was ignored by the court, because the operational control issue was the over riding factor.

Look it up.

Quoting TxAgKuwait (Reply 35): The only "niche" it created is it made Love Field a less desirable location for other airlines.

I don't understand how you can say that and call their "proftable niche" a lie. Yes, it created a niche. WN, to their credit, exploited it to much success (when they were a 3-plane airline). Now they're bigger and stronger and can take on the big-guys, so the niche is no longer convenient.

All this anti-trust stuff is BS since WN knew about the WA when they decided to stay and hunker down at DAL. It turned out to be a good move for them. If they had moved to DFW, they likely would have gotten swept away like the rest of them. So they stayed, and prospered, primarily because no other airline provided much competition, and they are simply better than thoes that did. AA's DAL-AUS flights hardly count for major competition.

In all fairness, WN should fight the WA, as it makes business sense for them. AA should fight against it, as it makes business sense for them. Whoever wins, all the more power to them. If AA needs to enter DAL in a big way and cut service to DFW to win political favor and hold WA in place, then they should do it. Consider it a legal expense. Obviously, though, they have to be careful. Because if they spend too much on this, or if WA is repealed anyways, it may be a loss they aren't capable of taking.

Quoting DALNeighbor (Reply 23): 1. Shutting down DAL and turning it into a residential development would decrease the tax revenue generated from that property. Bad move.

tax revenue, are you kidding me. DAL lost 20 million dollars each of the past 2 years, come on and get real DAL is a open wound either stitch it up or put it to sleep..

AA's knows it can't win and as others have stated this is simply a political move that I doubt is going to get much sympathy. The question is how long will AA lose money by offering the same fares as WN before they pull out? As for The Wright Amendment its going to be lifted, Southwest is going to go nation wide from Love and the reaction in AA's board room is going to amount to something like this "oh shit". Say what you want about WN in the next five years they are going to dominate domestic travel in the U.S.

Quoting Cjpark (Reply 37): Funny that you are forgetting that AA is bringing the fight to WN's door step to compete at DAL since WN will not compete with AA or any of the other airlines at DFW.

You don't physically have to be in the same airport to offer competing service. WN can offer service DAL- STL and AA can offer DFW - STL and dare I say you would be competing for the same Customers.

Quoting PanAm747 (Reply 3): It is kind of the same thing in MSP - WN and NW compete against each other at DTW, and always have. But mention the name Southwest in Minnesota, and Henny Penny comes running out screaming that the sky is falling. Why? It's a fortress hub for NW - always has been, and if NW has their way, it always will be.

Hmmmmmm, I live in Minnesota and I've never heard of NW screaming anything about WN at MSP or even WN expressing an interest in flying out of MSP. There are plenty of gates at the new Humphrey Terminal waiting to be used whenever WN feels they are ready.

NW, until just recently, has held WN pretty much in check in the Detroit Market for the 15 or so years they have been competing there. In fact, WN moved its operations out of a secondary airport to DTW at no other prompting from NW than competition.

Maybe, just maybe, its NW's business accumen and NOT any Henny Penny screaming that has kept WN from wanting to enter the MSP market up to this point.

Quoting Mikesairways (Reply 2): I have a question about all this - How come ORD (a huge AA hub) gets along so well MDW (large WN operation with AA flights) and no restrictions like Wright Ammendment?

There are two reasons why AA has never had a major operation at MDW, since WN started operations back in the mid 1980s.

First, ORD and MDW are about equal driving time from the Chicago Loop. So MDW doesn't have the advantage for people working in the Loop the way DAL has the advantage for people working in downtown Dallas.

Second, the major corporate headquarters and offices that aren't in the Loop are either in the north, northwest, or west suburbs. For those travelers, ORD has the advantage. If anything, MKE is the competitor for those in the northern suburbs.

Quoting DALNeighbor (Thread starter): American, in other words, is willing to lose money to prove a point.....

Isn't Southwest willing to lose money to prove a point too? It started service between Dallas and St. Louis offering $49 one-way. Meanwhile, in a flight that is similar in duration such as Dallas-Albuquerque, the lowest fare they offer is $107. Sounds like two sides of the same coin.

Quoting DALNeighbor (Reply 42): You don't physically have to be in the same airport to offer competing service.

That's a false statement. Two airlines serving the same city from different airports fracture demand: the one set of customers gets divided in three: a. those indifferent, b. those that prefer airport #1, c. those that prefer airport #2. Thus not all customers will consider both airlines as possible service providers. Slicing service across different airports reduces competition.

Quoting DALNeighbor (Reply 34): History time and time again has proven that competition and low fares WILL NOT WORK at DFW.

That's not the problem. The problem is that by landing at Love Field Southwest saves some 25 million dollars in landing fees every year.

Quoting Incitatus (Reply 45): Quoting DALNeighbor (Reply 42): You don't physically have to be in the same airport to offer competing service. That's a false statement. Two airlines serving the same city from different airports fracture demand: the one set of customers gets divided in three: a. those indifferent, b. those that prefer airport #1, c. those that prefer airport #2. Thus not all customers will consider both airlines as possible service providers. Slicing service across different airports reduces competition.

Wrong. It is not a false statement. I did not say that all customers will consider both airlines as possible service providers. You said that and you are wrong. I said you do not have to be physically located at the same airport to provide competing service which you admitted is correct when you said:

Quoting Incitatus (Reply 45): a. those indifferent

Which in the case of DAL and DFW I would gather exceeds 90% of the traffic. Furthermore, the demand is not fractured it is multiplied by competing service. 12 months from now I can guarantee higher O and D numbers between the Dallas market and STL than before the MO exemption. Same goes for MCI. Time will tell and Wright will be wrong.

[Edited 2006-01-12 20:45:52]

Quoting MAH4546 (Reply 19): AA isn't doing anything ridiculously stupid.

Except that they are still not on the best financial standing and are planning on taking these losses against a company that is the most financially sound in the industry. They are cutting off their nose despite their face on this one.

CJPark writes in, and I quote: >>And I am sure that a man in your position is not used to be told he is full of it but personally I think your are so full of it your eyes are brown.<<

Well, CJ, if you remember correctly I tried to get you to hop on the plane with another of our popular a.net posters who flies around for fun back a few months ago (before I deployed).....and you declined. You could have seen for yourself...my eyes aren't brown.

Which reminds me of the old joke "Are you brown from the sun?".... "Nope, I'm TxAgKuwait from Earth."

At any rate, there is only one problem with all this "stuff" that makes you think I am full of it. I have a good memory and I had a ringside seat.

You might fool someone who was not busy watching Lee Cullum Clark and Billy Porterfield and Patsy Swank and Peter Lesser and Bob Ray Sanders on "Newsroom" (channel 13 KERA's evening newscast) as they spent day after day dissecting the Love Field case and awaiting Judge Taylor's decision. It's not so hard to repeat the same thing, over and over again, and despite the way it really happen.....someone who wasn;t born, or someone who was 5 yrs old at the time, or someone who lived on the southside of Chicago (in the baddest part of town) is not going to know the difference.

But I do know the difference. I know how all this came to be and I remember how it played out.

A few facts folks conveniently forget from time to time:

Southwest did not want to leave Love Field because it was a demonstrated fact that short haul traffic suffered as a result of movement to a further-out airport. The experience of Braniff & Texas International once IAH opened indicated that leaving Love Field....when you were a 3 airplane airline whose longest stage length was 247 miles...would be suicide.

The city of Dallas never said they would close Love Field. The intent was to make everyone move to DFW by signatory agreements. Southwest was not asked to sign the letter when they started service in 1971.....speculation is Harding Lawrence told everyone who would listen that Southwest would be dead in 90 days and there was no need. By 1973, it was apparent that Southwest would survive and by that time they were smart enough not to sign.

It is not Boeing 7E7's place to decide whether or not the Dallas area is vibrant enough to support multiple airports. When it is argued that other metro areas....NYC, WASH, LA, SF, Chicago, Miami, Houston all have multiple airports, he is fond of saying that those are big, industrious places and Dallas does not qualify as such.

You might not like to see WN at Love Field. That's certainly your right and privilege. However, Southwest went thru the courts and earned the right to stay there, fair and square. Jim Wright and his AAsociates put the Wright Amendment in place. Okay fine. What Congress giveth, Congress can taketh away.

But I can foresee one way Southwest could end up at DFW. And despite their protests to the contrary, a healthy WN at DFW is not something American really wants to have to deal with.

If Love Field proved so popular (it won't) that multiple airlines flocked back there and Love Field got up to...oh.....1200 flights a day - Mockingbird Ln would be at a standstill, there would be no place to park, and you'd see 25 minute taxi times as commonplace.

If Love Field got that nasty to operate from, WN would move.

The advantage of Love Field's location is overrated. Yes, the metroplex has changed in the last 25 yrs. Yes, DFW is served by a road network and is much easier to get to. A lot of suburbes where people with money (read: people who buy airplane tickets) live are real convenient to DFW.

That being said, the single biggest advantage for WN at Love Field is it is where they have all their stuff - headquarters and infrastructure.

If Love Field had been the end-all, be-all, Delta's RJs to Atlanta would have prospered as would have CO's flights to Cleveland.

But back to the topic at hand. Bottom line: honest grey eyes. (or steely grey eyes, depending on your opinion of eyes). Excellent memory. No vested interest in this deal at all except for an abiding preference for free markets.

And to quote from a very old advertisement for the good guys:

"Remember what it was like before Southwest Airlines?"

Quoting TxAgKuwait (Reply 48): t any rate, there is only one problem with all this "stuff" that makes you think I am full of it. I have a good memory and I had a ringside seat.

Well put. Very good post.