MIAMI — At 12:01 am Monday, Southwest Airlines’ personal Berlin Wall came down, as the Dallas-based airline was allowed to begin non-stop service from Dallas Love Field to destinations across the contiguous United States, resolving a 43-year fight by the carrier to add service from its home base. The move, along with expansion by other airlines into the newly freed environs of Love Field, has created an unprecedented state of competition for origin and destination (O&D) in the Dallas-Fort Worth metropolitan area, challenging the hegemony of current market leader American Airlines.
A Protracted Battle
Written in 1979, the Wright Amendment was a federal law that governed air traffic at Love Field. Aimed at protecting massive government investment into the new Dallas-Fort Worth International Airport (DFW), the Wright Amendment prevented airlines from using aircraft larger than 56 seats at Love Field to serve destinations outside of the states of Texas, New Mexico, Louisiana, Arkansas, and Oklahoma.
Flights between Love Field and airports in those states could be operated by aircraft of any size. While in theory, this law allowed for airlines flying small jets and turboprops to serve the entire nation, in practice (as the case of Legend Airlines illustrated) American Airlines was quick to quash any full-service competition at Love Field. As a low-cost carrier (LCC) with a single type fleet of Boeing 737, Southwest Airlines, one of few tenants who refused to leave Love Field for DFW, couldn’t take advantage of the 56-seat exception and was hemmed in by the restrictions of the Wright Amendment.
Defenders of the Wright Amendment claimed that it was necessary to protect the metro area’s investment into its green field airport, rightly pointing to examples such as Montreal’s Mirabel International Airport or Osaka’s Kansai International Airport of cities allowing traffic to be split across two different airports and losing traffic and airline hubs accordingly. Meanwhile, opponents of the law claimed that it was anti-competitive and a violation of free market principles, as well as needlessly restrictive. Both arguments held merit.
Especially when DFW was opened, it was unclear whether the metropolitan area would have enough air traffic to justify two competing airports. Allowing two airports to fight over a limited pool of traffic often is a mistake, and strategically, the decision was justifiable at the time.
But the new connecting complexes built by American Airlines and Delta Air Lines meant that traffic at DFW boomed beyond anyone’s expectations and by the mid-1990s, DFW was over capacity, and it was clear that Love Field could be opened to new flying without damaging its prospects. While the airport and the city of Fort Worth managed to limit a 1997 repealment push to add Kansas, Alabama, and Mississippi, Missouri was added to the list of approved states with a 2005 amendment, and in 2006, another major push towards repealment that began in 2004 generated the compromise you see today.
Under the terms of the compromise ending the Wright Amendment in 2006, airlines are now free to begin service across the contiguous United States from Love Field, but the number of gates available to airlines will be capped at 20. Of the 20 gates, Southwest will control 16 while United and Virgin America will control two apiece.
Combined, the airlines will use these 20 gates to offer 178 flights per day by Thursday, January 15th, 2015, including 153 by Southwest, 13 by Virgin America, and 12 by United. Additionally, Delta Air Lines operates five flights per day to Atlanta, but those flights are in danger after Delta lost its lease on American’s gates (which were divested to Virgin America as part of the approval process for the American-US Airways merger).
Delta is currently working with the city and other airlines (temporarily gaining accommodation at one of Southwest’s gates) on a deal to continue service but will otherwise be kicked out of the airport on January 5, 2015. The table to the right summarize peak-day frequency for the three airlines at Love Field (assuming Delta retains service) in January 2015.
Virgin America will clearly be the second-largest airline at the airport, but United and Virgin America will operate just 25 daily departures (including 12 ERJ-145s with very quick turnaround times) across four gates for an average of 6.25 departures per gate, against Southwest’s 153 departures from 16 gates (9.6 departures per gate). Unless both airlines plan to expand operations, each could assist and/or be forced (in the case of a lawsuit) to accommodate Delta’s operations.
Southwest’s new non-stop service from Love Field will roll out in three phases to 17 new destinations, boosting the airline’s service offering at the airport from 116 daily departures to 153 by January 15, 2015, the peak day chosen for this analysis.
On Monday October 13, 2014, Southwest launched service to the following destinations:
- Chicago (Midway)
- Washington, D.C. (Reagan National)
- Las Vegas
- Los Angeles (LAX)
The following eight routes will begin November 2, 2014.
- Orange County/Santa Ana
- San Diego
- Tampa Bay
- Ft. Lauderdale
- New York City (LaGuardia)
And service to the final two destinations in Southwest’s initial round of expansion will begin on January 6, 2015.
- San Francisco
All told, Southwest will operate 153 peak-day departures to 33 destinations. Frequencies for the 16 pre-repeal destinations on January 15, 2015 are shown to the right, with total frequency chopped down from 116 daily departures to 100.
This reduction in frequency mostly happened to out of state destinations which had seen boosted frequencies due to Southwest’s ability to sell one-stop direct tickets to destinations outside the Wright Amendment “perimeter” via an intermediate stop within the perimeter. Since 2006, this has been the lifeblood of the Love Field operation, according to CEO Gary Kelly.
Meanwhile the chart below displays frequency to the new destinations for Southwest, along with a summary of American’s frequency (daily departures) for the same day of January 15, 2015. The fourth through seventh columns present a summary of key origin and destination (O&D) market data for the third quarter of 2013, representing the peak travel season for the DFW market.
PDEW measures the O&D traffic demand for the market per day in each direction, fare and yield are self-explanatory, and the final column states whether American is the leader in O&D passengers or notes which competitor has the O&D lead otherwise
Southwest is flying to 17 new destinations from Love Field, but only 14 new city pairs. The competitive dynamics with American are interesting, but what is key to note is that unlike some of the in-state quasi-shuttle routes, frequency to these new destinations is relatively low, with only New York La Guardia, Washington Reagan, and Chicago Midway surpassing five daily departures.
In part two of this story, Bhaskara covers American Airlines’ competitive response and the future of Southwest Airlines at Dallas Love Field.