10.5.05

DFW pays for a Study. Wow!

Big news today from DFW. The press release was sent out yesterday but they were tight lipped when asked about it. No details until today's press conference. Didn't matter though because most local media guessed correctly:

http://www.dfwairport.com/mediasite/pdf/05/05/050510-study.pdf

But there are issues with this report, not the least of which is that they paid for it. What would this same group have said if it was Southwest footing the bill. Yeah, that's what we think too. But let's have a little fun and take it piece by piece.

(DFW INTERNATIONAL AIRPORT) — In the darkened terminal where Delta Air Lines once serviced more than 220 flights a day, DFW International Airport officials, members of the North Texas Commission and aviation industry experts from Simat, Helliesen & Eichner, Inc. today released an independent economic analysis of potential impacts if the Wright Amendment were repealed.

Very dramatic. In the darkened Delta terminal that Southwest could have if they were only considerate enough to uproot their entire operation at Love and move it west.

Key SH&E study findings:

1. DFW will Lose Substantial Traffic. With repeal of the Wright Amendment, DFW Airport could lose up to 204 daily flights and up to 21 million passengers annually, representing a 35 percent decline. With this substantial loss, DFW Airport passenger levels will decrease to levels last seen 20 years ago and it will take up to 19 years for traffic to recover to current levels.

Hope they didn't pay too much for the study. We could have told them something similar for a much lower price. Besides the painfully obvious, though, there's another issue in number One. They ADMIT that the airport would recover from a repeal of Wright. Worst case, it may take awhile but it WOULD RECOVER.

Then there's this. If Starbucks moved in across the street from our coffeehouse we would expect to lose some business. But maybe if our prices were competitive and our coffee was just as tasty it would stand on its own. We know this...we wouldn't expect the government to come in and tell Starbucks what it could and could not sell.

2. Traffic at Love Field Could Triple. With the repeal of the Wright Amendment, Love Field operations could triple and Love Field passengers could increase by as many as 16 million passengers a year. Tripling Love Field’s use would strain older existing facilities and cause local traffic gridlock.

Oh, so they aren't so much concerned over losing business at DFW as they are with all of the poor Dallasites having to deal with increased traffic. That's big of them.

3. DFW will Lose International Air Service. With repeal of the Wright Amendment, current international air service would be substantially reduced due to a loss of international connecting traffic through DFW. Flights to Latin America are particularly vulnerable.

If the service is viable it would survive without government PROTECTION. If its not it won't. Let the market decide.

4. DFW Would Lose Domestic Destinations. With the repeal of the Wright Amendment, up to 15 current markets with low frequency could see service cuts or elimination.

Seems they have big enough problems as it is without having to also run around all worried about those unfortunate and underserved fliers in Lexington, Kentucky.

5. DFW has Significant Growth Capacity. DFW Airport was designed and built to handle 100 million passengers and 1.4 million airport operations annually and can accommodate low-cost carrier growth that won’t cost taxpayers more money. In contrast, if the Wright Amendment is repealed, Costly improvements will be needed at Love Field to accommodate increases in traffic; meanwhile, airport capacity investments already made at DFW Airport will sit idle.

We have all made poor decisions in our lives. But how many of us expect the government to back our play when we step up to the craps table to roll the dice? DFW built and added-on all while knowing Wright would be under assault. You pays your money and you takes your chances. DFW rolled craps and its not our worry.

6. Growth at DFW is the Preferred Option. The growth of low-cost carrier service at DFW will add more passengers and more long-term economic growth to the Dallas-Fort Worth area than any scenario in which the Wright Amendment is repealed – without disrupting facilities, neighborhoods or taxpayer commitments.

Preferred by whom? Downright presumptuous if you as us. Then we see some quotes from Community Leaders. You've heard of Mike Moncrief. He's the mayor of Fort Worth. Nice guy...but an idiot:

"Fort Worth and Dallas came together to create this global transportation hub and it is in great part made us who we are today."

How's that now? Knew there was a reason we voted against him. Who are we today, Mike? Don't know about you, but our set is made up of people who will gladly drive the extra 8 miles east to save 50 bucks on a trip to Nashville.

Mike has a buddy named Dan Petty. He is the big cheese at some outfit that calls itself the North Texas Commission. Yeah, we've never heard of them either but we suspect its another group of millionaires that want the government (read: taxpayers) to shield them from competition. Here's what this pantload has to say:

"Almost all of the 18 FORTUNE 500 companies headquartered in the North Texas region list DFW International Airport as one of the primary reasons to locate in the Metroplex."

REALLY. Maybe the restaurants are better at DFW? Or do they prefer the inflated business rate at AA? Or maybe, just maybe, Dan, you are making this up.

But dan is backed up by UNT economist Bernie Weinstein. We've spoken with Bernie on the phone and he seems to be a nice enough guy. Full of BS but quite affable. Here's what he says:

"As the SH&E report clearly documents, repeal of the Wright Amendment in today's changed commercial aviation environment could seriously impair the future growth and competitive cost structure of DFW International Airport. Consequently, the entire Metroplex could become less attractive to relocating and expanding businesses."

I'm up for the challenge, Bernie. Let's let the market decide. As an added bonus we'll get to see whether you know what you are talking about. The proof is in the pudding as they say...and I'm ready for some desert. If you are right then the free market has done its job. If you are wrong then you haven't been doing yours.

Most of us have heard of Jethro Pugh. We all know him as a member of the Dallas Cowboy's feared "Doomsday Defense" and he is a hero to many. Uncluding us. So normally we'd let him slide but not this time:

"Since the Delta pull-out, I have lost my number one shop at DFW. Repealing the Wright Amendment would mean DFW loses more airline business, which means I lose more business."

That is a shame, Jethro. Really it is. But there are not guarantees in business and your beef lies with a poorly run airline that is struggling for its life in the shadows of 9/11 and a fiscally inept administration responsible for a huge economic downturn.

There is a statement from a newstand owner at DFW and a Love Field area resident but they are so inane we're not even going to pay heed.

After that, this group has the gall to actually dig up and print 15 and 25 year old quotes from Southwest and its founder, Herb Kelleher. Do we need to point out that what may have been true in 1980 is not necessarily so today? There are those among us who, in 1980, thought Grease was a really good movie. Some of us, in 1990, took a couple of tokes and thought we had the solution to all of the world's problems. Guess what? We were wrong on both counts.

Blowing their own horn, Simat, Helliesen & Eichner, Inc. point out that they are a global aviation consulting firm with more than 40 years experience providing management assistance, expert counsel, and research regarding operations, economics, and finance of airlines and aviation-related industries.

Translation: S,H & E are consultants. They will say whatever they are paid to say and it is highly likely they don't work cheap. The result, a poorly written 7 page "study".

DFW got ripped off.

1 Comments:

Anonymous Anonymous said...

I work in the airline industry and the firm is respected by many. However, I will concede this particular report is poorly constructed. Perhaps they had one of the junior partners write it up.

9:55 AM  

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