8.5.05

From the Dallas Business Journal

Guest Columnist

Wright Amendment: a $200 million `yoke'

Jerry Bartos

Archival documents dating back to the days of the oxcart show that Dallas leaders were concerned about competitive rates and their impact on commerce.

This concern continued to the introduction of the railroad, the city's first major avenue for success. Not satisfied with only one rail line, immediate efforts were begun to have competing rail connections.

It is out of character that Dallas is not concerned with competitive air transportation when flight has become the dominant mode of travel and trade.

The root cause of noncompetitive air travel to and from Dallas is the out-of-date, leaden yoke known as the Wright Amendment. The amendment prohibits commercial planes with 56 seats or more leaving Dallas Love Field from traveling nonstop beyond the states bordering Texas. It forces passengers to disembark -- with their baggage -- during the mandated stops.

The amendment does not regulate noise, number of flights or safety. It only regulates consumer destination and choice. The Wright Amendment was enacted in 1979 strictly as a means of market control. Ironically, this was done during the deregulation of commercial aviation in this country.

Why? The Wright Amendment prevents level competition between airlines using Love Field and those using Dallas/Fort Worth International Airport. Airlines at D/FW are protected by the amendment's restrictions, which exist only in Dallas. This makes D/FW the most expensive airport of its size in America. As Business Travel News recently reported, "Airlines have long been known to take advantage of the dominant market position by hiking fares."

A 1996 Department of Transportation study of 60 hub cities listed those burdened with above-average air fares. The Metroplex's excessive fares stood alone when compared to those available in similar markets. Cities such as Atlanta, Phoenix, Los Angeles, Chicago and St. Louis were conspicuously absent from the list.

Since deregulation, few large markets have experienced higher air fares than during regulation. Dallas-Fort Worth is one where fares have escalated.

Fares per passenger mile to and from D/FW were 22.7 cents before deregulation, 25 cents and rising in 1995. By comparison, Houston Hobby's fares per passenger mile were 22.3 cents in 1979, 16 cents in 1994; Kennedy International Airport's (New York), 15.6 cents in 1979, 12.7 cents in 1994; and Miami International Airport's fares per passenger mile fell from 18 cents to 15.9 cents over the same period.

Manipulation of D/FW fares through the Wright Amendment is easily illustrated.
A Dallas businessman recently traveled to Los Angeles, but had to make a sudden return trip. His return fare dropped from $296 to $75 when he decided to fly through Dallas to Austin, then back to Dallas. Why? In Austin, major airlines must compete with Southwest's fares to and from the West Coast. But try to rationalize saving $221 by flying the additional miles to Austin!

Another Dallas businessman experienced this situation. "I flew to Salt Lake City on American Airlines at a cost of $356.50," he reported. "Out of curiosity, I priced Southwest Airlines' cost for the same route." The Southwest fare, including stopping in Albuquerque, changing planes and buying another ticket (as required by the Wright Amendment), was $231, a 35% savings.

The Wright Amendment has spawned a new business in Arkansas. The cost to travel nonstop from D/FW to Memphis, a non-border state, is so out of line that a regular bus-van service has started between Little Rock and Memphis. Travelers fly from Love Field to Little Rock and catch a bus to Memphis, saving up to 75%.

Similar instances abound. Why does Dallas have to endure this unique, Congress-enacted burden? Feeble attempts to explain the unfair anomaly continue, but you will not find it elsewhere. It's a special "treat" for Metroplex travelers, served by a Congress insensitive to consumers and small business. Congress bows to big business' influence and political action committees.

Large Dallas businesses are able to negotiate directly with the airlines for annual contracts more in line with average national fares. But more than 80% of new and existing jobs are created by small business, and that makes the negative effect of this outdated, market-control law critical to the Metroplex's future.

The regulation is excused by some on the basis of a Dallas-Fort Worth inter-city agreement made 30 years ago, before deregulation, before short-haul, low-cost service, even before hub service. But today's realities cannot be ignored. The effects of maintaining the Wright Amendment are:

Personal air travel opportunities are restricted to fewer and less economically diverse groups.
A $200 million annual cost, in 1996 dollars, to the local traveling public, according to a U.S. Department of Transportation study.

That $200 million subsidizes lower fares in more competitive markets.

Exorbitant fares depress the tourism, convention and meeting businesses in the Metroplex.
Metroplex professionals cannot fly directly to meetings in Chicago, Phoenix, St. Louis and other low-cost centers because companies are unwilling to shoulder the unique cost of D/FW's nonstop fares.

Entrepreneurs and small-business people who travel regularly will locate in more competitive markets to avoid not only the expense, but also the time-consuming delays that are part and parcel of cheaper fares here.

The effect for the future is certain: As truck regulation burdened Texas businesses (exemplified by the closing of Proctor & Gamble's Dallas plant), so will the Wright Amendment deter travel and commerce.

Repealing the amendment, in addition to the $200 million savings in air fares, would result in a $250 million, 2,500-job boost to inner-city Dallas. Similar results occurred in the area surrounding Chicago's Midway Airport. The effect on D/FW airport would be minor, as stated by a former D/FW executive director: "With (D/FW Airport's) growth," he said, "we wouldn't even know (Love Field) was there."

When defenders of the Wright Amendment present complex justifications, sermons about the "economic engine" that is D/FW Airport and studies compiled by specially hired consultants, simply compare fares at D/FW airport to those at other major airports. Common sense will make the truth clear.

Bartos, a former Dallas city councilman, is owner of Bartos Inc.

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