Forty years ago, Southwest Airlines made its debut as a small airline in Dallas, Texas, struggling to keep pace in the business. Today, Southwest is the top domestic carrier in the United States. But on the way to becoming the travel bellwether it is now, Southwest has been met with plenty of tension and turbulence.
The primary obstacle along Southwest’s path to success was a piece of legislation called the Wright Amendment, sponsored by former Fort Worth Congressman Jim Wright in 1979.
Wright’s aim was to protect competing airport Dallas/Fort Worth International Airport from losing business when Southwest refused to stay out of Dallas Love Field airport. The law was an amendment to the International Air Transportation Act of 1979, restricting passenger flights out of Love Field to locations within Texas and to four neighboring states — Louisiana, Arkansas, Oklahoma and New Mexico.
Since long-haul flights out of Dallas were limited to 56 passengers or fewer, Southwest relied on many shorter flights to build up and bolster its Love Field operation. Some passengers even managed to “work” the system and bypass limits completely – by flying out from Dallas, changing planes and then flying to any other city that Southwest served, with two tickets in each direction.
After D/FW’s annual air traffic began to exceed capacity, the amendment was modified to add Alabama, Kansas, Mississippi and Missouri to the Wright zone.
In 2004, Southwest launched a massive public relations campaign in an effort to rally support for a full repeal of the amendment, and created a website called “Set Love Free.” D/FW and its primary tenant, American Airlines, then launched an opposing campaign and designed a website called “Keep DFW Strong” — even painting ads onto one of its water tanks.
When Southwest threatened to pull out of Dallas Love Field, the amendment was finally repealed in 2006. The repeal lifted most restrictions but left others, such as the “Wright zone,” intact until 2014. (See a complete timelineof the Wright Amendment.)
“Travelers have been burdened for nearly 30 years with the higher airfares the Wright Amendment nurtured by preventing competition,” Southwest CEO Gary Kelly said in a press release. But "the public has spoken out for change, and a plan was developed that brought together parties from both ends of the spectrum.”
Following the repeal, Love Field soon became one of Southwest Airlines’ fastest growing markets, boosting its revenue from $11 million in 2006 to $113 million in 2007. Passenger volume increased from 1 million in 2005 to 1.45 million people in the third quarter of 2007, and by 2008 the airline had raised the number of destinations it offered by 400 percent.
In an interview with the Dallas Business Journal, Southwest senior planning analyst Bob Haster said the repeal would benefit not only the airline but also its passengers.
“If you get rid of the Wright Amendment and allow competition out of Love Field, traffic will increase and fares will decrease,” he said. “And passengers will be happy.”
But Tim Wagner, spokesman for Fort Worth-based American Airlines, said Dallas/Fort Worth was not as pleased.
“The lower fares generated by competition have attracted some new local passengers, though relatively few,” he said. “American Airlines being forced to move flights from Dallas/Fort Worth Airport to Love Field has resulted in decreasing connecting passengers at Dallas/Fort Worth.”
Former airline executive and industry expert Thomas Bacon predicts fares will fall to destinations beyond the current Wright zone.
American Airlines "has many monopolies from the D/FW area to the rest of the U.S. and many oligopolies with other high-cost carriers,” he said. “Southwest certainly is not always ‘low-fare’ but they do tend to price with fewer restrictions.”
Bacon also said the repeal would cause new, inexpensive capacity to increase at both Love Field and D/FW, citing a high price elasticity as the primary cause.
After the fray is finally over, despite a new maximum capacity of 20 gates, Southwest expects to launch an aggressive schedule of non-stop flights that will be coast to coast.
In addition, both American Airlines and American Eagle Airlines, which operated out of Love Field from 2006 to 2009, have vacated the airport while renovations take place but say they expect to return when a new terminal and gates are completed by 2014. Certain planned renovations to Love Field, such as baggage handling and concessions upgrades, are also on hold until then.
Timeline of the Wright Amendment
Watch CNBC Titans, Herb Kelleher, premiering Thursday, July 13 at 9 p.m. ET, with reairs at 10 p.m., midnight and 1 a.m.