And They're Just Thrilled

They would prefer not to be there in the first place, and they're probably gonna lose money on every plane that comes through. It was with this cheery outlook that American Airlines began flying from Dallas' Love Field Thursday, competing with Southwest Airlines on its home turf for the first time since 2001.

American's first flight, to St. Louis, left Love Field at 6:30 am Thursday. In all probability, it was a money-loser -- as many expect most of American's flights from Love Field to be. The Fort Worth-based carrier is dealing with a double-edged sword: each plane flying from Love Field means one less aircraft available at DFW -- which could be flying on far more profitable routes than DAL-STL.

Additionally, American has also reduced its fares to match those of Southwest -- which makes many wonder why American, which lost $861 million last year, would chose to lose more money.

"It's not a smart move," said University of Portland finance professor Richard Gritta to the Fort Worth Star-Telegram. "It strikes me as quite counterproductive."

American officials say they had little choice -- either they can lose a lot now, or lose even more down the line.

"It's a case of losing less than we would if we didn't have these flights," said spokesman Tim Wagner.

Of course, American Airlines isn't the only entity unhappy with the decision. With American's expansion at Love Field comes cutbacks at D/FW International, its home airport (which lies 10 miles west of Love Field, and is visible almost from the moment the wheels leave the runway at Love.)

That means fewer planes at D/FW -- which one could argue is underutilized already, especially with Delta's massive reduction of service from the large airport in 2004.

"They're cannibalizing their D/FW business," said airline analyst Roger King. "What [American] really needs to be doing is keeping as much volume as possible going through that hub."

"The negatives far outweigh any benefits," King added. "American is losing money there at a time when they say they need to cut more costs and raise revenues."

Southwest may also feel the sting -- not simply because American is now also flying from "its" airport, but also because its own service that attracted American to shift some flights across town hasn't been a moneymaker so far.

As Aero-News reported last year, American decided to begin service from Love Field shortly after Wright Amendment restrictions were eased on flights into Missouri. Southwest began flights to Kansas City and St. Louis almost immediately -- but so far, passengers haven't been beating a path to Southwest gates to fly to Missouri.

"We started right away, without any advertising or anything," Southwest spokesman Ed Stewart told the Star-Telegram, adding that a lack of public awareness may be to blame for sluggish ticket sales. "So things are going to be slow at first."

Stewart added sales have since picked up, and are "right on target."

For years, American competed with Southwest on other routes from its D/FW hub -- but the airline said the Missouri market was too important to give up to Southwest.

"You're talking about a very slim margin between a profit and a loss. We don't want [passengers] to fly on another airline," Wagner said. "We want them to fly on our airline, and the way to do that is to put flights in at Love Field" -- even if they lose money for American.

In fact, the only apparent winner in all this is Love Field -- which is seeing its first growth in several years.

FMI: www.aa.com, www.southwest.com, www.dallas-lovefield.com