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Sat, Nov 13, 2004

Southwest CEO Kelly Takes Aim At Wright Amendment

Kelly also nixes move to DFW to take up the slack after Delta closes hub

Southwest Airlines once again appears to be trying to set itself on a path to free itself of the restrictions of the Wright Amendment. The Amendment is part of a federal law enacted in 1979 that limits flights from Dallas' Love Field to Texas and seven neighboring states. Southwest's CEO Gary Kelly, in a speech addressing the Greater Dallas Chamber of Commerce, took aim at the law, calling it anticompetitive.

The law is once again under attack, this time by Tennessee's delegation to the US House of Representatives, and Kelly thinks they are doing the right thing to help the Dallas Airport grow. "It's anticompetitive. That's its purpose," Kelly said.

The amendment, named after defrocked House Speaker Jim Wright of Fort Worth (TX), was designed to strike a bargain that would make DFW Airport the prime gateway into North Texas, but allow Love Field to grow and protect the quality of life of the residents around the downtown Dallas airport.

Kelly is arguing, though, that the law is outdated and unnecessary because of American's strength at DFW. Proof of the fact, says Kelly, is Delta's decision to pull out of DFW as a hub and cancel more than 200 flights a day from the airport. Southwest could get around the Wright Amendment by moving its operations to DFW and taking up Delta's space, something the DFW airport management were strongly pursuing.

However, Kelly has rebuffed the offer, and instead has decided to indirectly promote the efforts of the Tennessee legislators, who want Southwest to provide service from Love Field to Nashville, and are seeking to modify the Wright Amendment to allow that to take place after American Airlines decided to reduce service to that city. Kelly also predicts that other cities and states may seek to follow Tenneesse's lead to pave the way for Southwest to serve their airports.

The management at DFW Airport was quick to respond to Kelly's remarks, saying that Southwest's actions may hurt DFW's attempts to bring other low-cost carriers onto the DFW ramps.

Jeff Fegan, DFW International Board CEO, said "An agreement is an agreement. The legislative history of the Wright Amendment shows a clear compromise between the Cities of Dallas, Fort Worth, DFW International Airport and Southwest Airlines. The agreement has provided certainty and harmony for all parties over the years, including residents surrounding Dallas Love Field."

Max Wells, DFW International Airport Board Chairman expressed concern that Kelly's decision will have a chilling effect on other airlines plans to enter the DFW market.

"DFW has been pursuing Southwest Airlines to provide low-fare service out of our Airport, which it can do under the terms of the Wright Amendment, and today Southwest announced that it has declined," said Wells. "Whether intentional or unintentional, Mr. Kelly's comments today could have a chilling effect on another low-fare carrier entering the market at DFW. Southwest may be attempting to turn its competitors away from North Texas."

Kevin Cox, DFW International Airport Chief Operating Officer, expressed his opinion on the events in stronger terms. "This latest assault on the Wright Amendment could not be more ill-timed to have a detrimental impact upon DFW," said Cox. "The Airport just completed the financing of its $2.7 billion capital development program - which includes a new airport train and international terminal - through the issuance of new debt.   These facilities, built to improve the travel experience and business environment for North Texas, will increase DFW's debt load six-fold."

Cox added that "Obviously, any changes to the Wright Amendment, which could siphon traffic from DFW Airport to Love Field, would have a detrimental effect upon DFW and its carriers at a time when they are least equipped to handle such a major change."

FMI: www.southwest.com, www.dfwairport.com, www.dallaschamber.org

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