The Wright Amendment has been repealed — so what?

Don’t believe all the hype is, is so what

First, this is going to get challenged in court, and rightfully so. Somebody’s going to sue on antitrust grounds.

Why? Doesn’t this break a monopoly that American allegedly has at D/FW Airport? Well, yes, only to replace it with an American-Southwest duopoly that may be worse. As I commented here and in a newspaper column this spring, that fact alone makes this worth just a third of a loaf.

(Besides any other suit over antitrust issues, Legend’s suit will deal with takings issues due to gate closure at Love.)

But, antitrust is just one of several matters about the Wright repeal compromise that are either concerns on my part or I see as fluff on the part of Southwest, or American.

Specifically, here’s the problems.

I first looked at the gate reductions, and how the mechanics of Wright repeal would play out. After all aspects of Wright repeal are done, Love will have two fewer gates than Houston Hobby. Southwest will have above 35 fewer flights than at Hobby, and will have just two more gates at Love than it does now. I listed where all it flew from Hobby and told travelers how I thought that would be trimmed to fit a lighter schedule at Love and to temper their expectations.

In my first somewhat skeptical Wright repeal post (after the initial unscrutinizing embrace), I said:

The ugly word “collusion” has started filtering through my mind. … I had to wonder — is Southwest getting something in return that’s not being publicized?

Hey, Southwest propagandizing and myth-making aside, it’s a business like any other. If American deals it some cards under the table, it’s not going to complain.

See the link for more of why I wondered about that.

I followed that with questions from we the consumers’ point of view, about whether or not Southwest would now rejoin Orbitz, Travelocity and Expedia.

An incredibly, mind-numbingly gushing reader response to my initial post led me to call Southwest The Amway of the airlines. Here’s why, quoting Mr. Gebhart’s response:

The Wright Amendment compromise won't affect Southwest refusal to allow their inventory GDS wide and on third-party services. It is about control over how their available inventory is displayed and managing customer expectations.

When some travel sites were displaying SWA fares, they were comparing different fare types. Generally they were showing more expensive and less restricted SWA fares against less expensive and more restricted participant airline fares. This made SWA look like the more expensive airline, and didn't inform customers they could get a cheaper rate going to SWA directly.

Alternatively if one service becomes a large enough portion of your sales, the extortion effect becomes possible. That service could start demanding a referral fee or a higher fee than they were already receiving. If you train your customers to go to your own distribution channel, you can prevent the threat of that possibility.

Finally southwest.com is an award winning site for clarity and ease of use, and their 800 number is always answered by humans and not voice response robots. Many of these other services have usability problems. Not all customers are savvy enough to recognize the difference and blame the third party. Customers could come to think of your company as providing this sub-standard service and negatively affect your brand image.

It is in Southwest's interest to maintain tight control of their distribution channels.

If not Amway, it sounds like Wal-Mart tightening up suppliers charging a penny too much for a widget, with the “tight control of their distribution channels.” But, that’s the least.

“Managing customer expectations”? That’s Amwayish. Thinking airline passengers are too dumb to tell the difference between a computer and a real human? More Amway.Thinking that real humans are always needed for things like telephone-based flight confirmation? Blowing company smoke.

As for the idea that, say, Travelocity could start demanding a shakedown “referral fee,” nonsense. Southwest would, first of all, be taking that to the Federal Trade Commission so fast Travelocity’s head would spin. Second, Travelocity wouldn’t want to lose that business.

I fly the airline that best meets my needs through
A. Being cheap, and
B. Having a reasonable schedule.

I don’t fly the one that’s blowing the most smoke up people’s skirts, Mr. Gebhart.

Finally, I exposed some Southwest hypocrisy, showing how it will use market research studies, etc., just like any other business without ever intending to do anything with the biased research that is not independently conducted.

Among concerns (of some D/FW area Congressional members) is a provision that requires Dallas and Fort Worth to mutually work to bring new air service for North Texas to D/FW Airport. …

“That is a contractual agreement between the city of Dallas and the city of Fort Worth that says we will put all of our eggs into the D/FW basket,” said Cox. “That agreement will stand on its own.”

In other words, for all of Southwest’s bluster and studies alleging the area would eventually need a third passenger airport, they’re willing to throw that all under the bus to collude with American.

Remember, for all of Southwest’s PR, too, this deal is ultimately about what’s best for Southwest, first, and what’s best for D/FW air travelers, whether Southwest customers or not, second.

Besides all this, in the long run, we’ll all be dead anyway, as Keynes famously said, so take everything Southwest says with a grain of salt.

I look at Southwest as the Apple of airlines. And like Steve Jobs, Herb Kelleher’s “fighting the giants, slaying the dragons” image sounds great. But, just be careful.