SocraticGadfly: Wright Amendment
Showing posts with label Wright Amendment. Show all posts
Showing posts with label Wright Amendment. Show all posts

July 08, 2008

Southwest hits gold with Canadian code-share partner

WestJet could be a better partner for Southwest than the defunct ATA anyway.

Southwest hasn’t had an international code-share partner since Icelandair more than a decade ago. With a much larger Southwest today, this is good for its future growth.

And, like Southwest, WestJet runs all 737s. Hmm, possible merger in the future?

As far as U.S. routes, WestJet flies to New York City, Phoenix, Las Vegas, Los Angeles, Tampa, Orlando and Fort Lauderdale.

For Dallas passengers, probably the Phoenix and Los Angeles connections are most valuable, giving entrée to western Canada from there. Given that Phoenix is Southwest’s busiest airport, this is big. Next would be the NYC connection, since WestJet actually goes there via Newark, a Southwest destination.

And, WestJet has several Caribbean flights.

The jackpot, with or without an actual merger, would be for WestJet to fly into Chicago Midway.

That would put Dallas passengers immediately on the tarmac for one-stop flights to Ottawa, Toronto and Montreal, since Chicago gets removed from Wright Amendment restrictions later this year.

October 01, 2006

The Wright Amendment has been repealed — so what?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.

July 13, 2006

Additional Wright Amendment details don’t sound so nice; more evidence of collusion rears its ugly head

The Dallas Morning News gives us the fine print.
Lawmakers from other states also raised concerns about the plan. Many were worried that other airlines would be locked out of Love Field because American, Southwest and Continental Airlines control all the remaining gates.

JetBlue Airways, among other carriers, has raised concerns that it would not have access to Love under the local compromise.

But the mayors and (Kevin) Cox, (COO of D/FW Airport), argued that there is plenty of unused gate capacity at Love and that entrant airlines could sublease from the existing carriers.

Puhleeze. You’re closing Love Field down to 20 gates, with only two gates not controlled by any of the aforementioned airlines.

Smokey Joe Barton, so wrong so often, is right about this:
In the end, Barton predicted North Texas would be viewed as having one superairport with terminals at D/FW Airport and Love Field that are only eight miles apart.

Exactly; to some degree, the Wright repeal deal is collusion between Southwest and American More evidence?
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.

June 23, 2006

Wright Amendment repeal, part 3: Will it really benefit the tourist/vacation traveler that much? And, is Southwest the “Amway of the airlines”?

My short answer to the first question? Probably not. And my short answer to the second question? Sure as hell sounds like it. (See below.)

Both of these are especially true if J. Gebhart, who responded to my original post about Wright repeal as currently agreed to by Southwest, American, Dallas and Fort Worth being a third of a loaf, accurately reflects Southwest business practices (re Question No. 1) and employee/corporate culture (re Question No. 2).

At the end of that post, I said that I hoped Southwest used the elimination of Wright to eventually again become an airline listed on Travelocity, Orbitz, Expedia, etc.

To which, Gebhart responded:
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.

Let me, then, analyze some of his key comments.

In the first graf, he talks about managing customer expectations. This customer, me, likes the ease and convenience of being able to look up all airlines, if possible, through one, or a set of similar, travel agency websites. This customer’s loyalty is toward getting the lowest fare — with the least amount of work possible — no matter the airline. This customer’s loyalty is to himself first and NOT to Southwest Airlines.

So, if enough other customers are like me, Southwest will learn to change its management of customer expectations. Besides, I’m an analytical and skeptical enough person, I fairly quickly see through having my expectations managed by any business. Indeed, in light of details of the Wright repeal agreement, my ardor for Southwest has already cooled, and my skepticism as to how much this has been about customer expectation management has increased.

Second, in reference to Gebhart’s second graf, I’ve bought Southwest tickets online once. I’ve never bought tickets online from another airline. I do know that Southwest has a multiple fare structure which may be geared more at business travelers than tourists. I also know that both American and United’s websites, and probably other major airlines, are structured more like Travelocity et al than like Southwest, whether that’s for better or for worse. I also do know that listed prices on Travelocity et al are cheaper for the “legacy airlines” than is visiting their individual websites. Maybe Southwest is afraid of adapting enough to meet competition head-on?

Third, in response to Gebhart’s third graf, in addition to the “Big Three” of Travelocity, Expedia and Orbitz, we also have Priceline and Hotwire, among others. They’re not all under the same ownership; in fact, none of them is. Now, Southwest DID have a dispute with Orbitz, which was founded by legacy airlines; however, I’m not aware of any dispute with the other online agencies. So, what I said in my graf immediately above refutes Southwest’s alleged concern for a travel agency monopoly. And, in fact, it’s arguable again, from my graf above, that Southwest only selling tickets through its own website is in fact guilty of the very thing it claims to worry about.

Also, again, note his comment about “train your customers.” This DEFINITELY sounds Amway-like.

Fourth, in the next graf, the only time I’ve spoken to a “bot” on American, Continental or United is to confirm flight time and departure gate on the date of a flight. If a bot will service me immediately, rather than waiting on the phone for a human, I’ll take the bot any time. A human just isn’t needed for such automatic services. AND, if it’s cheaper for a bot to be used, AND that savings is passed on to me, I’ll definitely take the bot. Wake up and smell the coffee, Gebhart.

Finally, Gebhart all but calls many online airline ticket buyers idiots in his next–to-last graf, and specifically, idiots who need the mind-control ministrations of Southwest “because not all customers are savvy enough.” Wow. If that’s Southwest’s idea of “managing customer service,” I take back my statement two grafs above. THIS comment is even MORE Amway-like.

June 20, 2006

Wright Amendment compromise, part 2: Southwest-American collusion?

Since making my initial post about the Wright Amendment compromise at Love Field, the ugly word “collusion” has started filtering through my mind.

Given that the Hobby-Bush duo of airports in Houston actually is not hugely cheaper than D/FW Airport currently is for the area outside Wright, and that Southwest accepted lowball compromises on how much landing fees will go up at Love (after things such as trying to get Boeing Field reopened in Seattle because it thought Sea-Tac’s landing fees were too high, and complaining vociferously about fees at DIA in Denver), the number of gates it will have and that will be open for all airlines at Love, and the eight-year weight on eliminating the Wright Amendment flight area restrictions that have been at the heart of the debate, 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.

June 16, 2006

Wright Amendment compromise: I guess a third of a loaf is better than none

I'll only call it a third of a loaf because of:

1. The eight-year wait to actually lift the Wright flight restrictions.

2. Southwest agreeing to just 16 gates at Love Field instead of, say, 24. (On the other hand, that's still more than the 14 they operate now, though they own more than that.

3. The poison pill that Southwest has to forfeit half its gates at Love if Congress passes a plan with a faster timetable.

Was Southwest CEO Gary Kelly that desperate? Is this a sign he thinks Democrats will gain a majority in Congress in November, so it's better to sign off now on this inter-city deal between Dallas and Fort-Worth, and between Love and D/FW, and present it to Congress rather than waiting?

Well, without stating the reason why, Southwest founder Herb Kelleher said his airline was in a hurry.

As Herb says here:
“We need to get this done quickly. Neither of us is interested in having year after year after year of campaigning and lobbying and fighting going on if we can possibly avoid it.”

In any case, if this gets approved by Congress, the through-ticketing restrictions get lifted immediately.

There are other reasons to look askance at what may be little more than Wright-lite even after the eight years have passed and the long-distance flight restrictions have been lifted.

First, we still won’t have international travel from Wright. I know, I know, Southwest doesn’t do international travel. But, especially if “Airline No. 3” had more than two gates at Love, don’t you think they’d be interested in flying business travelers to Mexico City? Or maybe Toronto or Ottawa? Or, going back south again, tourists headed toward Cancun or Puerto Vallarta would love to hop a flight from Love. But, with just two gates to use, it’s doubtful Airline No. 3 would do that. Of course, Houston Hobby, similar to Love, is also a domestic-only airport.

For that matter, with only two gates, will Love get an Airline No. 3 to even jump in the fray? Sure, Southwest likes to talk about the dominance of American at D/FW, but taking the two airports together as one service area, American and Southwest together really have the Metroplex blanketed. Continental already sounds uninterested. Jet Blue is still new enough it’s not going to spread itself that thinly across two airports in one metropolitan region. And, and …

What happens to those gates if nobody takes them within, say, three years? Does Southwest get first shot at them? American? Do they remain idle? Do they get withdrawn?

Besides eventually giving us something better than what we have now, the only unmitigated good I see coming out of this is the cities of Dallas and Fort Worth acting together as an ersatz airport authority until we get the real deal some day down the road. Oh, yes, increasing the landing fees at Love also is very sensible.

Finally, will opening Love up really make that much difference? Here’s a complete list of cities that Southwest serves out of Houston Hobby. A lot of it is in-state service:
· Albuquerque, Austin, Baltimore/Washington, Birmingham (AL), Chicago-Midway, Corpus Christi, Dallas-Love, Denver, El Paso, Fort Lauderdale, Harlingen, Jackson (MS), Jacksonville, Las Vegas, Little Rock, Los Angeles, Midland/Odessa, Nashville, New Orleans, Oakland, Oklahoma City, Orlando, Philadelphia, Phoenix, St. Louis, San Antonio, San Diego, Tampa, Tulsa.

According to Flight Aware, Hobby runs 317 commercial flights a day. Love Field runs 216. (For comparison, DFW runs 1,339 a day.) Sure, Southwest is going to want to ramp up operations with through ticketing eliminated, even before long-distance flight restrictions are removed in eight years. And, perhaps they haven’t been running their operations at Love at full throttle.

And, we need to count the total 20 gates, not just the 16 that Southwest will get.

BUT… can all airlines at these 20 gates really get anywhere close to 317 flights a day with just 20 gates?

Let’s do a little simple math. The six additional gates is a 30 percent increase. Now, 30 percent of 216 is 65. Add 216 and 65 and you’re at 281. Now, that’s in the neighborhood of 317, but it’s still 36 fewer flights. For comparison, Hobby has 22 gates. It seems a better solution would have been to open Love to 22 gates, give Southwest one more for 17, leave American at two (they do little flying from Hobby, and likely wouldn’t use more than 2 gates at Love), and leave three gates for “Airline No. 3,” along with providing for reversion or non-use provisions for these three gates.

If this version of Wright repeal passes as stands, where will Southwest fly that they don’t already? Take the list of its Hobby flights, and remember that with fewer gates, you have to prune that list. Throw out Jackson and Jacksonville off the top of your head. Cut back the service it already offers to Birmingham, and probably to Little Rock. Look for it to trim all the smaller in-state service and only fly to the cities it does from Hobby.

In-state, either Lubbock or Amarillo flights get eliminated, or both get severely trimmed. Harlingen gets trimmed, too, I’m guessing.

And that’s your list.

Finally, does American really need eight years to adjust to this? In that case, we need to call it a dinosaur airline, not a “legacy airline,” and wonder if it has troubles deeper than Love Field. Heck, even GM can get a new car design on the road faster than that.

In other words, just as before its 1980s breakup, AT&T long distance service was a cash cow for local service, is American’s service at DFW a cash cow for its operations elsewhere in the country? Is it really on that rickety of financial legs?

Also, from the tourist traveler point of view, with this removing a major "apples and oranges" comparison problem, I hope that, if Congress approves this, that Southwest immediately starts listing its flights again on Travelocity, Expedia, Orbitz, etc.

August 31, 2005

Meanwhile, EBJ fails to help her district’s top employer

That company would be Southwest Airlines, which would greatly benefit from elimination of the Wright Amendment.

And please, EBJ, don’t tell me that your Hudson bookstore holding at D/FW Airport is in a blind trust; you still know you have that, even if you don’t know the exact value.