Southwest Airlines Release Study

8th Jun 2005

Southwest Airlines today
released results of a three-month study by an outside commercial aviation
consulting firm that said the gain to local economies should the Wright
Amendment be repealed would be at least $4.2 billion annually. To view the
entire study, please click on this
link.Using a list of 15 potential new nonstop markets from Love Field, the
study found that:

—North Texas would reap an additional $1.7 billion in economic activity
annually due to increased air travel to the region.—3.7 million more
passengers would travel in the 15 markets annually due to new competition
and lower fares.—Passengers would save nearly $700 million annually
compared to airfares charged by American Airlines at DFW International.—
The total Wright Amendment burden on passengers, North Texas, and cities
beyond the seven-state perimeter exceeds $4 billion per year.

Southwest hired Campbell-Hill Aviation Group to demonstrate the “Southwest
Effect” in real numbers. Campbell-Hill used data readily available to the
public, such as passenger traffic figures from the Department of
Transportation (DOT) and current air service as published in the Official
Airline Guide (OAG). The Washington, D.C. consulting firm has done work
for the DOT and Federal Aviation Administration (FAA), in addition to
working with such airports as Baltimore/Washington International, DFW
International, the Houston Airport System, and Pittsburgh International.

“There have been many attempts to confuse or scare the consumer into
thinking that the best course of action is to do nothing about the Wright
Amendment. This issue is about the fares and the cost of doing nothing is
just too great,” said Gary Kelly, Southwest’s CEO, at today’s press

Southwest said it wished to answer a question that had not been addressed
in the seven months the Wright Amendment has been making headlines.
Communities all over its 60-city network report record traffic figures and
airfare savings for consumers, but in the 26-year reign of the Wright
Amendment over the Dallas area, a comprehensive look at the positive
economic impact to be gained from repealing the Wright Amendment had not
been done.


“Unlike others, this story can have a happy ending,” Kelly said. “It’s
about unrealized potential; money that could be going to area businesses;
money that travelers to and from the Dallas area could be saving on
airfares; and how much the entire region stands to gain in additional
tourism, convention, and business travel-related dollars.”

The Campbell-Hill study considered what destinations from Dallas could
look like by studying Southwest’s operations in similar markets.
Eighty-five percent of the U.S. population lives outside the restricted
seven-state Wright Amendment zone. The study assumed Southwest could add
15 new nonstop destinations from Dallas, not currently allowed by the
Wright Amendment. Using Southwest’s average fares to markets on a
like-mile basis, C-H determined consumers would have saved $397 million in
airfares from the Metroplex area alone in 2004, just in those 15 markets.

“We must never forget that it is the consumer who is penalized by the
status quo and who must be set free. It is the consumer who pays the
greatest price to maintain corporate bottom lines and ancient history,”
said Herb Kelleher, Southwest’s Executive Chairman, also onhand for the
Dallas press conference.

Southwest is well known for expanding markets due to its lower airfares
and frequent service. Through a price elasticity model validated by the
FAA, C-H determined that just these 15 new destinations from Love Field
would produce 3.7 million more passengers to those markets to and from the
Dallas area.

Increased air travel also generates enormous positive impact on the
economies of the cities and regions involved. Philadelphia recently
credited Southwest for saving citizens there about $1.2 billion on an
annual basis in Southwest’s first year of service in that city. C-H
determined that the economic impact of allowing competitive service from
Love Field in just the 15 new markets studied would provide a $1.7 billion
annual gain to the Dallas- area economy. C-H estimates a 46 percent gain
in new passenger traffic from nonresidents visiting the Metroplex.

“Dallas’ Love Field Airport is an underutilized facility and the wobbly
wheel of the economic engine which is the entire transportation
infrastructure in North Texas,” Kelleher said. “You might not know that
Love Field is now Southwest’s eighth-largest airport in terms of
departures, but it is only 17th-largest in terms of passenger traffic. Dr.
Campbell’s view would pump much-needed air into a flattening tire for a
much smoother ride overall.”

“It’s foolhardy to argue with prosperity,” said Dr. Brian Campbell,
chairman of Campbell-Hill Aviation Group.” Hotel occupancy in Dallas
declined drastically by 22 percent from 1996 to 2003. For a city its size,
Dallas cannot afford to ignore this issue and not actively market itself
to the rest of the country through healthy airline competition.”

It appears that lawmakers are listening. Texas Congressmen Jeb Hensarling
and Sam Johnson recently introduced “The Right to Fly Act” to immediately
repeal the Wright Amendment. Kelleher praised the leadership and vision
shown by that effort. The bill now has seven co-sponsors: Congressmen Jeb
Bradley (NH), Lee Terry (NE), Jim Cooper (TN), Joe Wilson (SC), Butch
Otter (ID), and Texans Ron Paul and John Culberson. Kelleher said he looks
forward to a similar effort in the Senate.

The Nevada State Senate and the Salt Lake City Chamber of Commerce are the
latest in a string of community efforts and editorial positions to support
repeal of the Wright Amendment, including the North Dallas Chamber of
Commerce, the Wall Street Journal, Houston Chronicle, Tampa International
Airport Authority, and a growing list of Dallas-area economists and
academics who say the competition presented by an unfettered Love Field
would lower airfares within the region.

Southwest Airlines launched a web site, , as
part of its education campaign. The site received thousands of
registrations within the first few days. The site provides information on
the Dallas Love Field Master Plan, the benefits of state-of-the-art
aircraft operated by Southwest, illustrates the fare premium charged to
Dallas-area travelers as a result of the Wright Amendment, and Southwest’s
business reasons for not choosing DFW International Airport as its next
new start-up.

“Herb and Colleen (Barrett) set the pace at the beginning, and Southwest
Airlines has remained steadfast, in its mission of low costs, high
productivity, great Customer Service, and low fares. It’s why repealing
the Wright Amendment is so important,” Kelly said.


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