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