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Fri, Dec 14, 2007

American Finds The Going Tough At Love Field

But Carrier Vows It Won't Get Going

The financial resurgence of the airlines in 2007 has been largely a story about what the industry calls load factor. Fewer seats, more demand, fuller planes and less need to cut ticket prices.

But in spots, there are still flights that have lots of empty seats. Among them are most American Eagle flights out of Dallas Love Field. Industry and media sources have calculated that those flights average 35-to-38 percent full.

Or, as the Dallas Morning News observes, 18 people on a 50-seat regional jet...  just about enough for every passenger to have his own private row.

Part of the problem for American Eagle is the dominance at Love Field of Southwest Airlines, which has 20 gates to American Eagle's two. That disparity is a hangover from a law known as the Wright Amendment, a bit of market-fixing by Congress in 1979 which limited routes available out of Love Field to protect Dallas Fort Worth International.

As ANN reported, American began service grudgingly from Love in March 2006, shortly after Wright Amendment restrictions were eased on flights into Missouri. The airline -- which has its hub down the road at Dallas/Fort Worth International -- began limited service within Texas and to Missouri, with a mix of regional jets and mainline MD-80s.

The move was made ahead of a compromise on Wright, which went into effect at the end of last year... calling for the controversial amendment to expire in 2014. That changed the playing field... and led some to believe American would chose to abandon its money-losing operations at Love to return to DFW, as that airport gained greater parity with its cross-town rival.

That didn't happen, though many wonder if it should have. American chose to maintain its presence at Love... though its American Eagle subsidiary has largely taken over operations there, and the airline cut several flights to destinations including St. Louis and San Antonio. Still, capacity rates on American planes have averaged about half those on Southwest's flights.

It's a strategic move for American... as with Wright set to disappear, other legacy carriers want more slots at Love Field, as DFW grows more congested. So American Eagle will keep flying those 2/3-empty planes, and hope persistence and marketing can make headway against Southwest.

It will be an uphill battle.

"We're going to continue to work on improving the consumer awareness of our schedule and our traffic at Love Field," said American spokesman Tim Wagner. "But it's difficult competing against a carrier that has really been entrenched there for 30 years. That's something that we've acknowledged all along. Just like anybody competing against an airline with a fortress hub, a term people like to use, the entrenched carrier at Love Field has a large schedule and a large network – and that's what we're up against."

Analysts are more succinct. In the words of Boyd Group airline expert Michael Boyd, American is "having their heads handed to them," adding the airline's customers prefer to fly from DFW despite the more convenient access Love Field offers them. "They backed themselves into a corner, and they have to get out of it, be graceful and leave."

Aviation consultant Darryl Jenkins says American will continue losing money at Love, solely in the hope of doing damage to its rival.

"[E]very time I hear them say they're doing it for strategic reasons, I presume they're saying they're losing money so they can screw people," Jenkins said.

FMI: www.aa.com, www.southwest.com, www.dallas-lovefield.com

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