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The Changing Skyscape – What Happens to DFW if American and US Airways Merge?

09/12/2012

With the “final” stage of airline consolidation waiting in the wings, what happens to North America’s fourth-busiest aerodrome should US Airways and American merge? Will American’s Dallas/Fort Worth International wither if US Airways takes over? Not a chance, believes Mike Boyd. “The only question I have for DFW is how much upside there will be,” says the president of Boyd Group International, a major aviation consultancy. Should American stay independent he sees DFW – the carrier’s prime hub – continuing to grow. Should US Airways prevail and take over AA, “there’s a good chance DFW will grow monstrously.”

Another aviation consultant sees things almost the same way. American Aviation Institute Executive Director Josh Marks says he doesn’t “see any reason” the megaport won’t continue ascendant, no matter how the merger scenario unfolds. For the record, both Marks and Boyd think a US Airways/American merger is going to happen.

Either way, “We are confident of our future path,” says David Magaña, Dallas/Fort Worth International’s senior manager of public affairs.

By the Numbers

Under whatever guise American Airlines files in the foreseeable future it looks to dominate DFW, an aerodrome that Airports Council International says handled 57.8 million souls in 2011. Right now American and American Eagle fly 84.5 percent of the passengers out of the north Texas megaport. Lofting an average of 655 daily departures. American Airlines proper flies to 74 domestic and 22 international destinations from DFW, American Eagle to 70 domestic and 9 international airports. The other 15.5 percent of the airport’s passengers are divvied up this way: Delta and its Delta Connection carriers have 3.8 percent of the pie, United 2.9 percent, US Airways 2.7 percent and up-and-coming Spirit (more on it momentarily) 1.9 percent. Everyone else clocks in with less than 1 percent.

DFW’s top five domestic markets largely mirror the business pulse of the Dallas/Fort Worth Metroplex. According to 2011 DFW figures, Dallas/Fort Worth – Los Angeles was the largest air market, a 26,324-available-seats-per-week, three-carrier affair. American flew 82.1 percent of the seats, Virgin America 11.2 percent and United 6.8 percent. Atlanta was number two, with 23,897 weekly seats. Delta had 52.6 percent of those seats, American 42.2 percent, and Spirit 5.2 percent. Chicago O’Hare was DFW’s third-largest domestic market, with 22,248 available seats. American had a 74.8 percent share of total seats available, United a 15.9 percent share. New York LaGuardia was the fourth-busiest airport out of DFW, with 19,110 seats a week. Again, American led the pack with 77.7 percent of the passengers. Delta had 17 percent and Spirit 5.3 percent. Las Vegas was fifth-busiest, with 12,201 weekly seats. American commanded 81.5 percent of them, Spirit 18.5 percent.

Internationally, American was dominant in four of the top five markets. There are two airlines flying the DFW – London Heathrow route, and both of them are oneworld alliance partners. American flies 75 percent of the 8,721 weekly seats, British Airways 25 percent. Leisure destination Cancun saw American (73.2 percent) and Sun Country (26.8 percent) offer 6,640 weekly seats on the route. Interestingly, DFW – Mexico City was a one-carrier route. American had all of the run’s 5,880 weekly seats. American (69 percent) and Air Canada (30.8 percent) divided the 4,625 weekly seats available ‘twixt DFW and Toronto Pearson. The fifth-busiest international route from DFW was Seoul Incheon. Korean Air lofted 1,505 seats per week in 2011 according to a Dallas/Fort Worth International tally.

That’s the Spirit

Not reflected in last year’s calculus was the impact self-proclaimed “ultra-low fare” Spirit Airlines is having on the Metroplex mix. “People have missed the implication” of Spirit’s rapid growth at DFW insists Mike Boyd. Spirit spokeswoman Misty Pinson says the carrier flies to 15 destinations nonstop from Dallas/Fort Worth, this via 19 daily nonstops. In the not too distant future the number of nonstop destinations will rise 26, this as the nation’s quintessential unbundled airline adds such business spots as Baltimore/Washington, Houston, and Los Angeles to the list.

Love Just Isn’t Enough

Meanwhile, over at far smaller Dallas Love Field, a critical accord was reached a few years back defining the role once and for all of the one-time field of contention.

A bit of background. The infamous Wright Amendment once unabashedly bound Love’s future. The controversial 1979 piece of restrictive legislation was supposed to protect DFW from Love Field. Under the law, aircraft with more than 56 seats were forbidden to fly from DAL to states outside of Texas, Louisiana, Arkansas, Oklahoma or Arkansas. So much for competition. Say you wanted to fly from Dallas to Los Angeles. You could do it nonstop from DFW, or go through all sorts of contortions (as this reporter did) and buy a ticket from DAL to Albuquerque, and then a separate ticket from ABQ to LAX. Oh yeah, you couldn’t check your bag through either. You had to claim it in New Mexico and re-check it on to California. Ah one, ah two.

That’s changed now. Love Field flights have opened up, although not fully. Now, you can fly nonstop from Love to anyplace in Texas, Louisiana, Arkansas, Oklahoma, New Mexico, Mississippi, Alabama, Kansas or Missouri. Airlines can also fly beyond those states providing they stop en route in one of the nine enumerated states. Got it? It gets simpler in 2014. That’s when domestic restrictions go away. International flights will remain verboten.

Great news for Love Field-based Southwest? Sure, but there are still restrictions. One of them is the number of gates. The pact that rid the world of Wright also limited the number of gates at DAL to 20. 16 of them are Southwest’s.

The City of Dallas is constructing a much-needed new airside terminal at Love Field. Set to open in 2014, it’s still going to have just 20 gates. Southwest “is going to have to make some decisions on where they fly [from DAL],” says Boyd. Right now, Love Field is Southwest’s seventh-busiest focus city. It fields some 129 daily departures to 15 nonstop destinations – with direct or connecting service to 57 cities according to airline spokesman Paul Flaningan.

It’s here that the Spirit equation becomes fascinating. “Spirit has stayed away from nonstop Southwest markets from Dallas,” says Josh Marks. The ultra-low-cost carrier focuses instead on flying to “Southwest markets where [Southwest] is restricted to one-stop flights from DAL.” It’s an intriguing strategy, one that could directly affect how you book.

Infrastructure Insights

That’s the big picture, the shape of air service in the Dallas/Fort Worth Metroplex for the foreseeable future. But how about getting to and from the airports, and what you’ll do when you get there?

Currently, there’s no light rail service from Dallas or Fort Worth to DFW’s terminals per se. That should change by 2014 says DFW spokesman David Magaña. Then, Dallas Area Rapid Transit, or DART, plans to begin running rails through the north end of the Manhattan-sized airport into Terminal A, a key American Airlines facility. The ride to downtown Dallas is estimated to take 30 to 40 minutes says Magaña. As for westward ground connections, he says, “The Fort Worth Transportation Authority plans to bring in a rail line to connect to Terminal B.” 2016 is when that’s supposed to happen.

Right now rail service is sort of clunky to and from the mid-cities megaport. Passengers can ride the Trinity Railway Express to either Dallas or Fort Worth – but it entails a shuttle bus transfer.

The current cab fare to downtown Dallas is $40 flat; $43 to downtown Fort Worth.

While Dallas Love Field is getting an airy, modern new airside terminal, ticketing halls and baggage claim area at a price tag of some $519 million, Dallas/Fort Worth International is undergoing a $2.2 billion terminal improvement effort that will transform the innards of four of the airport’s five terminals. Lot’s of behind-the-scenes blocking and tackling projects here. HVAC, power, water. That sort of stuff. What flyers will most notice is security checkpoint upgrades. “We’re making the checkpoints themselves larger,” says Magaña. “[We’re] turning them 90 degrees. Instead of going across the narrow width of our [semicircular] terminals, they’re now actually going the length of the terminals.” The result?: “A little bit more ability to put more room in here.”

When the dust settles on all this work the terminals will all have terrazzo floors too. They’ll replace the tiles that made your roller bags go clickety-clack. Small stuff, perhaps – but it matters in a world where everybody’s got roller bags.

DFW is also getting some new eateries, many of them serving up healthy fare. Even iconic Dickey’s barbeque near Gate A19 is now offering a vegetarian option.

That’s the least of the changes flyers to the Metroplex can expect over the coming years. Spirit’s on the rise and Southwest is about to shed its Love Field shackles. That’s going to change some booking patterns. The one change they probably won’t see is American Airlines (or its successor) dumping DFW.

This story was originally published in the August 2012 edition of Business Travel Executive Magazine.

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One Comment
  1. Retired Lawyer permalink

    As a retired antitrust attorney, formerly both for the government and for private industry, I would normally say that the proposed USAir/American merger would have significant antitrust trouble. Moving from 5 to 4 major carriers (including Southwest) significantly increases the probability of coordinated effects, and likely outright collusion. But there has been a horrendous failure of major merger enforcement, particularly in the commercial aviation industry, at the antitrust enforcement agencies over the past 12 years.

    The fact of the matter is that the massive decrease in capacity by the carriers, without entry into the lesser-served markets by other carriers is troubling from an antitrust standpoint. There is little or no competition left on the majority of short to medium routes. Barriers to entry are close to impossible today. Yet, USDOJ seems to continue to be unable to find a merger it doesn’t like.

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