Keeping a Good Idea Down

Cheers to Legend Airlines, and jeers to American, which is standing in Legend's way.
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T. Allan McArtor, the chief executive of

Legend Airlines

in Dallas, flew to Washington last week on business. Because he could not make the reservation in advance, his roundtrip fare was a little more than $1,500.

But McArtor, a frequent flier with

AMR's

(AMR)

American Airlines

, is looking forward to this time next year. He hopes that by then business travelers from Dallas will be able to fly Legend Airlines at a fare that probably would be nearly half that amount -- from

Love Field

, which is close to downtown Dallas, as opposed to the more distant

DFW International Airport

.

Many Dallas business travelers have the same hope.

Legend is constructing its new terminal and gate area at Love Field, while continuing the arduous process of

FAA

certification. The airline is positioning its product as a cross between

Richard Branson's

upper-class service on

Virgin Atlantic

flights and

Midwest Express'

(MEH)

legendary business-class service.

Legend will use DC-9 aircraft, refitted with only 56 seats, two abreast and all leather. (The 56-seat configuration is mandated by the Wright Amendment, which only governs flights in and out of Love Field.)

Needless to say, there will be plenty of room for carry-on storage space and long legs. In essence, the entire plane will be similar to a business-class configuration. "If they can wheel it up to the gate -- computers, luggage, garment bags, whatever -- we'll take it," McArtor said in an interview on Thursday, stressing the airline's commitment to the needs of business travelers.

But there is a problem: American is making Legend's entry into the business difficult.

"Sam Addoms

CEO of

Frontier Airlines

(FRNT)

has been quoted as saying that they got Frontier up and running in four months, and that their total start-up costs were not as much as the legal bills we have already incurred," McArtor said Thursday.

American has spent millions of dollars trying to hamstring Legend legally, with suits being filed against the airline in almost every court that could be construed as having jurisdiction over the matter. American, along with the city of Fort Worth, and in some cases the DFW Airport Board, has also sued the city of Dallas over the issue.

However, in December, the

Department of Transportation

ruled that it alone has the authority to issue rulings on the federal laws pertaining to Love Field. The DOT found that the restrictions on Love Field service that were being sought were contrary to federal law. It also found that the Wright and Shelby amendments, which limit long-haul service from Love Field to those aircraft containing 56 seats or less and limit the flights of larger aircraft to certain adjoining states, hold firm.

But while Legend interpreted the DOT ruling as a green light, related suits are still pending at state and local levels. We called the corporate communications department at American on Friday to get their latest comments on the pending lawsuits, but the department was closed for the holiday.

Last year, in the midst of all this continuing legal maneuvering, American made a big mistake, as many in the Dallas area see it. An ad campaign, generally thought to have been the brainchild of then-American CEO

Robert Crandall

, suddenly blitzed Dallas-area radio stations, buses, billboards and newspapers talking about how awful it would be for Dallas residents if new airline service was allowed out of Love Field. You would have thought the world was going to come to an end if Legend was allowed to fly.

The concern on American's part is purely financial. The airline, which has its main hub at DFW, is able to charge very high fares in and out of the market -- a revenue premium, as the industry terms it -- simply because there is no major competition in terms of the high-yield business routes to many markets. When you scan a review of average fares paid across the country based on mileage, for any number of city combinations, the fares into and out of DFW are usually some of the highest.

Legend, which wants to fly high-yield business travelers at lower fares, has a good concept. And American knows it. As a result, the airline has used the legal system, and issues surrounding the competition-squelching Wright Amendment, to try to keep Legend on the sidelines.

The scenario being played out in Dallas is neither new nor unusual. If you have read anything about the history of

Southwest Airlines

(LUV) - Get Report

, for example, you know its story is the same. The airline fought some 30 legal and regulatory hurdles in its attempt to fly out of Love Field. Finally, an uneasy truce materialized, allowing the airline to offer restricted service from Love Field.

As passengers, we should all be concerned about situations like these. Because it is this type of activity on the part of the major airlines that has made the concept of "deregulation" pretty much a joke. With little competition to worry about, the major airlines have been able to treat passengers, generally, as a means to an end -- not as the reason for them being in business.

As DOT Secretary Rodney Slater said two weeks ago in

US News and World Report

, "There's a groundswell from the public, and something needs to be fixed."

New Voices

I want to thank all of you for the strong support you have shown this column, which

TSC

kicked off in November. Survey response levels and email feedback have clearly shown that this is a keen area of interest.

Beginning next week, Traveling With Wings will rotate among a group of writers who are already working to ensure that the column will continue to inform and stimulate discussion. I won't be too far away as I write my Wing Tips columns, and I will appear here again from time to time.

Holly Hegeman, based in Dallas, pilots the Wing Tips and Traveling With Wings columns for TheStreet.com. At time of publication, Hegeman was long Southwest Airlines, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. You can usually find Hegeman, publisher of PlaneBusiness Banter, buzzing around her airline industry Web site at

www.planebusiness.com. While she cannot provide investment advice or recommendations, she welcomes your feedback at

hhegeman@planebusiness.com.