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Justice department questions Wright deal, memo saysBy SUZANNE GAMBOA
Associated Press Writer
WASHINGTON - An aviation agreement reached by Texas officials and two major airlines to eventually lift flight restrictions at Dallas Love Field would violate federal antitrust laws and should not be approved, the Justice Department said in a memo.
The agency's antitrust division told lawmakers restrictions in the local agreement to repeal the Wright Amendment in eight years "would be hard-core, per se violations of the Sherman Act," according to a copy of the memo obtained Tuesday by The Associated Press.
The agency's concerns refer to an agreement among Texas officials to eventually repeal the so-called Wright Amendment and legislation sponsored by Sen. Kay Bailey Hutchison, R-Texas, containing the agreement.
Forged by officials from Dallas, Fort Worth, Southwest Airlines Co., American Airlines and Dallas-Fort Worth International Airport, the compromise also calls for reducing gates at Love Field in Dallas from 32 to 20. Other airlines have objected to the gate reduction, saying it limits their ability to establish service there.
The 1979 law, named for its author, former House Speaker Jim Wright of Fort Worth, prohibits flights by aircraft with more than 56 seats between Dallas and any points outside Texas, Kansas, Missouri, New Mexico, Oklahoma, Arkansas, Louisiana, Mississippi and Alabama.
A spokeswoman at the Justice Department was not immediately available for comment Tuesday.
The Justice Department said the gates to be torn down could be used by other airlines to enter and compete there. Razing them "is the very kind of collusive output reduction that the antitrust laws are designed to prevent."
The department said the parties to the local agreement are aware of the antitrust violations because they have sought blanket immunity for the agreement, instead of including an "antitrust savings clause," which the agency said is commonly done to preserve competition under antitrust laws.
American Airlines, based in Fort Worth, disputes the Justice Department's view of the antitrust implications, a spokesman said.
"We simply disagree with the conclusions of the Justice Department, and we believe that so do the cities of Dallas and Fort Worth and the North Texas congressional delegation," said American spokesman Tim Wagner.
Officials with Southwest and the cities of Dallas and Fort Worth did not immediately return calls for comment.
Southwest is limited to 16 gates in the deal, which the Justice Department said is a hard cap on Southwest service from Dallas for more than eight years and would not allow Southwest to expand its operations once the Wright Amendment is lifted without leaving cities it now serves or facing penalties for starting up service at another Dallas area airport.
Consumers would lose out on a 50 percent discount in fares from Southwest's entry into the market, the agency said.
"More broadly, the cap on gates at Love Field affects every other airline that would otherwise be attracted to the new competitive opportunities at Love Field, including low-cost carriers such as JetBlue (Airways), as well as other legacy carriers, such as US Air," the agency said.
Also, House Judiciary Committee Chairman James Sensenbrenner, R-Wis., sent a letter to House Speaker Dennis Hastert, R-Ill., requesting that his committee be given a chance to review the House bill that includes the agreement. In his letter, Sensenbrenner also raises competition concerns. A copy of the letter was obtained Tuesday by the AP.
The compromise also would allow for immediate through-ticketing from Love Field, meaning passengers would have to buy one ticket instead of two for travel beyond the states in the Wright bill.
Associated Press Writer
WASHINGTON - An aviation agreement reached by Texas officials and two major airlines to eventually lift flight restrictions at Dallas Love Field would violate federal antitrust laws and should not be approved, the Justice Department said in a memo.
The agency's antitrust division told lawmakers restrictions in the local agreement to repeal the Wright Amendment in eight years "would be hard-core, per se violations of the Sherman Act," according to a copy of the memo obtained Tuesday by The Associated Press.
The agency's concerns refer to an agreement among Texas officials to eventually repeal the so-called Wright Amendment and legislation sponsored by Sen. Kay Bailey Hutchison, R-Texas, containing the agreement.
Forged by officials from Dallas, Fort Worth, Southwest Airlines Co., American Airlines and Dallas-Fort Worth International Airport, the compromise also calls for reducing gates at Love Field in Dallas from 32 to 20. Other airlines have objected to the gate reduction, saying it limits their ability to establish service there.
The 1979 law, named for its author, former House Speaker Jim Wright of Fort Worth, prohibits flights by aircraft with more than 56 seats between Dallas and any points outside Texas, Kansas, Missouri, New Mexico, Oklahoma, Arkansas, Louisiana, Mississippi and Alabama.
A spokeswoman at the Justice Department was not immediately available for comment Tuesday.
The Justice Department said the gates to be torn down could be used by other airlines to enter and compete there. Razing them "is the very kind of collusive output reduction that the antitrust laws are designed to prevent."
The department said the parties to the local agreement are aware of the antitrust violations because they have sought blanket immunity for the agreement, instead of including an "antitrust savings clause," which the agency said is commonly done to preserve competition under antitrust laws.
American Airlines, based in Fort Worth, disputes the Justice Department's view of the antitrust implications, a spokesman said.
"We simply disagree with the conclusions of the Justice Department, and we believe that so do the cities of Dallas and Fort Worth and the North Texas congressional delegation," said American spokesman Tim Wagner.
Officials with Southwest and the cities of Dallas and Fort Worth did not immediately return calls for comment.
Southwest is limited to 16 gates in the deal, which the Justice Department said is a hard cap on Southwest service from Dallas for more than eight years and would not allow Southwest to expand its operations once the Wright Amendment is lifted without leaving cities it now serves or facing penalties for starting up service at another Dallas area airport.
Consumers would lose out on a 50 percent discount in fares from Southwest's entry into the market, the agency said.
"More broadly, the cap on gates at Love Field affects every other airline that would otherwise be attracted to the new competitive opportunities at Love Field, including low-cost carriers such as JetBlue (Airways), as well as other legacy carriers, such as US Air," the agency said.
Also, House Judiciary Committee Chairman James Sensenbrenner, R-Wis., sent a letter to House Speaker Dennis Hastert, R-Ill., requesting that his committee be given a chance to review the House bill that includes the agreement. In his letter, Sensenbrenner also raises competition concerns. A copy of the letter was obtained Tuesday by the AP.
The compromise also would allow for immediate through-ticketing from Love Field, meaning passengers would have to buy one ticket instead of two for travel beyond the states in the Wright bill.