WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #16
No one will know what the effect on allowing WN to fly long-haul domestic from Love Field will be until it is too late to do anything about it but, despite all of the talk about the size of AA’s operation at DFW and how geography does not favour Love Field, the simple fact is that WN is by far the dominant airline from the Metroplex (DAL plus DFW) in the short-haul markets that WN is allowed to serve.
The fact that WN also has half of the market share even in those markets that were added such as MCI and STL says that they are more than capable of establishing themselves as a serious competitive option. History does indeed show that fares dropped dramatically when WN added service to those cities, only to return to higher levels after WN had gained its half of the overall Metroplex market.
The sheer size of Love Field will limit the size of operation that WN can build but WN has more than enough space to add enough flights to capture half of the current level of demand in the top 20 domestic markets from DFW. Any carrier that can serve the top 20 markets from an airport is a credible alternative and having such an alternative, which hasn’t existed since DL had a hub at DFW alongside AA, will affect AA’s finances.
If AA isn’t concerned about what WN can do, then they won’t try to fight back using flights from DAL. The fact that they did it when Legend was there, says they viewed it as a threat then and will again. How much money AA spent to fight off Legend doesn’t matter today. What does matter is that AA’s future profitability very much hinges on its ability to successfully retain its dominance in the Metroplex. The sheer size of the operation that WN can mount compared to what AA can do at Love Field means that AA will do nothing more than spit in the wind to try to stop WN.
Long term, it is almost guaranteed that WN will fight to remove the remaining restrictions on Wright. I believe their plan at this point is to use every available amount of capacity that DAL has, leaving nothing else for anyone else that doesn’t already have gates. Then they will show the citizens of Dallas how much they have reduced prices – and they will reduce prices and have built their business plan around keeping prices low enough to argue the point – while at the same time arguing that they could do the same thing if they had more room to grow. Problem is that US courts have upheld the ability of airports to limit their size based on community feedback to the exclusion of other carriers, and there are a number of examples of where that is being done – including LAX, SNA, and LGB as well as all of the FAA slot controlled airports on the east coast. There is no requirement for those airports to provide access to newcomers or expand their size to accommodate competitors. Thus, WN wants first to maximize its size at DAL. Then, they will fight to remove all remaining restrictions so that they can operate what economically makes the most sense within the size that DAL is allowed to be and that might include nonstops to MEX instead of MCI. WN will also argue that it can grow more in the Metroplex if it could add service at DFW w/o giving up gates at DAL – and they will likely win. Whether they ultimately use DFW is another question but Dallas IS WN’s home and they have been very successful not only there but elsewhere at gaining what they want politically.
How all of that affects AA is less significant than that WN will be able to build its presence in N. Texas as it has never been able to do. How far they go before they stop is anyone’s guess – and it will be driven by the market.
The fact that WN also has half of the market share even in those markets that were added such as MCI and STL says that they are more than capable of establishing themselves as a serious competitive option. History does indeed show that fares dropped dramatically when WN added service to those cities, only to return to higher levels after WN had gained its half of the overall Metroplex market.
The sheer size of Love Field will limit the size of operation that WN can build but WN has more than enough space to add enough flights to capture half of the current level of demand in the top 20 domestic markets from DFW. Any carrier that can serve the top 20 markets from an airport is a credible alternative and having such an alternative, which hasn’t existed since DL had a hub at DFW alongside AA, will affect AA’s finances.
If AA isn’t concerned about what WN can do, then they won’t try to fight back using flights from DAL. The fact that they did it when Legend was there, says they viewed it as a threat then and will again. How much money AA spent to fight off Legend doesn’t matter today. What does matter is that AA’s future profitability very much hinges on its ability to successfully retain its dominance in the Metroplex. The sheer size of the operation that WN can mount compared to what AA can do at Love Field means that AA will do nothing more than spit in the wind to try to stop WN.
Long term, it is almost guaranteed that WN will fight to remove the remaining restrictions on Wright. I believe their plan at this point is to use every available amount of capacity that DAL has, leaving nothing else for anyone else that doesn’t already have gates. Then they will show the citizens of Dallas how much they have reduced prices – and they will reduce prices and have built their business plan around keeping prices low enough to argue the point – while at the same time arguing that they could do the same thing if they had more room to grow. Problem is that US courts have upheld the ability of airports to limit their size based on community feedback to the exclusion of other carriers, and there are a number of examples of where that is being done – including LAX, SNA, and LGB as well as all of the FAA slot controlled airports on the east coast. There is no requirement for those airports to provide access to newcomers or expand their size to accommodate competitors. Thus, WN wants first to maximize its size at DAL. Then, they will fight to remove all remaining restrictions so that they can operate what economically makes the most sense within the size that DAL is allowed to be and that might include nonstops to MEX instead of MCI. WN will also argue that it can grow more in the Metroplex if it could add service at DFW w/o giving up gates at DAL – and they will likely win. Whether they ultimately use DFW is another question but Dallas IS WN’s home and they have been very successful not only there but elsewhere at gaining what they want politically.
How all of that affects AA is less significant than that WN will be able to build its presence in N. Texas as it has never been able to do. How far they go before they stop is anyone’s guess – and it will be driven by the market.
