American Pulls Out of Dallas/Love Field, Turns on the Spin Machine

American, DAL - Dallas/Love Field, Southwest

The whole point of PR is to try to spin an issue in your favor, but sometimes the spin is so strong, you feel like you’re riding the teacups at Disneyland. Yesterday, American announced it was pulling out of Dallas/Love Field with a release entitled . . . “AA Signs New Lease at Love Field.” Huh?

Technically, American has signed a new extended lease with Dallas/Love Field that commits the airline American's PR Strategyto Love until 2028. BUT, beginning June 11, the airline will suspend service until the terminal work is done. When will that happen? 2013, as of now. So I’m going to go out on a limb here and say that a four year suspension of service is actually pulling out of a market.

Why would they bother to renew a lease on the terminal if they clearly don’t want to be there for the next four years? Well it all goes back to the whole Love Field fight. When DFW opened, traffic restrictions were put in place at Love Field (by the Wright Amendment) to force airlines to move to DFW. Southwest refused to move, and the battle was born.

Southwest really became aggressive at trying to end the restrictions recently, and American tried to play the “doom” card. American said it would have to move a bunch of flights to Love, split its hub up, and the whole area would suffer just so it could compete with Southwest.

Once Love was opened up slightly, American immediately jumped into the airport with flights to show that the doom and gloom was coming. Well those flights failed, and they ended up consolidating around a single route – Love to Chicago/O’Hare. Now that route is going away.

But as part of the compromise, Love was restricted to a certain number of gates (20), and American got some of those gates. So what would happen if they gave them up? Well Southwest would be able to grow into those gates. Hmm, they can’t have that. So it appears they’ve committed to the gates under the assumption that they’ll need to squat on them in the future.

If I were Southwest, I’d be mounting a challenge here to see if I could get those gates, but of course when I asked them, they didn’t have any official challenge to speak about. They did, however, say that with more of the current terminal being empty right now with American’s departure, it might allow them to accelerate the completion of the new terminal because it gives them more room to maneuver.

You hear that American? That may make you come back to the airport in only 3 years. Think you can handle it?

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13 comments on “American Pulls Out of Dallas/Love Field, Turns on the Spin Machine

  1. I’m not that familiar with gate leases….. what happens if in 2011 or 2012 or 2013 when the building work is complete, AA decide not to fly out of Love ? Would a standard lease require them to pay a big pile of cash to Love if they don’t resume flights ? Can they just walk away and surrender the gates at no cost if Southwest want them ? If Southwest will be flying from Love to Midway, I imagine AA would lose a lot of money on flights from Love to O’Hare when there’s already a big hub next door at DFW

  2. Right now it’s cheaper to drive from Dallas to Chicago. No fees, no security, just the open road and one night in a hotel if you don’t want to push all the way thru. And Lincolnland around Springfield seems to be enjoying a nice renaissance at the moment, too.

  3. David – I’m not sure. My guess is that every lease agreement is different in that regard, and I’m not sure the answer. I’d bet that American wouldn’t enter into this agreement if there wasn’t a way for them to get out.

  4. I don’t get it. It’s CLEAR AA has no business at DAL other than losing money, so why bother? What are they protecting? It would be like CO setting up a big operation at JFK to compete with DL, or AA dumping flights into MDW to protect ORD. Are they just doing it to save face now that they’ve made such a big stink? Adding flights to DAL has to be one of the worst decisions of the last few years, right up there with things like Ted and EOS.

  5. AA must be liable for something if they decide not to use the gates after 2013. I’m sure Love could use the time to market the gates and possible routes to other airlines besides AA and Southwest. If not, Love have just given AA a free option lasting at least 3 years. Options on stock trading are never free…. options on gates should not be free either

  6. Right now it’s cheaper to drive from Dallas to Chicago. No fees, no security, just the open road and one night in a hotel if you don’t want to push all the way thru. And Lincolnland around Springfield seems to be enjoying a nice renaissance at the moment, too.

    … and gas, and the cost of my time. TSA doesn’t usually have a 12 hour line.

  7. Actually, the release doesn’t seem SO misleading to me. As anyone in this industry knows, it’s rare for an airline to actually sign their name to a commitment for anything more than 6, 12 or 18 months out — let alone four years! They easily could have said they were suspending DAL service, but “remain committed to returning when the new terminal opens” — and left it at that. They didn’t, which I think is significant.

  8. Let’s see:
    Gas at $2.25/gallon on a 15-gallon tank = $33.75
    Two and a half tanks at the most, Dallas to Chicago if you can get 400 miles of highway = $85
    Food = Depends on where and how much you eat. Say $50 for grins and giggles.
    Time = 14 to 16 hours depending on who’s driving.
    Benefits: No security, delays, cancellations, surly attitudes, middle seats, buy-on-board meals or rental car issues.
    Two drawbacks: 15 hours of Sunday drivers and rush hour in St. Louis.

    Not counting hotel, I’d say $135 one way to Chicago is a deal for a doable drive. Dallas to LA or New York? Not so much.

  9. It’s not unusual for an airline to sign a lease of 2+ years. Airports convince airlines to sign long leases to fund new projects or renovations and the airlines typically bite because it’s a mutual benefit.

  10. @ David “AA must be liable for something if they decide not to use the gates after 2013. ”

    I think there are actually two things at play here: proximity to “elite” clientele within Dallas, and the gate forfeiture agreement signed by all the parties which allowed for the eventual repeal of the Wright/Shelby Amendments restricting DAL.

    First, a large number of highly affluent travelers and/or frequent business travelers live within the “Park Cities” (actually two totally independent municipalities within the city limits of Dallas) and in/around the downtown core that are MUCH closer to DAL than DFW. But, at present the Wright/Shelby amendments restricting the size of aircraft and/or the destinations are still in effect and may serve to make it–I’m guessing–pretty useless for AA to try to compete with SWA at present. They tried serving beyond the Wright/Shelby perimeter with 56-seat, single-class aircraft but that’s been a bust, particular in the current economic climate. However, once the restrictions are lifted and AA and SWA can fly wherever they like (read: major business cities) AA may find bringing their 2-class aircraft back worth it for some city pairs if they can bring those affluent/business travelers back to the “new and improved” DAL.

    Second, the gate agreement for the post-Wright/Shelby era provides for SWA to make available one of their DAL gates to competitors on a 1-for-1 basis if they decide to begin service from DFW. So there’s a huge disincentive for SWA to attempt expansion that way. Instead, I believe they’d have to buy gates from a DAL competitor (like AA) and I’m betting that AA would make them pay through the nose knowing that’s SWA’s only option. SWA is, effectively, restricted to DAL and to the number of gates they were allotted in the accord.

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