FTC Staff Comment Before the Dallas City Council Transportation Committee Concerning Proposed Repeal of Restrictions on the Use of Love Field

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V890087
COMMISSION 	AUTHORIZED
TESTIMONY OF
Thomas 	B. 	Carter
Regional 	Director
Dallas 	Regional 	Office
Federal 	Trade Commission1
Before 	the
Transportation Committee
City 	Council
City of 	Dallas, 	Texas
On
The 	Proposed Repeal 	of Restrictions 	on 	the 	Use 	of 	Love 	Field
September 	5, 	1989
These comments 	are 	the 	views 	of 	the 	staff 	of 	the 	Dallas
Regional 	Office 	and 	the 	Bureau 	of 	Economics 	of 	the 	Federal 	Trade
Commission. 	They 	are 	not 	necessarily 	the 	views 	of 	the 	Commission
or of 	any 	individual 	Commissioner.

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Mr. 	Chairman, 	members 	of 	the Committee, 	my 	name 	is 	Tom
Carter. 	I 	am Director of 	the 	Federal 	Trade 	Commission's 	Dallas
Regional 	Office. 	I 	appreciate 	the 	opportunity 	to 	testify 	today
before 	the Transportation Committee 	of 	the 	Dallas 	City Council 	on
the 	potential 	Congressional 	repeal 	of 	the 	federal 	statute 	called
the 	·Wright Amendment." 	The Wright Amendment 	prohibits
commercial 	airlines 	from 	providing through 	service 	or 	interlining
service between Dallas' 	Love 	Field 	(Love 	Field) 	and 	cities 	that
lie 	in 	states 	other 	than Texas, 	Arkansas, 	Louisiana, 	New Mexico
and Oklahoma. 2 With your permission, 	1 	would 	like 	to 	offer 	a
statement on behalf 	of 	the 	staff 	of 	the 	Dallas 	Regional 	Office
and 	the 	Bureau of 	Economics 	of 	the 	Federal 	Trade 	Commission.
Before 	I 	begin, 	however, 	I 	must 	state 	that my 	testimony 	today 	is
the view of 	the 	Dallas 	Regional 	Office 	and 	the 	Bureau 	of
Economics 	staff 	of 	the Federal 	Trade 	Commission and does 	not
necessarily represent 	the view of 	the 	Commission or of 	any
individual 	Commissioner.
My comments 	are 	offered 	for 	the 	limited purpose 	of 	analyzing
some of 	the 	effects 	on consumers, 	both 	inside 	and 	outside 	the
Dallas 	area, 	which may result 	froa 	removal 	of 	the 	current 	flight
restrictions 	on Love 	Field. 	One effect 	of 	repealing the 	Wright
Amendment may be 	increased competition among air carriers 	serving
"Interline" 	service permits 	passengers 	to make
reservations 	and 	receive 	a 	ticket 	for 	travel 	to 	a 	single
destination using 	two 	or more 	different 	air 	carriers 	to 	reach
that 	destination.
2

·',r.
locations 	outside 	the 	five 	state region 	to 	which 	flights 	from
Love 	Field are 	currently restricted. 	Such 	increased competition
may 	result 	in 	lower 	air 	fares 	for 	consumers 	flying 	between 	Dallas
and 	those 	locations. 	In addition, 	if 	some 	air carrier 	traffic 	is
shifted to 	close-in, 	underutilized Love 	Field 	from 	the 	more
congested Dallas/Fort Worth 	International 	Airport 	(D/FW) 	as 	a
result 	of 	the 	removal 	of 	those 	restrictions, 	consumers 	may 	save
time 	as 	a 	result 	of 	fewer 	delayed 	flights 	and reduced commuting
distances, 	and they may 	save money on parking and commuting
expenses.
I. 	Introduction
Before addressing 	these 	issues 	specifically, 	I 	would 	like 	to
make 	some 	introductory 	remarks.
The 	Federal 	Trade 	Commission 	is 	an 	independent 	regulatory
agency which 	for 	75 	years 	has 	been charged with 	the
-responsibility of 	protecting competition and 	safeguarding the
interests 	of consumers. 	Section 	5 	of 	the 	Federal 	Trade
Commission Act 	prohibits 	unfair methods 	of 	competition 	and 	unfair
or deceptive 	acts 	or 	practices.' 	Pursuant 	to 	this 	mandate, 	the
Commission seeks 	to 	serve 	the public 	interest by, 	among 	other
things, 	protecting 	the 	marketplace 	from 	unreasonable 	restraints
of 	trade. 	Upon 	request 	by 	federal, 	state, 	and 	local 	governmental
15 	U.S.C. 	§ 	45.
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bodies, 	the FTC 	staff 	regularly 	assesses 	the 	competitive 	impact
of 	legislative 	and 	regulatory proposals 	in order 	to 	identify
provisions 	that 	may benefit consumers 	by promoting competition
and 	reducing prices, 	and provisions 	that 	may 	harm consumers 	by
impairing competition or 	increasing costs 	without 	offering
offsetting benefits.
The 	FTC 	staff 	has 	had considerable experience 	in 	evaluating
competitive aspects 	of 	the 	air carrier 	industry and 	related
airport 	issues. 	Commission 	staff 	have 	studied 	and 	commented 	on
numerous 	issues 	including 	airline 	deregulation,4 	slot
regulation,' 	airport 	charges,' 	and 	airline 	computer 	reservation
systems. 7 In 	response 	to 	your 	invitation 	to 	us 	for 	comment, 	the
4 J. 	Ogur, 	C. 	Wagner, 	and M. 	Vita, 	"The 	Deregulated
Airline 	Industry: 	A Review of 	the 	Evidence," 	Bureau of
Economics, 	Staff 	Report 	to 	the 	Federal 	Trade 	Commission, 	January
1988; 	See Also 	Statement of 	James 	C. 	Miller, 	III, 	Chairman,
Federal 	Trade Commission, 	Before 	the 	Subcommittee 	on 	Aviation 	of
the 	House Committee on Public 	Works 	and Transportation, 	July 	26,
1983.
to
, D. 	Koran 	and J. 	Ogur, 	"Airport Access 	Problems:
Lessons 	Learned 	from 	Slot 	Regulation by 	the 	FAA," 	Staff 	Report
the 	Federal 	Trade Commission, 	May, 	1983; 	"Slots 	Transfer
Methods," 	before 	the 	Federal Aviation Administration 	(FAA),
Docket No. 	24105, 	1984. 	See 	also 	"Discussion Authority 	for
Agreement 	to 	Shift 	Schedules," 	Before 	the 	Department 	of
Transportation, 	Docket 	No. 	44634, 	1987; 	"Elimination of 	Airport
Delays," 	Before 	the 	FAA, 	Docket 	No. 	24206, 	1984.
6 "Proposal 	for 	Airport Capacity Efficiency," 	Before 	the
Massachusetts 	Port Authority, 	1988; 	"Charges 	for 	Use 	of
Metropolitan Washington Airports," 	Before 	the 	FAA, 	Docket 	No.
25204, 	1987.
7 "Airline Computer Reservation 	Systems," 	Before 	the
Civil Aeronautics 	Board, 	Docket 	No. 	41686, 	1983.
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staff 	of 	the 	Dallas 	Regional 	Office 	and 	the 	Bureau 	of 	Economics
offer these 	remarks 	on 	the 	issue 	of 	the 	repeal 	of 	the 	use
restrictions 	on Love 	Field.
II. 	The Wright Amendment
In 	the 	1960's, 	Love 	Field was 	the 	only 	Dallas 	airport 	served
by major commercial 	airlines. 	Concern 	about 	the 	capacity 	of 	Love
Field 	and 	other 	local 	airports 	and 	the 	ability of 	the 	airports 	to
keep up with 	the 	region's 	growth caused 	the 	cities 	of 	Dallas 	and
Fort Worth to 	develop 	jointly a 	regional 	airport 	located midway
between the 	two 	cities. 	In 	1968 	the 	cities 	passed a 	concurrent
bond ordinance 	authorizing 	the 	issuance 	of 	the 	bonds 	for 	the
construction of 	D/FW. 	All 	of 	the 	airlines 	operating 	out 	of 	Love
Field at 	the 	time 	signed 	agreements 	to move 	their 	operations 	to
D/FW •.
By the 	time 	D/PW was 	completed, 	Love 	Field was 	operating 	at
its 	peak capacity.' 	Also by that 	time 	a 	new 	airline, 	Southwest
Airlines, 	had 	begun 	operations 	out of Love 	Field. 	It 	offered
flights 	between 	the 	four 	major 	cities 	in Texas. 	Southwest 	never
signed an agreement 	to move 	its 	operations 	to 	D/FW, 	and on
January 	13, 	1974, 	when 	all 	the 	other 	air carriers 	moved 	their
operati~ns to 	D/FW, 	Southwest 	stayed 	at 	Love 	Field. 	A lawsuit
8 	Love 	Field had 	446,160 	takeoffs 	and 	landings 	in 	1973.
Dallas 	Love 	Field Activity Report, 	1972-78.
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9
10
',.1.
was 	instituted 	in 	an effort 	to 	force 	Southwest 	to 	move 	to 	DjFW;
however, 	Southwest 	prevailed 	and continued 	to 	operate 	out 	of 	Love
Field.'
Because 	of 	a 	concern 	that 	unrestricted 	air 	travel 	out 	of
Love 	Field would endanger the 	success 	of 	the 	new 	airport 	and 	the
possibility that 	the 	cities 	would 	not 	be 	able 	to 	meet 	their 	bond
obligations, 	legislation was 	introduced 	in 	the 	United 	States
House of 	Representatives 	that 	would 	place 	restrictions 	on 	the 	use
of Love 	Field. 10 The 	legislation that 	was 	enacted by Congress,
commonly 	referred 	to 	as 	the 	"Wright Amendment, "11 	prohibits
airlines 	from 	using Love 	Field 	for 	flights 	to 	and 	from 	cities
that 	lie 	in 	states 	other than Texas, 	Arkansas, 	Louisiana, 'New
Mexico 	and Oklahoma. 	The Wright Amendment 	also 	prohibits 	air
service 	from 	being extended beyond 	the 	five 	states 	by means 	of
through 	service, 	connecting service, 	or 	interline 	service. 12 For
example, 	not only are 	airlines 	prohibited 	from 	flying 	nonstop
City of 	Dallas 	v. 	Southwest Airlines 	Company, 	371 	F.
Supp. 	1015 	(N.D. 	Tex. 	1973). 	aff'd, 	494 	F.2d 	773 	(5th 	eire 	1974),
cert. 	denied, 	419 	U.S. 	1079, 	reh'g 	denied, 	420 	U.S. 	913 	(1975).
S. 	Henigson, 	"House Limits 	Love 	~lights to 	4 	States,"
Dallas 	Time 	Herald, 	Jan. 	31, 	1980, 	p. 	A-I.
11 Pub. 	L. 	No. 	96-193, 	94 	Stat. 	SO, 	Feb. 	18, 	1980.
12 It 	is 	possible that 	the 	type 	of 	restrictions 	imposed 	by
the Wright Amendment may have 	been an 	efficient way 	to 	assure 	the
success 	of 	D/FW and 	therefore were 	justifiable 	at 	the 	time.
Whether or not 	this 	was 	true, 	there would 	now 	seem 	to 	be 	little
justification 	for 	continuing to 	impose 	restrictions 	on Love 	Field
as 	a 	means 	for 	assuring 	the 	success 	of 	DjFW 	(see 	Section 	III,
below).
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l'
14
from Love 	Field 	to Los 	Angeles, 	but 	they 	are 	also 	prohibited 	from
writing a 	ticket 	for 	a 	passenger 	from 	Love 	Field to 	Los 	Angeles
on 	a 	flight 	from Love 	Field 	to Albuquerque, 	New Mexico, 	that
continues 	to Los 	Angeles. 13
III. 	Status of 	D/FW and Love Field
Dallas/Fort Worth 	International 	Airport 	has 	grown 	and
prospered 	in 	the 	15 years 	since 	it 	opened 	and 	is 	now 	the 	second
busiest 	airport 	in 	the 	nation. 14 Indeed, 	it 	has 	begun 	to
ex~erience the 	problems 	that 	inevitably accompany 	such 	a 	large
amount 	of 	traffic. 	Delay has 	become more 	prevalent. 	Both
American Airlines 	and 	Delta, 	which operate major 	hubs 	at 	D/FW,
have 	gate 	space 	shortages. 15 D/FW, 	which currently 	has 	6
commercial 	runways 	is 	planning construction 	of 	two 	more
The 	Department 	of 	Transportation has 	determined 	that
Continental 	Airlines 	could provide 	service 	from 	Love 	Field 	to
Houston, 	if 	such 	service 	did 	not 	interline 	or 	list 	connecting
flights 	to 	restricted 	destinations. 	DOT Order 	95-12-81 	(July 	26,
1985), 	aff'd, 	Continental 	Airlines 	v. 	Dept. 	of 	Transportation,
483 	F.2d 	1444 	(D.C. 	Cir. 	1988).
R. 	Dunham 	and 	R. 	Calhoun, 	"Congressman wants 	Love 	Field
limits 	repealed," 	Dallas 	Times 	Herald, 	July 	15, 	1989, 	p. 	B-1.
Both 	airlines 	have 	announced plans 	to 	build more 	gates.
Op-Ed 	piece 	by Ted Tedesco, 	Vice 	President-Corporate 	Affairs,
American Airlines, 	Inc., 	"Opportunity can 	land 	here," 	Dallas
Mornin 	News, 	August 	7, 	1999, 	p. 	A-9: 	M. 	Zimmerman, 	"Delta
studying D FW expansion," 	Dallas 	Morning News, 	August 	3, 	1989, 	p.
D-1.
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runways.16 	Moreover, 	parking close 	to 	the 	terminals 	is 	in 	short
supply.
Total 	operations 	(takeoffs 	and 	landings) 	at 	D/FW were
675,061 	in 	1988. 	Of 	these, 	nearly 	75% 	were 	commercial 	airline
operations. 	The 	airport's 	operations 	are 	increasing at 	a 	rate 	of
5% 	per year. 17 Even with the 	improvements 	that 	are 	being
planned, 	D/FW expects 	to 	reach 	its 	capacity sometime 	around 	the
year 	2000. 18 In order 	to 	deal 	effectively with 	this 	capacity
problem, 	a 	group of 	north Texas 	local 	governments 	have
commissioned a 	study to 	explore 	possible 	solutions, 	including 	the
construction of 	one or more 	satellite 	airports 	in 	the 	area. 19
Moreover, 	although 	the 	D/FW Airport 	Board has 	not 	taken 	a
position 	on 	the 	issue 	of 	the 	repeal 	of 	the Wright Amendment, 	the
Board does 	not 	expect repeal 	of 	the 	amendment 	to 	be 	detrimental
to 	D/FW. w One estimate 	is 	that 	repeal 	of 	the 	Wright 	Amendment
16 	Interview, 	William Cyran, 	Marketing 	Department, 	D/FW
Airport 	Board, 	August 	1, 	1989.
17 	Oris 	Dunham, 	Dallas/Fort Worth 	Executive 	Director, 	D/FW
Report 	to 	the 	City of 	Dallas, 	Council 	Transportation Committee,
Public 	Hearing, 	August 	15, 	1989.
18 	C. 	Austin 	and A. 	Van 	Zeifden, 	"War brewing over Love
Restrictions,· 	Dallas Times 	Herald, 	July 	16, 	1989, 	p. 	B-1.
19 	Interview, 	Danny L. 	Bruce, 	Director of Aviation, 	City
of 	Dallas, 	August 	1, 	1989.
R. 	Dunham and R. 	Calhoun, 	supra, 	note 	14.
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would extend by two years 	the 	date when D/FW reaches 	its
capacity. 21
Love 	Field, 	on 	the 	other hand, 	has 	a 	significant 	amount 	of
excess 	capacity. 	Consultants 	for 	the 	city estimate 	that 	the
capacity of 	Love 	Field 	is 	approximately 	435,000 	operations 	per
year. 22 However, 	in 	1988 Love 	Field had only 	212,823 	operations,
106,534 	of which were commercial 	operations. 	At 	the 	present
time, 	Southwest Airlines, 	the 	only major commercial 	airline
operating out 	of 	Love 	Field, 	uses 	only 	15 	gates 	on one 	concourse
of 	the 	three 	concourses. 23 	Prior 	to 	the 	opening of 	D/FW, 	55
gates 	were 	in operation at Love 	Field. 24 There 	is 	also 	ample
space 	available 	for 	additional 	airline 	ticket 	counters. 25 Due 	to
recent 	improvements, 	Love 	Field also 	has 	excess 	parking
21 	Oris Dunham. 	supra 	note 	17. 	According 	to 	Mr. 	Dunham
rePeal 	of 	the Wright Amendment 	would 	have 	no major 	impact 	on 	the
viability of 	D/FW. 	In 	addition 	it may 	temporarily 	alleviate 	the
need to expand 	facilities 	at 	D/FW.
22
23
Interview, 	Danny L. 	Bruce, 	supra, 	note 	19.
Id.
24 Letter dated August 	3, 	1989, 	with enclosures, 	from
Danny L. 	Bruce, 	Director 	of Aviation, 	City of 	Dallas, 	to 	Thomas
B. 	Carter, 	Director, 	Dallas Regional 	Office, 	Federal 	Trade
Commission. 	There 	are 	at 	least 	nine 	elevated gates 	which could
be 	used 	immediately. 	Some 	gates 	have 	been converted 	to 	other
uses 	since 	D/FW opened, 	however 	they could be 	reconverted 	to
airline 	gates, 	subject to 	certain 	lessees' 	interests.
2S 	Interview, 	Danny Bruce, 	supra 	note 	19.
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27
29
capacity. 26 	The 	city estimates 	that, 	even ~uring current 	peak
periods, 	approximately 	40% 	of 	the 	airport's 	garage 	and 	surface
lot 	parking 	is 	unused. 27
Removal 	of 	the 	restrictions 	on Love 	Field will 	allow
airlines 	to more 	freely 	compete with carriers 	based 	at 	D/FW. 	It
will 	immediately allow Southwest Airlines 	to 	provide 	through
service 	and connecting service to 	the 	15 	restricted destinations
that 	it 	now 	serves 	through other airports. 28
South~est 	will 	also 	be 	permitted 	to 	provide 	nonstop 	service 	to
these and other destinations. 	In addition, 	three 	other 	airlines,
Continental, 	America West, 	and Midway can be 	expected 	to 	initiate
service 	from 	Love 	Field. 29 Even American Airlines 	is 	making
The 	City of 	Dallas 	recently 	spent 	$21.5 	million on Love
Field to 	renovate 	the 	terminal 	and provide more 	parking 	spaces.
D. 	Dillon, 	"The New Look of 	Love, 	" 	Dallas 	Morning News, 	Feb. 	4,
1988, 	p. 	C-1.
Letter 	from 	Danny L. 	Bruce, 	supra, 	note 	24. 	Moreover,
there 	exist 	additional 	sites 	where parking 	facilities 	have 	been
located 	in the past.
Those 	destinations 	are 	Kansas 	City, 	St. 	Louis,
Nashville, 	Birmingham, 	Chicago, 	Detroit, 	Indianapolis, 	Phoenix,
Las 	Vegas, 	San Diego, 	Ontario, 	Los 	Angeles, 	San Francisco, 	and
Oakland.
M. 	Zimmerman, 	"Field of 	Dreams,n 	Dallas 	Morning News,
July 	18, 	1989, 	p. 	0-1; 	B. 	Roth, 	"Continental 	wins 	Love 	Field
Battle," 	Dallas'Times 	Herald, 	March 	31, 	1988, 	p. 	B-1. 	Airlines
that 	operate ont 	of D!rw may be 	limited 	in their use 	of Love
Field by the terms 	of 	their use agreements 	with D/FW and 	the
requirements 	of 	the 	1968 	Regional 	Airport 	Concurrent 	Bond
Ordinance 	adopted by 	the 	City Councils 	of 	Dallas 	and 	Fort 	Worth.
Section 	9.5 	of 	the 	Bond Ordinance requires 	the 	cities 	to 	phase
out 	the 	use 	of 	all 	existing airports, 	including Love 	Field, 	by
commercial 	air carrier 	services. 	The extent of 	the 	limitation on
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30
contingency plans 	to 	begin 	service 	from 	Love 	Field 	if 	the
restrictions 	are 	lifted. 30 In 	total, 	it 	has 	been estimated 	that
Love 	Field operations 	(and 	passengers 	served) 	would more 	than
double 	in 	the 	first 	five 	years 	following 	repeal 	of 	the 	Wright
Amendment. 31
IV. 	Benefits 	to Consumers 	in Removing Restrictions
Re~oval of 	the 	restrictions 	on 	the 	use 	of 	Love 	Field 	would
likely 	increase 	airline competition, 	provide 	added convenience,
and 	reduce congestion at 	D/FW. 	As 	a 	result, 	consumers, 	both 	in
Dallas 	and elsewhere, 	could 	benefit 	substantially. 	Some 	of 	the
benefits 	that 	could 	result 	include 	lower 	airfares 	to 	certain
locations, 	lower parking and commuting cost, 	and 	reduced 	delays.
I 	will 	discuss 	each of 	these 	potential 	benefits 	in 	turn.
We 	do 	not 	address 	the 	implications 	of 	repeal 	for 	changes 	in
noise 	levels 	in 	the Dallas/Fort Worth area. 	We 	note, 	however,
that 	whatever 	these 	implications 	might 	be, 	imposing 	restrictions
carriers 	operating out 	of 	D/FW has 	not been 	fully 	determined.
See, 	~, 	City of 	Dallas 	v. 	Continental 	Airlines, 	Inc., 	735
S.W.2d 	496 	(Tex. 	Ct. 	App. 	1987). 	See 	also 	"The 	Impact 	on Air
Traffic 	Activity at 	Dallas 	Love 	Field Resulting 	from 	Repeal 	of
the Wright 	Amendment"r 	Reese 	& Company, 	Jnly 	31, 	1989.
David Jackson, 	"City 	is 	Promised 	Business, 	Warned 	of
Noise 	if 	Love 	Field Limits 	Lifted," 	Dallas 	Morning 	News, 	August
16, 	1989. 	p. 	A-27.
"The 	Impact 	on Air 	Traffic Activity 	at 	Dallas 	Love
Field Resulting 	from 	Repeal 	of 	the Wright Amendment", 	supra 	note
29.
11

on 	flight 	destinations 	may be 	an extremely 	inefficient 	method 	for
controlling noise 	pollution. 	Except 	to 	the 	extent 	that 	changes
in the 	routes 	served by Love 	Field cause 	changes 	in 	the 	types 	of'
aircraft 	using 	the 	Field 	(a change 	that 	could 	tend 	to 	reduce
noise 	levels, 	if 	less 	noisy 	aircraft 	replace 	noisy 	aircraft), 	the
changes 	in 	noise 	levels 	will 	be 	determined 	largely 	by 	changes 	in
the 	aggregate number of 	operations 	performed at 	the 	airport, 	not
by 	the 	origins 	and destinations 	of 	these 	additional 	flights. 	The
council 	may wish 	to 	consider whether 	the 	goals 	of 	increased 	air
service and 	noise 	abatement 	can be 	better 	served 	through other
means, 	such 	as 	measures 	that 	directly affect 	flight 	frequency 	and
aircraft 	choice. 	For example, 	noise 	abatement 	can be dealt 	with
o
by measures 	such 	as 	a 	varying of 	landing 	fees.
A. 	Potential Reductions 	in The Price of Airline Tickets
There 	are 	several 	reasons 	why removing 	the 	restrictions 	at
Love 	Field could 	result 	in 	lower airline 	ticket 	prices. 	First,
removing 	restrictions 	from 	Love 	Field will 	increase 	the 	number 	of
potential 	competitors 	faced 	by airlines 	at 	D/FW operating 	flights
to 	destinations 	that 	cannot currently be 	served 	from Love 	Field.
Eliminating these 	restrictions 	will 	allow 	Southwest 	and other
potential 	entrants 	to offer 	services 	to 	these 	destinations. 	Any
impact on price will 	depend, 	in part, 	on 	the 	extent 	of 	existing
12

competition among 	airlines 	to 	provide 	service 	to 	these
destinations 	from 	O/FW.
Second, 	on those 	occasions 	when O/FW operates 	at 	capacity,
the 	shortage of 	gates 	and other 	scarce 	airport 	facilities 	may
give 	rise 	to 	"scarcity rents. n32 In other words, 	if 	O/FW cannot
keep up with growing demand, 	airline 	ticket 	prices 	could 	increase
to 	reflect 	these 	scarcities. 	Removal 	of 	restrictions 	at 	Love
Field will 	increase 	available 	airport 	facilities, 	which 	is 	likely
to 	erode 	any economic 	rents 	embedded 	in 	the 	pricing of 	airline
tickets 	at 	D/FW~
Examination of 	existing ticket 	prices 	may 	help 	suggest 	the
potential 	price 	reductions 	that 	might 	occur 	if 	the 	restrictions
at Love 	Field 	are eliminated. 	The discussion 	that 	follows 	is 	not
based on a 	sophisticated analysis 	of 	airline 	ticket 	prices 	in
which we 	control 	for 	all 	the 	determinants 	of 	prices.
Consequently, 	the 	price 	differences 	that we 	focus 	on below 	should
be viewed as 	illustrative of 	potential 	fare 	reductions 	that 	might
occur with 	the removal 	of 	restrictions 	at 	Love 	Field, 	rather 	than
conclusive 	evidence 	that 	fares 	will 	decline. 	Moreover, 	we 	do
S2
not attempt 	to measure what 	part of 	these conjectured 	fare
When a 	factor 	of 	production, 	such as 	an 	airport 	gate,
is 	in 	fixed 	supply, 	increases 	in 	the demand 	for 	that 	factor 	will
cause 	its 	price 	to 	rise. 	If 	this 	factor 	is 	already earning 	a
competitive 	return before 	the price 	increase, 	the 	additional
revenue 	generated by 	this 	price 	increase 	is 	termed 	a 	"scarcity
rent."
13

reductions 	is 	attributable 	to erosion of 	"scarcity rents" 	and
what 	part 	is 	due 	to 	increased competition 	faced 	by carriers
oPerating 	from 	D/FW.
Since Southwest Airlines 	is 	the major 	carrier 	at 	Love 	Field
and American Airlines 	is 	the major 	carrier 	at 	D/FW, 	we 	compare
American and Southwest 	prices 	in 	the 	analysis 	that 	follows. 	We
first 	compare 	prices 	on 	routes 	in which both American 	and
Southwest 	are 	permitted 	to 	provide 	service 	in order 	to 	examine
whether 	the 	two 	airlines 	price 	similarly when 	serving 	the 	same
destinations. 	We make 	these comparisons 	for 	assorted 	flights
originating 	from 	both the 	Dallas 	and 	the Houston areas. 	If 	the
two 	airlines 	charge the 	same 	price 	for 	city-pair 	routes 	which
they both currently serve, 	it 	raises 	the 	suggestion 	that 	American
and Southwest prices 	would be 	similar on 	routes 	that 	Southwest
would 	serve once 	the 	restrictions 	at Love Field 	are 	removed.
After comparing 	these 	prices 	we 	then compare 	American 	prices
from 	D/FW 	to destinations 	that 	Southwest cannot 	serve 	from 	Love
Field with American and 	Southwest 	prices 	from 	the Houston 	area 	to
these 	same destinations. u service 	from 	D/FW and Houston 	to 	the
listed destination 	is 	similar. 	in 	that 	both Dallas 	and 	Houston
have 	a 	newer regional 	airport 	and an older, 	in-town airport, 	the
33 	There 	are 	no destination 	restrictions 	on 	flights
leaving 	from Houston, 	therefore 	it 	is 	possible 	to compare
Southwest 	fares 	and American 	fares 	from 	Houston 	to 	destinations
which Southwest cannot 	serve 	from 	Love 	Field.
14

34
35
36
37
distances 	of 	the 	routes 	to 	the 	listed destinations 	are
comparable, 	and 	the 	cities 	are 	of 	comparable 	size 	and 	location. 34
Consequently, 	providing 	that 	no 	significant 	remaining differences
exist 	between 	flights 	originating 	in Dallas 	and Houston,
differences 	in 	fares 	may 	reflect 	the 	impact 	that 	the 	restrictions
at Love 	Field have 	on prices. 3s
Table 	1 	[attached] 	provides 	the 	price comparisons 	discussed
above. 	The A8erican 	prices 	were 	obtained 	from 	one 	of 	the
compute~ reservation 	systems 	(CRS) 	used by 	travel 	agents 	allover
the 	United States. 36 The 	Southwest 	prices 	were 	obtained by
contacting Southwest 	directly. 	Consequently, 	prices 	obtained 	are
likely 	to 	be 	accurate 	indicators 	of 	what 	consumers 	actually 	pay
for 	their 	airline 	tickets. 	We 	use 	prices 	listed on 	the 	eRS
andlor quoted 	on August 	4, 	1989. 	We 	provide 	data on 	the 	lowest
available 	fare 	and on unrestricted 	fares 	(full 	fare) 	for 	weekday
travel. 37 These 	latter 	fares 	are 	provided 	to 	estimate 	the
The American prices 	are 	for 	"coach" 	travel 	which 	is 	the
closest 	comparable 	service 	to 	that 	offered by Southwest.
As 	discussed above, 	we 	have 	not 	taken 	into 	account 	all
possible differences 	in demand and 	supply considerations 	between
the 	city-pair routes 	we 	compare. 	Thus, 	our price 	comparisons
should not 	be viewed 	as 	conclusive 	evidence 	that 	the Love 	Field
restrictions 	are 	solely 	responsible 	for 	the price 	differences 	we
observe.
"Full 	fare" 	prices 	were 	double-checked 	by contacting
American reservations 	directly.
Some of 	the 	unrestricted 	fares 	have 	limits 	on 	the
number of 	stopovers 	and may 	require 	a 	roundtrip booking. 	It 	is
interesting 	to note 	that 	these 	limitations may 	have 	been 	imposed
to 	prohibit 	Dallas 	passengers 	from 	taking advantage 	of 	the 	lower
15

3.
"
.....
typical 	fares 	business 	travelers 	are 	likely 	to 	face 	when 	flying
during weekdays 	without 	advance 	re8erv~tions.38
The 	price comparisons 	in Table 	1 suggest 	that 	for 	routes
unaffected by 	the 	Wright Amendment, 	American 	tends 	to 	offer 	the
same 	range 	of 	prices 	as 	Southwest. 	For example, 	the 	lowest 	price
for 	a 	roundtrip Southwest 	flight 	from 	Love 	Field to 	either 	Little
Rock, 	Houston, 	Austin, 	or San Antonio 	is 	$38. 	American's 	lowest
priced 	fares 	from 	D/FW 	to 	these 	cities 	is 	also 	$38. 39
Similarly, 	Southwest's 	and American's 	lowest 	priced 	flights 	from
Houston 	to 	Nashville, 	Birmingham, 	and 	St. 	Louis 	are 	identically
priced 	at 	$98. 	Comparisons 	of 	full 	fares 	suggest 	that 	the
airlines 	also 	price these 	types 	of 	fares 	similarly 	though 	some
differences 	exist 	between American and Southwest 	fares 	from
Houston to 	the 	assorted destinations. 	These 	price 	comparisons
suggest 	that when 	Southwest 	and American 	serve 	the 	same 	city-
pairs, 	the 	two 	airlines 	tend 	to 	offer a 	similar 	range 	of 	fares.
This 	suggests 	that 	if 	Southwest were 	permitted 	to 	serve
fares 	on 	flights 	out 	of 	Houston 	that 	require 	a 	stop 	in 	Dallas
before continuing to 	destinations 	that 	airlines 	may 	not 	serve
from 	Love 	Field. 	Other 	than 	these 	limitations, 	American's 	full
fares 	reflect 	the 	lowest 	fare 	a 	passenger 	could 	obtain without
any conditions 	on advance 	purchases, 	minimum 	stay, 	time 	of 	day
travel, 	etc.
Since we do 	not 	have 	information on 	how many 	tickets
were 	purchased 	at 	these 	and 	other prices 	our 	discussion 	is 	based
on comparisons 	of 	list 	prices, 	not 	average 	prices.
These 	are 	the 	lowest 	fares 	available. 	They 	require 	3
weeks 	notice and 	are 	nonrefundable. 	Other 	restrictions 	may
apply.
16

destinations 	that 	it 	cannot 	presently serve 	from 	Love 	Field,
American would price 	similarly 	to Southwest 	on 	flights 	from 	DjFW
to 	these 	destinations.
·We 	now compare American prices 	on 	routes 	from 	D/FW 	to
destinations 	that 	Southwest cannot 	serve 	from 	Love 	Field with
prices 	on routes 	from Houston 	to 	these 	same 	destinations. 	In
particular, 	we present American 	fares 	from 	D/FW 	to 	Kansas 	City,
Nashville, 	Birmingham, 	and 	St. 	Louis 	as 	well 	as 	American 	and
Southwest 	fares 	from 	Houston to 	these 	same 	cities. 	Table 	1 	shows
that 	the 	lowest 	available 	fares 	from 	Houston 	to 	Kansas 	City,
Nashville, 	Birmingham, 	or St. 	Louis 	are 	significantly below 	the
fares 	from 	D/FW 	to 	these 	destinations. 	For example, 	the 	lowest
available 	fare 	from 	the 	Houston area 	to 	St. 	Louis 	is 	$98 	and 	the
lowest 	available 	fare 	from 	Dallas 	to 	St. 	Louis 	is 	$200. 	For 	full
fares, 	the 	differences 	are even 	larger, 	with 	full 	fares 	from 	DjFW
being sometimes 	as 	much as 	four 	times 	more 	than 	full 	fares 	on
routes 	originating 	in Houston. 	Thus, 	while 	the 	fare 	from 	Houston
to 	Nashville 	is 	$168, 	the 	same 	airline's 	fare 	from 	Dallas 	to
Nashville 	is 	$672.
In 	summary, 	our 	analysis 	suggests 	that 	when 	serving 	the 	same
city-pairs 	Southwest 	and American have 	similar 	fares. 	Moreover,
the 	prices 	from 	D/FW 	to 	destinations 	that 	cannot 	be 	served by
operations 	from 	Love 	Field 	are 	significantly 	higher 	than 	fares
from Houston to 	these 	same 	destinations. 	This 	evidence, 	though
17

illustrative rather 	than 	conclusive, 	suggests 	that 	removal 	of
restrictions may 	lower 	fares 	to 	consumers 	flying 	into 	and 	out 	of
Dallas.
B. 	.Potential Reductions 	in Delay Time
There 	are 	other potential 	benefits 	of 	eliminating
restrictions 	on 	traffic 	into 	and out 	of 	Love 	Field. 	There may 	be
times 	when 	the demand 	for 	operations 	at 	D/FW exceeds 	the
airport"s 	capacity. 	During 	these 	peak use 	periods, 	the 	cost 	of
an 	aircraft 	using 	terminal 	gate 	space, 	taxiway, 	and 	runways
consists 	of 	the 	actual 	resource 	costs 	incurred 	(~, 	the 	use 	of
air 	and 	ground 	traffic 	controllers) 	plus 	the 	additional 	cost 	that
the 	operation 	imposes 	on other operations 	that 	would 	have 	used
the 	airport 	facilities. 	The costs 	associated with 	preventing
other aircraft 	from 	using 	airport 	facilities 	are 	known 	as
congestion costs. 	During peak use 	periods 	when many 	aircraft
want 	to 	use 	the 	limited airport 	facilities 	at 	the 	same 	time, 	the
congestion costs 	for 	any 	slngle operation can be 	significant.
The 	gains 	from 	eliminating 	restrictions 	from 	Love 	Field and
moving operations 	from 	D/FW 	to 	Love 	Field 	are, 	in 	part, 	embodied
in 	the 	reduction 	of 	congestion costs. 	There 	are empirical 	data
suggesting that 	the 	congestion costs 	at 	O/FW are 	significant.
For example, 	one 	important cost 	is 	the 	delay 	time 	imposed 	on
18

40
passengers 	on 	flights 	waiting 	to 	use 	a 	runway. 	In 	December 	1988
alone, 	well 	over 	1,000 departures 	at 	DJFW were delayed more 	than
15 minutes. 4o During all 	of 	1988 	there 	were over 	10,000 	delays 	at
D/FW. 	Many of 	these delays, 	as 	discussed below, 	are 	related 	to
aircraft congestion.
Delays 	can be caused by a 	variety of 	factors 	including bad
weather, 	constraints 	on the 	air 	traffic 	control 	system, 	equipment
failure, 	and airport volume. 	Airport volume 	can 	affect 	delay
time 	for 	a 	variety of 	reasons. 	Airport 	volume 	is 	a 	likely major
determinant 	of delays 	due 	to 	bottlenecks 	such 	as 	limited 	runway
capacity and 	limited availability of 	gate 	space. 	For example,
from 	March 	through 	July 	1989, 	DJ,W experienced over 	5,300 	delays,
approximately 	18% of which were 	attributed 	to 	airport 	volume. 41
This 	implies 	that 	a 	reduction 	in operations 	when an 	airport 	is
near 	its 	capacity can have 	a 	significant 	impact 	on delay 	time.
It has 	been estimated, 	for 	example, 	that 	if 	there 	were 	20
departures 	per runway per hour, 	a 	1% 	increase 	in commercial 	air
carrier departures 	would cause 	an 	increase 	in 	average 	departure
delay 	of 	2.9%. 	Similarly, 	if 	there 	were 	20 	arrivals 	per 	runway
in the 	same 	hour, 	a 	1% 	increase 	in commercial 	air 	carrier
arrivals 	per runway would 	increase departure 	delay 	by 	an
FAA Air Traffic 	Operations 	Service, 	"Air Travel
Activity and Delays 	Report 	for 	December, 	1988", 	NAS 	Analysis
Branch,oATO-130.
41 	FAA Daily Aircraft 	Operatio~s, D/FW 	and DAL, 	January 	-
Juiy 	1989.
19

additional 	1.6%.42 	Thus, 	given 	traffic 	volume 	at 	peak hours 	at
D/FW, 	a 	reduction 	in the 	number of 	operations 	is 	likely 	to 	cause
a 	significant 	reduction 	in delays.
Loye 	Field, 	by contrast, 	does 	not 	appear 	to 	be 	capacity
constrained. 	For example, 	as 	reported 	in the 	Dallas 	Morning
News, 	"[t]he Federal Aviation Administration estimates 	that 	Love
Field can handle 	about 	432,000 	takeoffs 	and 	landings 	a 	year. 	It
recorded only 	216,000 	in 	1988."43 	The 	FAA estimates 	that 	from
March 	through 	July 	1989 	Love 	Field experienced only 	349 	delays,44
none 	of which was 	attributable 	to 	airport volume~4s 	Thus, 	delays
caused by 	air 	traffic 	volume 	are 	less 	likely 	to 	be 	a 	significant
problem and 	increases 	in 	traffic 	volume 	are 	less 	likely 	to 	affect
operations 	at 	Love 	Field than 	at D/FW.
Appendix A presents 	eBt~tes of 	the 	dollar value 	of 	the
time 	air 	passengers 	may be 	expected 	to 	save 	if 	the 	restrictions
at Love 	Field are 	removed. 	These 	savings 	can arise 	because
42
removal 	of 	the Love 	Field 	restrictions 	is 	likely 	to 	shift
operations 	from 	an 	airport 	with 	high congestion costs 	to 	an
s. 	Morrison and C. 	Winston, 	"Enhancing the 	Performance
of 	the 	Deregulated Air Transportation System," 	Brookings 	Papers
on Economic 	Activity, 	K. 	Bailey and C. 	Winston, 	Ed., 	Brookings
Institution, 	Washington, 	D.C., 	1989.
M. 	Zimmerman, 	supra 	note 	29.
44 	The 	number of 	delays 	per 	thousand operations 	at 	D/FW 	is
almost 	6 	times 	greater than 	at Love 	Field.
The 	FAA Daily Aircraft 	Operations, 	supra 	note 	41.
20

46
47
airport 	with 	lower congestion costS. 46 The 	calculations 	in
Appendix A are based on 	several 	assumptions 	and 	are only
illustrative of 	the 	types 	of 	savings 	consumers 	may 	realize 	rather
than precise estimates. 	These calculations 	suggest 	that 	the
dollar value of 	reduced delay time may be 	substantial, 	perhaps 	on
the 	order of 	tens 	of 	millions 	of 	dollars 	per year.
C. 	Savings 	in Commuting To and From the Airport
Love 	Field 	is 	closer 	to 	downtown 	Dallas 	than D/FW 	(by
approximately 	10 miles). 	Since a 	large 	percentage 	of 	air
travelers 	are 	likely 	to 	be 	traveling 	to 	or 	from 	downtown 	Dallas,
shifting traffic 	from 	D/FW 	to 	Love 	Field will 	lower commuting
costs 	to 	these 	passengers. 47 Appendix B provides 	an 	analysis 	of
the value of 	commuting time saved if 	the 	restrictions 	concerning
Love 	Field 	are 	removed. 	~he analysis 	in"the Appendix 	should be
viewed 	as 	illustrative of 	the 	types 	of 	savings 	consumers 	may
A shift 	in operations 	could occur because 	Southwest
would expand 	its 	oPerations 	to 	routes 	that 	were 	previously
restricted, 	thereby 	reducing 	the demand 	for 	operations 	at 	D/FW.
In 	addition, 	air-carriers 	other 	than Southwest may 	be 	able 	to
shift 	their operations 	from 	D/FW to 	Love 	Field. 	Note 	that 	our
analysis 	would be 	similar 	if 	instead of 	existing operations
shifting 	from 	D/FW 	to 	Love 	Field, 	Love 	Field 	received 	a 	greater
proportion of 	any growth 	in 	the demand 	for 	operations.
Note 	that 	commuters 	who 	live 	closer to 	Love 	Field 	than
D/FW will 	also experience 	lower commuting costs 	to 	the 	extent
they 	are 	able 	to 	make 	greater 	use 	of 	Love 	Field. 	In 	addition,
those 	commuters 	who 	live closer to D/FW will 	still 	be 	able 	to 	use
that 	airport.
21

realize 	if 	the 	restrictions 	at Love 	Field are 	removed 	rather 	than
precise 	estimates 	of 	these 	savings. 	The 	analysis 	suggests 	that
the 	savings 	from 	reduced 	travel 	time 	alone might exceed 	two
million dollars 	per year.
In 	addition to 	the 	time 	savings, 	there 	is 	the 	direct 	savings
from 	traveling 	10 	fewer 	miles. 	The 	second part of 	Appendix 	B
provides 	an 	analysis 	of 	these 	savings 	to 	consumers. 	The 	direct
savings 	to 	consumers 	who 	shifted 	from 	O/FW 	to 	Love 	Field might
exceed 	three million dollars 	per year.
D. 	Savings 	Due 	to Airport 	Parking Arrangements
Shifting traffic 	from 	O/FW 	to 	Love 	Field 	also will 	enable
consumers 	to 	save 	on parking 	fees 	and/or 	save 	time 	getting 	to 	and
from 	the 	airport 	terminal. 	Parking close 	to 	the 	terminals 	at
D/FW 	costs 	$10 	per day. 	Parking close 	to 	the 	terminal 	at 	Love
Field 	is 	$6 	per day 	in 	the 	covered 	garage 	and 	$4.50 	per 	day 	in
the 	open 	lot. 	D/FW has 	remote 	parking 	at 	comparable 	rates 	to
parking at 	Love 	Field, 	but 	it 	is 	far 	from 	the 	terminals 	and
involves 	waiting 	for 	transportation 	to 	arrive 	and entails 	a
significant 	amount 	of 	travel 	time between the 	lots 	and 	the
terminal. 	Therefore, 	the 	ability 	to 	fly 	from 	Love 	Field could
22

48
save 	consumers 	money 	in 	parking 	fees 	and/or 	time 	expended getting
to 	and 	from 	the 	parking 	lot 	to 	the 	terminal. 48
Summary
This 	analysis 	has 	provided a 	framework 	to 	analyze 	the 	impact
of 	removing restrictions 	at Love 	Field on 	airline 	ticket 	prices,
commuting costs, 	and delay 	time. 	The 	analysis 	suggests 	that
removing 	the 	restrictions 	may result 	in 	lower 	air 	fares 	as 	well
as 	reductions 	in delays 	and commuting costs 	to 	air passengers.
Our analysis 	indicates 	that 	even without 	considering 	the
substantial 	savings 	that 	may 	arise 	from 	lower air 	fares, 	the
savings 	from 	reduced delay 	time 	and commuting costs 	alone 	could
be 	substantial.
At 	some 	point, 	the 	currently 	ample 	parking 	at 	Love
Field might 	become crowded, 	which could 	lead 	to 	higher 	parking
rates 	and, 	in turn, 	reduce 	these 	savings.
23

Table 1
Roundtrip Airline Fares on Selected Routes
Qcstinations That Can Be Served From Loye Fjeld
Lowest Available Fares From DaU asl 	Full Price FaW from Dallas2
AA(DFW) 	SW(Love Field) 	AA(DFW) 	SW(Love Field)
Destinatjon
Linle Rock, AR 	$38 	$38 	$122 	$122
Albuquerque. NM 	$76 	$76 	$164 	$164
Houston (Hobby). TX 	$38 	$38 	$122 	$122
Austin, TX 	$38 	$38 	$122 	$122
Oklahoma City, OK 	S38 	S38 	$102 	$102
San Anfpnio. TX 	S38 	$38 	$122 	$122
New Orleans, LA 	$76 	$76 	$164 	$164
Destinatiom ThaI CaD Not Be Served From we FicJd
Lowest Available FarC3 From Dallas 	Lowest AvailabJe Fares From Houston 3
Destinatipn
Kansas City. MO
Nashville, TN
Birmingham, AL
Saint Louis, MO
AA 	SW
$198 	Restricted
$200 	Restricted
$200 	Restricted
$200 	Restricted
AA
$108
S98
S98
S98
SW
$108
$98
$98
$98
Fun Price Fares from DaJiaS 	FuJI Price Eares from Houstpn
Destination
Kansas City. MO
Nashville. TN
Birmingham. AL
Saint Louis, MO
AA 	SW
$476 	Restricted
$672 	Restricted
$672 	Restricted
$630 	Restricted
AA
$230
S168
$238
$162
SW
$236
$188
$198
$178
1 	Lowest fares offered by each airline; all require 3 week advance purchase and are non-
refundable; other restrictions may apply.
2 	Lowest unrestricted fares offered for ·coach" travel on weekdays; they do not require
advance purchase. minimum &tay, time of day travel, and are fully refundable; there may be a limit on
stopovers and may require round trip purchase.
3 	Fares from both Houston airports (Hobby and International) were the same.
24

Appendix A
I. 	Dollar Value of Reduced Delay Time
In 	this 	appendix we 	estimate 	the 	value of 	reduced 	delays 	to
travelers. 	We 	compute these 	savings 	under 	two 	different
scenarios 	regarding 	shifts 	in 	traffic 	from 	O/FW 	to 	Love 	Field
subsequent 	to 	the 	removal 	of 	restrictions 	at 	Love 	Field. 	We
assume, 	respectively, 	that 	5\ 	and 	then 	10\ 	of 	O/FW's 	commercial
traffic 	moves 	to 	Love 	Field.! 	These 	computations 	assume 	that 	the
average 	delay at 	O/FW 	is 	10 minutes. 2 We 	also employ 	several
assumptions 	regarding 	the 	impact 	of 	traffic 	reductions 	at 	O/FW 	on
the 	average delay. 	Furthermore, 	we 	assume 	that 	because 	Love
Field 	is 	underutilized, 	the 	increased 	traffic 	would 	not 	affect
delays 	at 	Love 	Field.'
The 	first 	group of 	passengers 	that 	might 	be 	expected 	to
experience 	less 	delay time 	is 	the 	group 	that 	shifts 	from 	using
O/FW 	to Love 	Field. 	The 	number of 	passengers 	in 	this 	category
1 	We 	focus 	on a 	shift of 	commercial 	operations 	since
general 	aviation 	is 	not 	restricted by the 	"Wright Amendment" 	and
commuter operations 	are 	less 	likely 	to 	fly 	to 	restricted
destinations. 	A shift 	in operations 	could occur 	because
Southwest 	expands 	its 	operations 	to 	routes 	that 	were 	previously
restricted, 	thereby 	reducing 	the demand 	for 	operations 	at 	O/FW.
Alternatively, 	other air 	carriers 	could 	shift 	their 	operations
from 	O/FW to 	Love 	Field. 	Note 	that our 	analysis 	would 	be 	similar
if 	instead of existing operations 	shifting-from O/FW 	to 	Love
Field, 	Love Field received 	a 	greater proportion of 	any 	growth 	in
the 	demand 	for 	operations. 	The 	analysis 	that 	follows 	assumes
that 	there 	is 	a 	one-time 	shift 	of 	5% 	or 	10% 	of 	commercial
operations 	from 	O/FW 	to 	Love 	Field.
2 	In 	1988, 	there were 	over 	10,000 	airline departure 	delays
at 	O/FW which exceeded 	fifteen 	minutes. 	Official 	records 	are 	not
kept 	showing delays 	of 	less 	than 	fifteen 	minutes. 	Therefore, 	an
average delay of 	ten minutes 	seems 	to be 	a 	reasonable 	assumption.
3 	The 	FAA estimates 	that 	from March 	through 	July 	1989 	Love
Field experienced only 	349 	delays, 	none 	of 	which 	were
attributable 	to 	airport volume. 	Even 	if 	10% 	of 	the 	operations
shifted to 	Love 	Field, 	the 	airport would 	still 	have 	a 	large
amount 	of 	excess 	capacity 	so 	that delays 	due 	to 	air 	traffic
volume 	are 	assumed 	not 	to 	increase.
We 	also 	assume 	that 	the 	increase 	in operations 	at 	Love 	Field
would 	not 	change 	air 	traffic 	patterns 	in 	a 	manner 	that 	would
increase delays 	for 	operations 	originating 	from 	Love 	Field.
25

will 	depend on 	the 	number 	of 	operations 	shifted 	from 	O/FW 	to 	Love
Field, 	the 	type 	of 	aircraft 	shifted, 	and the 	load 	factors 	of 	the
aircraft. 	Assuming a 	5% 	shift 	in commercial 	operations, 	an
average 	aircraft 	capacity of 	164 	seats 	and a 	50% 	load 	factor,4
the 	number 	of 	passengers 	shifted to 	Love 	Field would equal
2,048,114 	per year. 5 Assuming a 	10% 	shift 	in operations 	this
number would double 	to 	4,096,228 	passengers 	per year. 	If
operations 	at 	O/FW were delayed on average 	by 	10 minutes 	and 	the
average 	value 	of 	passengers' 	time equals 	$10.00 	per 	hour,' 	then 	a
5' 	shift 	in 	operations 	would yield 	a 	$3,413,523 	savings 	per year
and 	a 	10% 	shift would yield a 	$6,827,046 	savings.
The 	second 	group of 	passengers 	that 	might 	be 	expected 	to
experience 	less 	delay 	time 	is 	the 	group 	that 	continues 	to 	use
O/FW. 	This 	group would experience 	less 	delay because a 	shift 	in
operations 	away 	from 	O/FW would 	reduce 	delay 	time 	there 	as 	well.
If 	5' 	of 	the commercial 	operations 	shifted 	from 	O/FW 	to 	Love
Field 	there would 	still 	be 	474,568 	commercial 	air-carrier
operations, 	155,264 	commuter 	aircraft 	operations, 	and 	20,251
general 	aviation operations 	at 	O/FW per year. 7 If 	each
percentage point 	shift 	in commercial 	operations 	results 	in 	a 	3%
decline 	in overall 	delay 	(i.e., 	the 	elasticity of 	delay 	time 	with
respect 	to commercial 	operations 	equals 	3) 	and 	there 	was 	a 	10
minute 	average delay per operation, 	such 	a 	5% 	shift would 	result
in 	over a 	1.5 minute decline 	in delay per 	operation.
Assuming 	that 	commercial 	aircraft 	carry 	164'passengers,
commuter 	aircraft 	22 	passengers, 	and 	general 	aviation aircraft 	4
passengers, 	and 	assuming a 	load 	factor 	of 	50%, 	commercial 	air-
carriers 	average 	82 	passengers 	per 	flight, 	commuter 	aircraft
average 	11 passengers 	per 	flight, 	and 	general 	aviation 	aircraft
average 	just 	2 	passengers 	per 	flight. 	Then there 	would 	continue
to 	be 	40,662,995 	passengers 	using 	O/FW per year. 	Again 	placing 	a
$10.00 	per 	hour value 	on passengers' 	time, 	the 	decline 	in 	delay
time would 	imply 	a 	$10,165,749 	annual 	saving.
4 	"Load 	Factor" 	as 	used 	here means 	the 	average 	percentage
of 	seats 	sold on an 	aircraft.
5 	The 	formulas 	used 	for 	the various 	computations 	are
provided 	in Section II 	of 	this 	appendix.
6 	Although estimates 	of 	time value vary, 	the 	estimate 	of
$10.00 	per hour 	is 	actually 	a 	very conservative 	estimate 	of 	the
value 	of 	time. 	For example, 	Morrison and Winston 	(1989) 	value
passenger time 	at 	$42.55 	per hour.
7 	FAA data 	indicate 	that 	of 	total 	operations 	at 	O/FW, 	74%
were 	air carrier operations, 	23% 	were 	of 	commuter operations, 	and
3' 	were 	general 	aviation operations.
26

Table A-I 	shows 	the 	dollar 	savings 	to 	passengers 	remaining
at 	D/FW under 	the 	assumptions 	stated. 	If 	10% 	of 	the 	operations
shift 	from 	O/FW 	to 	Love 	Field, 	and 	the 	elasticity of 	delay 	time
with 	respect 	to 	operations 	equals 	3, 	the 	remaining passengers 	at
D/FW would 	save 	$19,307,399. 	Finally, 	even 	if 	the 	delay 	per
operation 	is 	applicable 	to 	only 	20% 	of 	the 	flights, 	the 	savings
would 	still 	be 	substantial.'
Table A-I
Dollar Savings 	To 	Remaining Passengers 	at 	D/FW
Initial Minutes 	of 	Delay Per Operation 	= 10
Elasticity of 	Delay
With 	Respect 	to 	Operations
Percent 	Shift 	in Operations 	1 	3 	5
5%
10% $3,388,583
$6,435,800 $10,165,749
$19,307,399 $16,942,915
$32,178,998
II. 	Formulas 	and Computations 	for 	Delay Analysis
The 	computations 	given 	below are based on 	the 	assumption
that 	5% 	of 	traffic 	shifts 	from D/rw to 	Love 	Field, 	that 	delay 	per
operation at O/FW 	is 	10 minutes, 	and 	the 	elasticity of 	delay 	with
respect 	to 	operations 	equals 	3.
1. 	The 	number 	of 	air carrier operations 	shifting 	from 	D/FW 	to
Love 	Field: 	(ACS)
ACS 	= total 	number 	of 	operations 	at 	D/FW 	* percent 	of 	DjFW
operations 	that 	are 	air carrier 	* 	percentage of 	air 	traffic 	that
shifts 	from 	DjFW to Love 	Field.
24,977 	= 675,061*.74*.05
2. 	Total 	Number of 	Passengers 	Shifting From D/FW 	to 	Love 	Field:
(PSHIFT)
, 	These 	savings 	can be 	computed by multiplying 	all 	entries
in 	Table A-I 	by 	.2.
27

PSHIFT 	= ACS 	* 	passengers 	per 	air carrier operation.
2,048,114 	= 24,977*82
3. 	Value 	of 	Time Saved 	By 	Passengers 	that 	Shift From O/FW 	to
Love 	Field: 	(VTSHIFT)
VTSHIFT 	= PSHIFT 	* 	the 	10 minutes 	of 	delay per operation
saved by moving 	from 	O/FW to 	Love 	Field 	(expressed 	as 	a 	portion
of 	an 	hour) 	* the 	value 	of 	passenger time 	per 	hour.
$3,413,523 	= 2,048,114*10/60]*$10
4. 	Number of 	Passengers 	that 	Remain 	at 	O/FW: 	(PSTAY)
PSTAY 	= remaining 	air 	carrier operations 	at 	O/FW 	*
passengers 	per 	air 	carrier operation 	+ 	commuter operations 	at
O/FW 	* 	passengers 	per commuter operation + general 	aviation
operations 	at 	O/FW 	* 	passengers 	per 	general 	aviation operation.
40,662,995 	= {675,061*.74-24,977)*82 	+ 	(675,061*.23)*11 	+
(675,061*.03)*2
5. 	Time 	Saved by Passengers 	that Remain 	at 	O/FW: 	(TSAVE)
TSAVE 	• 	Average minutes 	delay 	at 	O/FW 	* 	Percentage 	of 	air
travel 	that 	shifts 	from 	O/FW 	to 	Love 	Field 	* 	Elasticity of 	delay
with 	respect 	to commercial 	operations.
1.S 	• 	10 	* 	.05 	* 	3
6. 	Value 	of 	Time 	Saved By Passengers 	that 	Remain 	at 	O/FW:
(VTSTAY)
VTSTAY 	= PSTAY 	* 	TSAVE 	(expressed as 	a 	portion of 	an 	hour) 	*
value of 	passenger 	time 	per hour.
$10,165,749 	= 40,662,995*(1.5/60)*$10
28

Appendix B
I. 	Savings 	in Commuting Time To and From the Airport
D/FW 	is 	approximately 	10 miles 	farther 	from 	downtown 	Dallas
than 	Love 	Field. 	We 	assume 	that, 	on average, 	the 	commute 	to 	Love
Field 	is 	12 minutes 	shorter 	than 	the commute 	to 	D/FW. 1 	If 	we
assume 	that 	5% 	of 	the 	operations 	move 	from 	D/FW 	to 	Love 	Field,
that 	30% 	of 	the passengers 	on 	these 	flights 	are 	travelling 	to 	or
from 	downtown 	Dallas, 	and 	that 	passenger time 	is 	valued 	at
$10/hour, 	then 	the 	savings 	to 	these 	passengers 	would equal
$1,228,868 	per year. 2 Calculations 	are 	given below based on 	the
these 	assumptions. 	This 	estimate depends 	on 	the 	speed of 	travel
and 	the 	number of 	passengers 	affected by the 	shift 	in operations.
For example, 	if 	10% of 	the 	operations 	shift 	from 	D/FW 	to 	Love
Field the 	savings 	would 	increase 	to 	$2,457,736.
Value 	of 	Time 	Saved Because of 	Shorter Commuting Time:
(VSHORT)
VSHORT 	= PSHIFT 3 * 	the 	difference 	in commuting 	time 	between
D/FW and Love,Field 	(expressed 	as 	a 	portion 	of 	an 	hour) 	* 	the
proportion that 	commute 	from 	Dallas 	* value 	of 	passenger 	time 	per
hour.
$1,228,868=2,048,114*(12/60)*.30*$10.
II. 	OUt-of-Pocket Savings 	Prom the Shorter Commute
As 	before, 	we 	assume 	that 	the 	direct 	costs 	of 	traveling
affects 	30% 	of 	the passengers 	who would use 	flights 	from 	Love
Field 	instead of 	D/FW. 	If 	it 	costs 	$0.25 	per mile 	to 	commute,
then 	th~ additional 	passengers 	that would use 	Love 	Field 	save 	an
additional 	$1,536,086. 	This 	calculation 	is 	performed below. 	As
in our 	previous 	analysis, 	the 	savings 	will 	depend upon 	the
percentage of 	the 	operations 	that 	shift 	from 	D/FW 	to 	Love 	Field,
1 	This 	impiicitly assumes 	that 	after 	the 	shift 	in
operations 	from 	D/FW 	to 	Love 	Field 	travelers 	could 	average 	50
miles 	per 	hour 	to 	either 	airport. 	If 	travelers 	average 	less 	than
this 	speed 	the 	savings 	in minutes 	from 	driving 	the 	10 	fewer 	miles
would 	be 	greater.
2 	An 	additional 	percentage 	of 	the 	passengers 	shifted 	from
D/FW 	to 	Love 	Field, 	commuting 	to 	or 	from 	places 	other 	than
downtown 	Dallas, 	can be 	expected 	also 	to 	have 	a 	shorter commute
and 	therefore would experience 	savings.
3 	See 	the 	discussion 	in Appendix A for 	the 	calculation 	of
PSHIFT, 	the 	number of 	passengers 	that 	shift 	from 	D/FW 	to 	Love
Field.
29

as 	well 	as 	upon 	the 	direct 	cost 	of 	traveling 	the 	additional
miles. 	For example, 	in 	the 	above 	scenario, 	if 	10% 	of 	air 	carrier
operations 	shift 	from 	D/FW 	to Love 	Field, 	the 	savings 	would 	be
$3,072,171.
OUt-of-Pocket 	Savings 	from 	Shorter Commute: 	(OUTPOCKET)
OUTPOCKET 	= PSHIFT 	* 	the 	cost 	of 	commuting 	an 	extra 	10 	miles
* 	the 	proportion of 	passengers 	that 	commute 	from 	Dallas.
$1,536,086 	= 2,048,114*($0.25*10)*.30
30