The (W)right to Fly

How little Legend Airlines beat mammoth American at its own game

In July, Shelby attached a rider to the Senate version of the $42 billion transportation bill that would allow Legend to fly out of Love Field. At the last minute, Sen. Hutchison fought for the addition of a provision that would give the Dallas City Council veto power over the rider within 90 days of its passage. But first the bill had to go to the House-Senate Conference Committee.

Shelby's provision was supported by other powerful members of Congress, including House Speaker Newt Gingrich, by the Teamsters Union, and by a consortium of big and mid-sized corporations concerned about the rising cost of airline travel.

Legend's battles were far from over. It still had to take on the local establishment and almost the entire North Texas congressional delegation, who were mounting their own campaign to oppose any changes at Love Field--a campaign that Legend strongly felt was orchestrated by and on behalf of American.

The opposition trotted out all the old arguments. Ignoring his own poll of his constituents that showed 70 percent favored repealing the Wright Amendment, U.S. Rep. Martin Frost, whose district includes both Dallas and Fort Worth, told The Dallas Morning News he was against Legend's efforts because "it would upset the delicate balance between Dallas and Fort Worth."

"I am the only congressman who has lived in both cities and represents [both] cities, and I can tell you that Fort Worth views Dallas the same way that Oak Cliff views North Dallas--with complete distrust," Frost told the Observer. He feared that any change in the Wright Amendment would lead Fort Worth to make good on threats of suing Dallas for violating the 1968 bond covenants.

While his fears were realized--Fort Worth filed suit against the city of Dallas and Legend Airlines on October 10, claiming long-haul flights from Love Field would breach the 1968 bond covenant between the two cities--the suit is spurious, as is Fort Worth's feelings of mistrust toward Dallas.

A close reading of the bond ordinance reveals that, technically, Fort Worth's Alliance Airport violates the bond covenant. Alliance is the main Southwest hub for Federal Express, which is a certificated carrier, according to FAA guidelines. And the covenant specifically protects D/FW airport from competition by certificated carriers at other regional airports--unless otherwise permitted by law or voted for by a majority of the D/FW board.

The board did not vote on Alliance, according to D/FW spokesman Joe Dealey. He argues--incorrectly--that the covenant refers to passenger service.

Meacham Field, where New Mexico-based Mesa Airlines recently began intrastate airline service, may also be a violation of the bond covenants. Dealey argues that intrastate service is exempt, but nowhere in the covenants does such an exemption exist.

"It is selective enforcement," says McArtor. "Why is what happens west of D/FW is OK, but what happens east of D/FW is troublesome? Dallas has gotten the short end of the stick on a lot of these issues."

The lawsuit also claims that the agreement called for the two cities to close their respective airports, but a copy of the agreement obtained by the Observer says no such thing. Interestingly, Fort Worth is being represented in the suit by the law firm of Kelly, Hart and Hallman, whose name partner Dee Kelly sits on the board of AMR Corp.

The next argument politicians and American executives inevitably make is that increased flights out of Love will undermine D/FW's growth. Crandall has threatened to split his hub between Love and D/FW if the Wright Amendment is ever fully repealed.

The same argument was made in 1979 when there was a fight to reopen Midway Airport in Chicago, says Brian Campbell, one of the founders of the now-defunct Midway Airlines. Almost 20 years later, Midway Airport is thriving and O'Hare is still the No. 1 airport in the country in terms of flights. And neither American nor United, the two dominant carriers at O'Hare, split their hubs, as they threatened they would.

Not only is it unlikely that American would move half its operation to Love Field, but, because of the agreement it signed almost 30 years ago to move to D/FW, it cannot do so without permission from the D/FW Board. When Continental--one of the eight carriers that signed that agreement--wanted to move some of its operations to Love in the 1980s, it had to sue to do so. Continental won the suit.

As the conference committee was hashing out the rider Shelby attached to the transportation spending bill, Crandall was busy hedging his bets. A division of AMR purchased the old Braniff terminal at Love Field. American insisted that one of its units was in dire need of office space and that the airline was not buying up gates. But Legend, which had been negotiating to lease those gates itself, knows how much American paid for its new offices, and it was a premium.

"I think the move was intended to give us crib death," says McArtor, who says Legend has other options for gates.

A last-minute maneuver almost did kill Legend's chances to get off the drawing board. Sources say U.S. Rep. Kay Granger, Fort Worth's former mayor, persuaded a high-ranking legislator to send a letter to Newt Gingrich questioning the safety of Love Field if restrictions are removed. In the letter, she included undated testimony on the issue from Norm Scroggins, former regional director of the FAA. It turns out Scroggins raised those questions in 1991. The issues have since been addressed by a multi-million-dollar overhaul the FAA recently conducted of the air-traffic system for the region. The changes, which went into effect last year, double the airspace capacity.

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