By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
By Eric Nicholson
It takes a lot to shock Jerry Bartos, but what the former city council member and foe of government waste, special interests, and dirty politics heard this day was alarming even by Dallas standards.
A cranky fiscal conservative who had become the city's most vocal opponent of the Wright Amendment, the anachronistic federal law that restricts air travel out of Love Field, Bartos was about to learn just how low American Airlines would stoop to protect the amendment and the near-monopoly it gives the airline in the Dallas-Fort Worth area.
Bartos already knew something about American's bag of dirty tricks. There was the time in 1989, for instance, when a member of Bartos' ad hoc committee studying ways to change the Wright Amendment came to him in tears. The man, Dick Williamson, worked for the Texas Credit Union League of Texas, which served all the credit unions in the state. The credit union for AMR Corp.--American's parent company--was its biggest member. When someone from American learned Williamson was on Bartos' anti-Wright Amendment committee, the company threatened to leave the league unless he withdrew. A frantic Williamson, due to retire the following year, told Bartos he feared he would lose his job if he did not disavow allegiance to the group.
Bartos knew of other similar stories, but none had involved him directly--or so he thought.
But in the winter of 1993, shortly after Bartos left office, former Dallas Times Herald publisher Tom McCartin made a startling confession to him. McCartin had invited Bartos and a DART board member to accompany him on a trip to St. Louis. McCartin's fortunes had waned in the years since he was forced out of the Herald in the mid-1980s. In recent years he had been working as a business consultant, and he was taking Bartos and the DART board member to see a client who manufactured railway safety equipment that might be of interest to Dallas' light rail system.
As the private jet carrying the trio scissored across the sky on its way to Missouri, McCartin turned to Bartos and told him there was something he had to get off his chest. Not long ago, when he was hurting for money, he said, he had agreed to do some work for American Airlines. His single assignment was to dig up dirt on Bartos in an effort to discredit him and his campaign to repeal the Wright Amendment, according to the DART board member on board, who requested that he not be identified.
Before the plane touched down, McCartin apologized to Bartos for his unsavory behavior and assured him that he was unsuccessful in his efforts to find any mud to sling. That was small comfort to Bartos.
McCartin died in February 1994, but his confession was not far from Bartos' mind when two businessmen came to see him last year. They told him they wanted to start a lower-cost, higher-comfort airline catering to the business traveler. They planned to launch the airline out of Love Field and fly to under-served destinations beyond Texas' four adjacent states.
Such long-distance flights out of Love generally are prohibited by the Wright Amendment. But using a little-known provision in the amendment that allowed long-distance flights for planes with 56 seats or fewer, the men planned to take large planes and reconfigure them with 56 roomy, first-class seats--sold at coach prices or below--and fill the rest of the plane with cargo to help defray their costs.
The men had gone to Bartos because he was such a fountain of information on the history of the Wright Amendment and "on where people's ties were." When one of the men said they thought they could get support for their plan from Robert Crandall, chairman of AMR, Bartos told him he was naive.
"American Airlines will end up torturing you," Bartos warned the men. "They play really dirty."
Bartos' words would prove prophetic.
"Welcome to the team! Welcome to the war!"
That is how T. Allan McArtor greets new employees--a work force that now totals a "battalion of eight"--of his fledgling Legend Airlines, housed in a half-empty office suite at the northeast corner of Love Field. Then he hands them an olive-drab pith helmet emblazoned with silver and gold stars, the company's logo.
A highly decorated Vietnam War fighter pilot, McArtor does not use war imagery lightly. But there is no other way for Legend's president and chief executive officer to describe what he and Dallas businessman Bruce Leadbetter, Legend's principal investor, have been through in the last year as they've fought on the homefront of Dallas and on the political battlefields of Washington, D.C., to get their airline off the ground.
Legend found its staunchest opponents to be the political and business establishment of a community that prides itself on being among the most entrepreneurial and business-friendly in the country. The ammunition their enemies used consisted mostly of an expansive, emotionally charged campaign of misinformation and hypocrisy, orchestrated in large part by American Airlines and the local politicians it controls. The old-guard business establishment, represented by the Dallas Citizens Council, publicly opposed Legend. While the largest companies in Dallas privately supported Legend, Leadbetter says, none would say so publicly, afraid that they would anger American.
"We really kicked over a hornet's nest," says Leadbetter.
That is an understatement. By attempting to upset the Wright Amendment status quo, Leadbetter and McArtor took on an issue that rivals the Kennedy assassination in the amount of emotion, suspicion, and controversy it engenders locally.
The U.S. Department of Transportation fired the first salvo at Legend when it issued a strange ruling last fall that said the airline could fly only planes originally designed for 56 or fewer passengers, not the reconfigured larger jets in Legend's proposal. The ruling, which almost clipped Legend's wings permanently, had American Airlines' fingerprints all over it. Within days of the final ruling, American made large contributions to several national Democratic warchests.
Although McArtor always has maintained that Legend intended to fly within the strictures of the Wright Amendment, Robert Crandall accused him and his partner of wanting to repeal the amendment. Moreover, Crandall claimed that Legend, which expected to begin service with six planes, would destroy Dallas/Fort Worth International Airport and the economy of the entire metroplex. In an interview with the Dallas Business Journal last October, he threatened "to sue everyone in America to close Love Field" if the Wright rule was altered in any way. Crandall refused to be interviewed for this story.
Then a chorus of elected officials--from Dallas Mayor Ron Kirk to U.S. Rep. Dick Armey and Sen. Kay Bailey Hutchison--chimed in, claiming that Legend's efforts would cause a civil war between Dallas and Fort Worth by violating an agreement the cities made to build D/FW airport 30 years ago. Fort Worth also threatened to sue if Legend was successful.
McArtor and a handful of Legend lobbyists spent the summer in the halls of Congress battling legions of American's lobbyists and an onslaught of accusations against their company that made them out to be the economic equivalent of the Antichrist. Then, at the 11th hour, they had to contend with a final, desperate assault launched by former Congressman Jim Wright and a handful of North Texas legislators using out-of-date information that questioned the safety of increased air traffic out of Love Field.
"We were blamed for everything," says a weary McArtor. "It is amazing the amount of opposition American created and the lengths to which people will go to create misinformation."
A close analysis and investigation of every argument posited by the opposition to Legend shows that few facts support any of them. "Every story the politicians tell about the need to preserve the Wright Amendment--protecting the bond holders, keeping the peace between Dallas and Fort Worth, noise, safety--they are all code words used to protect American Airline's monopoly," says Bernard Weinstein, director of the Center for Economic Development at the University of North Texas.
And that monopoly is the reason, Weinstein and industry analysts say, why Dallas air travelers pay so much--two to three times more than Houston passengers pay on comparable routes. American Airlines' airfares are 67 percent higher in Dallas, where it dominates 70 percent of the market, than throughout the rest of its domestic route system, according to a study conducted last year by the Houston-based Campbell Aviation Group. The price differential can be astounding. The price for a no-advance ticket purchase on American Airlines from D/FW to Phoenix, for instance, is $1,142. (The reservationist quotes the price one way--perhaps to soften the blow.) The same ticket from Houston Intercontinental to Phoenix costs $538. The ticket price from Austin is even cheaper--at $364--and includes a stop in Dallas to pick up the passengers who paid more than three times the amount to go to the same place.
Last summer, when the Dallas Observer first began talking to McArtor and Leadbetter about their struggle, McArtor, who was director of the Federal Aviation Administration in the late 1980s, characterized American Airlines' fierce opposition to his airline as the epitome of anticompetitive practice. "They want all the marbles," he said. "But by fighting so hard to protect the few they might lose to Legend, they risk losing a whole lot more."
And that is exactly what happened. Stymied by the Transportation Department, McArtor and Leadbetter looked for help in Congress. It took the better part of the year, but they found an unlikely ally in Alabama Sen. Richard Shelby, who saw Legend's plight as more than just a local issue, but a symbol of the problems plaguing the airline industry nationwide. Like many congressional leaders, Shelby was concerned about spiraling airfares and the lock the large carriers had on the country's major hubs, which were allowing them to control market forces.
But Shelby did not stop at championing Legend's cause. He enlisted the help of the most powerful men in Congress to remove some of the limits of the Wright Amendment, which they viewed as government protection of one of the biggest, most profitable airlines in the country.
By waging such a heavy-handed campaign to keep Legend grounded, American Airlines thrust the Wright Amendment into the national spotlight, which illuminated just how little support it had in Congress. Now it is just a matter of time before the Wright Amendment is history.
In 1993, when Bruce Leadbetter bought Dalfort Aviation, an airplane maintenance facility based at Love Field, he had no intention of starting an airline. And he certainly had no intention of taking on the behemoth American Airlines, an $18 billion company and the largest local employer, with more than 30,000 employees.
"I would have had to inhale something to want to go head to head with American Airlines," Leadbetter says.
By comparison to American and Crandall, Legend and Leadbetter are the little guys. But Leadbetter is by no means a business midget. A civil engineer by training, Leadbetter started out as a business agent to Lucille Ball in Hollywood in the early 1960s, where he caught the attention of California Gov. Pat Brown, who appointed him to head the Hollywood Pavilion during the New York World's Fair. He was part of a committee that helped struggling pavilions, including the one from Texas, which was foundering because of the financial reverses suffered by the sponsoring Angus Wynne family, owners of Six Flags.
In the course of consulting with the Wynnes' company, Leadbetter made numerous contacts in Dallas and eventually moved here after clinching a deal that converted an unfinished downtown Dallas apartment complex into the Fairmont Hotel. Through the years, he would add other stellar projects to his portfolio. He became partners with the Chicago-based Pritzker family, who own the Hyatt Hotel chain. With the Pritzkers, Leadbetter helped take Braniff Airlines out of bankruptcy in 1982 and then sell it in 1987. Dalfort Aviation was part of the Braniff package, but the Pritzkers and Leadbetter held on to it for a while. Leadbetter sold his interest in Dalfort in the late 1980s and acquired it again in 1993.
Leadbetter had envisioned expanding Dalfort's operation from heavy maintenance to airplane manufacturing. He was negotiating a deal for Dalfort to do the final assemblage on the McDonnell Douglas 95 aircraft, but then the machinists' union got involved. They threatened a work stoppage on C-17 cargo aircraft if they lost jobs on the MD-95 in St. Louis and Long Beach, Calif., to Texas. McDonnell Douglas caved, and Dalfort lost the deal.
Leadbetter was determined to figure out a way to increase Dalfort's operations and work force. He wanted not just to improve his bottom line, he says, but to make better use of the untapped resource of Love Field, which had been operating at less than one-third capacity for the past 30 years.
While reading assorted Love Field leases, as well as the infamous Wright Amendment and the history of how it came into being, Leadbetter conceived the idea for Legend.
The Wright Amendment consists of a single page of predictably dull legislative language. But the events that led to its passage include some of the most extraordinary and colorful moments in the history of Dallas and Fort Worth's bitter rivalry--not to mention the most vicious, under-handed battles in the history of airline competition.
Fort Worth has always had an inferiority complex when it comes to Dallas, and nowhere was that more apparent than in its jealousy of Dallas' thriving Love Field. In the early 1950s, Fort Worth decided to build its own airport to compete with Love--the Amon Carter Field, built halfway between Dallas and Fort Worth. Carter Field--later named Greater Southwest International--never attracted the airlines and passengers for which city fathers had hoped. Jokingly referred to as the longest bowling alley in the world, Greater Southwest and its concourses languished as Love Field continued to grow and prosper, much to Fort Worth's chagrin.
Both cities continued to ask Washington to ply them with more federal dollars for their respective airfields, which didn't make much sense to the Civil Aeronautics Board, the precursor to the Federal Aviation Administration. Love Field was landlocked, with no more room to grow, and the board was unwilling to keep shoring up Fort Worth's moribund airport a mere 10 miles away from Love. The CAB gave the two cities an ultimatum: Either they jointly select a site for a regional airport, or the feds would do it for them.
"It was a shotgun marriage arranged to quell the internecine warfare between Dallas and Fort Worth," recalls Walt Humann, a longtime Dallas businessman and member of the elite Dallas Citizens Council.
The cities finally put their rivalries behind them and chose a location that straddled the Tarrant and Dallas County lines--but at the time seemed far from civilization. In 1968, the two cities drew up a concurrent bond ordinance that empowered the 11 members of the Dallas/Fort Worth Regional Airport Board to issue bonds to build the airport. The ordinance also called for the two cities to support the full development of D/FW airport by the earliest practical date by phasing out service by "certificated air carriers" at their respective airports, including Love, Greater Southwest, Meacham, and Redbird. The airlines at Love Field signed agreements in 1970 to transfer their operations to D/FW, which opened in 1974.
Fort Worth eventually bulldozed Greater Southwest, and Love Field might have met the same fate--had it not been for a plucky upstart intrastate carrier called Southwest Airlines. While the two cities were busy preparing for the birth of their regional airport and wooing American Airlines to move its corporate headquarters there, Southwest was fighting lengthy, expensive administrative and legal challenges to their right to exist mounted by Texas International and Braniff.
The two bully airlines tried to destroy Southwest with underhanded--and illegal--tactics, including boycotting Southwest's vendors, blackballing it from membership in the airline credit-card system, and keeping its planes from using the fuel hydrant system at Houston Intercontinental Airport.
By the time the dust settled, Southwest, which was hemorrhaging money, had won the legal battle--thanks to its wily attorney, Herb Kelleher, now the company's CEO, who at one point deferred his legal bills and paid all the court costs. And Braniff and TI were indicted by the federal government for conspiring to put Southwest out of business. The companies pleaded no contest to violating the Sherman Anti-Trust Act.
But Southwest's battles were far from over. Based at Love Field, Southwest grew rapidly throughout the state because of its low-cost, low-frills formula. When it came time for airlines to move from Love to D/FW airport, Southwest refused. The carrier was not technically in existence when the bond covenant was drawn, and it never signed the subsequent agreement to move. Dallas and Fort Worth were furious, and both cities sued Southwest. Again Southwest emerged victorious in a federal court ruling that was ultimately upheld by the U.S. Supreme Court.
Federal Judge William Mac Taylor threatened to jail Dallas City Council and its city attorney if they didn't stop the legal harassment of Southwest, according to Bartos.
Southwest's victory and subsequent service out of Love Field did little damage to the increasing fortunes of D/FW, but probably created eternal enmity on the part of Fort Worth. In 1978, Congress deregulated the airlines, and Southwest applied for federal authorization to begin interstate travel. It launched its first route from Houston's Hobby Airport to New Orleans. It was an immediate success. When Southwest tried to inaugurate a similar route from Love Field, a furor erupted.
Former House Majority Leader Jim Wright vehemently opposed Southwest's application to fly from Dallas to New Orleans. When he lost, he marched into the House and convinced his colleagues in one day to ban all interstate service from Love Field. In the ensuing months of intense lobbying, the Senate finally talked Wright into compromising. The result was the 1979 Wright Amendment, which banned interstate travel from Love Field except to four adjacent states--Oklahoma, New Mexico, Arkansas, and Louisiana. To this day, Southwest cannot fly nonstop beyond Texas' bordering states. This leads to an absurd traveling masquerade. For example, if a Dallas passenger is flying to, say, Phoenix, and that is his Southwest flight's ultimate destination, he has to get off the plane when it lands in Albuquerque, get his baggage, wait an hour, then recheck his bags and board the next flight heading for Arizona.
At the time, Wright's rule arguably was needed to bolster Dallas and Fort Worth's investment in its new soon-to-be international airport, and it probably went a long way toward brokering a tentative peace between the two cities. In a bit of revisionist history, Jim Wright has recently said the amendment also was passed because of safety concerns at Love Field. But several air-traffic controllers at Love tower who talked on the condition of anonymity said there never was a safety issue.
By the time Leadbetter read the Wright Amendment in 1994, D/FW had become the second-busiest airport in the world and was predicted to become No. 1 by 2000.
While Leadbetter was firmly in the camp that believed the time for the Wright Amendment had come and gone, he had no intention of trying to repeal it. He was interested in the provision that allowed for long-haul service from Love in planes with 56 or fewer seats. He didn't know why that exemption was in there. At the time, the smallest plane had double the capacity, and no airline could remain profitable flying half-empty. Leadbetter figures that might, in fact, have been the point.
Over the next two years, Leadbetter researched his plan, modeling it on Midwest Express out of Milwaukee, which caters to business travelers with all first-class seating at coach prices, unlimited carry-on, good food, and expedient check-in. Spiraling airfares over the last decade made the possibility of flying a 56-plane at a profit feasible, especially if it carried cargo.
Leadbetter commissioned a survey of the 50 top businesses in Dallas, as well as travel companies catering to businesses, asking what they thought of his idea for a new airline. The results were almost 100 percent in favor of what Leadbetter wanted to do. Several respondents even offered to invest.
"I really didn't think American would object," says Leadbetter. "We were going to fly to markets that neither Southwest nor American serviced, like from here to Rochester or Birmingham. We would be giving a little bit of an alternative, but not enough to create a problem. I figured Crandall would see it as a way to relieve the pressure valve on the Wright Amendment."
And the pressure was there. In 1992, the Transportation Department released a study showing that repealing the Wright Amendment would save travelers $183 million annually, while having a negligible effect on the growth of D/FW airport, which was poised for a multi-million-dollar expansion. But it wasn't just Dallas residents who were getting fed up with the inconvenience and expense the Wright Amendment caused. Business travelers from nearby states such as Kansas and Tennessee were complaining to their members of Congress about being locked out of non-stop service to Love Field and the lack of low-cost carriers to D/FW airport.
When discount airlines did try to make inroads at D/FW, American squashed them like bugs. For example, in 1996 Vanguard Airlines started flying from Kansas City to D/FW. In response, American added several routes, slashed airfares, and offered special frequent-flyer miles. When Vanguard retreated, American discontinued the routes and raised their prices.
Several Kansas lawmakers tried numerous times over the years to introduce legislation to kill the Wright rule--to no avail. A frustrated Bob Dole, the former senator from Kansas, wrote a scathing letter to Crandall in the 1990s that stopped short of calling him an out-and-out hypocrite. In his droll way, Dole pointed out that the American CEO, who had recently argued for removing airline restrictions in European markets and loosening certain anti-competitive practices at some lucrative U.S. hubs, was being two-faced.
"The bottom line is that if you are truly for real competition, in favor of the flying public and against contradictory involvement by the government, you will support a repeal of the absurd restriction imposed on Dallas Love Field," Dole wrote. "No rational argument can be made to justify the exorbitant fare differences between destinations in Kansas and Dallas as opposed to those within Texas and contiguous states and Dallas..."
In light of this mounting opposition to the Wright Amendment, Leadbetter thought his airline concept would offer a compromise that might appeal to American and its head honcho.
"Bartos was right," Leadbetter says. "I was very naive."
Leadbetter began lining up potential investors, who would eventually need to kick in $32 million if Legend took off. He began looking for a possible CEO and found a good candidate in McArtor, who had spent most of his career at Federal Express.
Before McArtor committed, Leadbetter took the first important step toward making his idea a reality. He needed a clarification from the Department of Transportation that reconfigured planes with 56 seats were in compliance with the Wright Amendment. Based on both the FAA's and DOT's previously stated definition that maximum passenger capacity meant the number of passenger seats for which a plane is configured, not the number for which it was designed, Leadbetter didn't expect any problems. He asked DOT to interpret the amendment in its least restrictive manner, since the purpose for the amendment--providing economic safeguards for D/FW airport--had ceased to exist.
He wrote to the Transportation Department in May 1996 and did not hear anything back for almost two months, despite repeated phone calls to DOT's chief counsel, Nancy McFadden. Finally, transportation officials agreed to meet him in August. He had his first inkling his request was doomed when he learned that DOT was meeting with American Airlines officials that afternoon. He would later learn from DOT officials that American Airlines had submitted a briefing paper on Leadbetter's proposal and that the Transportation Department also sent some information to the White House concerning Legend's issue.
In mid-September, DOT dealt Legend a setback. Using the Webster's Dictionary definition of capacity, McFadden ruled that Legend's reconfigured planes did not meet the definition. Further, she said DOT believed that Congress' intent when passing the Wright Amendment was to limit long-distance service. As for whether the amendment was no longer necessary, McFadden told Leadbetter that was best left to Congress to decide.
Rather than kill Legend Airlines, the DOT order strengthened its resolve. By now, McArtor was on board, and he had his work cut out for him.
"I fell in love with the idea of Legend," he says. "It had great potential. I wanted to take my 30 years of aviation experience and build an airline at Love Field the way I think an airline should be built. As a former FAA administrator, I think it is a crime to have a billion-dollar asset like Love Field all paid for and sitting there underutilized."
The DOT ruling, he decided, was just a minor setback. He and Leadbetter devised a strategy to get their airline off the ground. Technically, the DOT decision did not keep them from flying. They could use new regional jets built with 50 seats, which is what Continental is soon going to be flying out of Love Field. But for Legend, regional jets were too costly. Besides, there was a waiting list for them, which would push back the airline's starting date by more than a year. And the jetliners--which are manufactured in Canada and Latin America--wouldn't require heavy maintenance for a while, which would mean no new jobs created for Dalfort.
Legend was going to stick with its original plan. The first thing its leaders decided to do was appeal the DOT decision to the 5th U.S. Circuit Court of Appeals. They knew that was going to be a lengthy and expensive proposition, and their chance for success was uncertain.
Curious about just how much input American Airlines had in the DOT decision, Leadbetter instructed his lawyers to investigate. They also wanted to know whether there had been any contact between DOT and the White House or any Democratic Party fundraising committees regarding Legend Airlines.
Leadbetter had reason to be suspicious. According to the public citizens' lobby Common Cause, American Airlines--which donated more money during the last presidential election than all the other major airlines combined--gave almost $250,000 to the Democrats within days of DOT's final ruling on Legend.
American Airlines spokesman John Hotard says the timing was purely coincidental. "If all the money we gave to the Democrats bought American all the favors our critics claim it did, then we've never gotten more bang for the buck."
"Maybe it was purely a coincidence," says Leadbetter. "But from what I've seen of how the political process works--from political contributions to high-priced lobbyists--the little guy doesn't have a chance."
Lawyers for Legend filed a request for documents under the federal Freedom of Information Act with DOT, but "were stiff-armed at every turn," says McArtor. First DOT lost the original request, then took five months to fill the request. Except for one slim DOT document, the agency released only Legend's own documents. They refused to release some materials American had submitted as well as a draft of a document that--curiously--was intended for the White House.
Legend considered filing suit to get DOT to release the rest of the materials, but they ultimately decided against it. "You don't tug on Superman's cape," says Leadbetter.
Leadbetter and McArtor thought the surest and swiftest path to gaining clearance for the airline was through Congress. But even before they sought anyone's help, U.S. Rep. Joe Barton came to their aid. A Republican congressman from Ennis whose meandering district includes part of D/FW Airport, Barton was an old friend of Leadbetter's. In fact, several years earlier, Barton's son worked for Dalfort for two years after he graduated from Texas A&M with an engineering degree.
After reading about the DOT ruling on Legend, Barton took it upon himself to propose an amendment that would open up Love Field to the type of large aircraft Legend planned to fly. When Crandall learned about it, he dispatched representatives to pay Barton a visit and called him himself. According to a spokesman in the congressman's office, Barton told Crandall he was better off letting Legend quietly have its way: If he fought them, he would risk making a federal case of the entire Wright Amendment. Barton cautioned him that the government restriction had little support in Congress, and that he might wind up losing the whole thing.
Crandall refused to heed Barton's advice. The next day, he sent a special memo to his 30,000 local employees imploring them to voice their objections to Barton's amendment. "This amendment would gravely harm American's operations at D/FW, by bleeding off valuable local traffic from D/FW to Love Field," Crandall's memo read. "That, in turn, would have a terribly adverse effect on American relative to its competitors in Atlanta, Denver, St. Louis, Houston, etc."
For the next three days, American employees practically shut down Barton's Washington and district offices by flooding them with phone calls. Barton eventually withdrew the amendment, but called for hearings on the Wright Amendment for later in the year.
"Everything with American Airlines is nuclear war," says McArtor. "There is no compromising. In our wildest expectations, we couldn't put a dent in American's operations. If we met our seven-year-growth plans, our revenues would be the equivalent of one year's growth at D/FW. We'll have no more impact on D/FW than opening a runway in Lubbock would."
As Legend's appeal languished at the 5th Circuit and lawyers filed repeated appeals under the Freedom of Information Act to shake free documents from the Transportation Department, McArtor scoured the halls of Congress looking for someone to replace Barton to champion Legend's cause.
Armed only with his story about a need for more airline competition, McArtor says, he found many Republicans and Democrats who were sympathetic to his plight and saw his struggle as more than a local issue. He was assisted by a newly formed association for small airline carriers, headed by Ed Faberman, a former government lobbyist for American. Faberman makes no apologies for spending eight years peddling influence on behalf of Crandall, a man he now likens to "a bad sheriff" running off the competition in "his company town."
"I'm not pretending that [while working for American] I didn't made arguments that are inconsistent with the arguments I'm making today," says Faberman over the phone from his Washington office. "Sometimes that happens. But life has changed dramatically. The major airlines have become enormously profitable at the same time they have run off competition. There is a fine line between free enterprise and predatory behavior, and many of the large carriers continually cross it. There is a public need, a long-term need, for people to step up to the plate and allow the free-enterprise system to function. Soon there will be no competition at all, and if you think the fares you are paying now are too high, wait till 2002."
In early summer, McArtor found the person who was willing to step up to the plate. Sen. Richard Shelby, a Republican from Alabama who recently assumed the helm of the powerful Senate Appropriations Subcommittee on Transportation, had never heard of the Wright Amendment. Introduced to the senator by one of Shelby's former aides who had become a lobbyist, McArtor convinced him that Love Field restrictions were an "interstate commerce issue." Like Kansas legislators before him, Shelby began to blame the Wright Amendment for "gouging" his constituents.
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.
Jim Wright also questioned the safety of Love Field in local interviews, talking publicly about the amendment for the first time in years.
"We don't have a safety issue at Love Field," says a longtime controller at the Love tower, who asked not to be named. "And the Wright Amendment never was--and never will be--connected to safety concerns."
When questions of safety are interjected into debate over Legend, McArtor fumes. "When I was FAA director, I used to throw people out of my office who hid behind safety arguments to make a political statement. It's inappropriate, cowardly, and unfair to the public who don't understand the air traffic control system."
At 4 p.m. on October 8, word came from the House-Senate Conference Committee that Legend had finally achieved legislative success. Hutchison's provision giving Dallas City Council veto power did not survive. What's more, three additional states--Kansas, Alabama, and Mississippi--were unshackled from the bonds of the Wright Amendment. Two days later, the bill was passed by the House and Senate and awaits President Clinton's signature.
Legend plans to lease six jets and immediately begin overhauling them, which will include upgrading them to Stage 3--the quietest aircraft level, which will be required of all commercial aircraft by 1999. About 600 new jobs will be created at Dalfort almost immediately. McArtor must also secure $32 million from investors by Christmas. He will not reveal the names of potential investors because several of them, he claims, already have received personal calls from Crandall.
Legend suspects it hasn't heard the last from American and Robert Crandall. "I believe American Airlines will do whatever it has to do, whatever it can do to prevent Legend from operating."
McArtor was not surprised at how ferociously American fought to keep Legend on the ground. "But I was disappointed to see the level to which elected officials would go to stifle competition," he says.
Legend still has to contend with a lawsuit from Fort Worth and the opposition from angry neighbors of Love Field worried about increased noise. Bartos, as well as members of other Love Field neighborhood groups contacted by the Observer, claim the concerns about noise are unwarranted. Bartos is in the process of building a house in an expensive development a half-mile from Love Field, which is 2,500 feet from the airfield flight path.
"Do you think I'm stupid enough to be building a house I think will lose value?" Bartos asks.
Kathy Murdock, a member of the Concerned Citizens of Walnut Hill, doesn't believe the noise level will increase that much. "Most of the noise comes from corporate jets," she says. "And the inconvenience is far outweighed by the economic benefits a revived Love Field will bring to the area."
Even when it comes to the noise issue, there is reason to believe that American Airlines is helping foment neighborhood concern. Love Field Citizens Action Committee, the neighborhood group that is most opposed to expanded flights at Love Field, is running ads on six radio stations this week asking for listeners to call their city council members to voice opposition to changes at Love Field. And who paid for those costly ads? According to city hall documents, American Airlines picked up the $2,500 tab for the ads the committee is running on city-owned WRR-FM.
Now that Legend is almost cleared for takeoff, the question remains whether they can actually make their business fly. But even if they fail, it is clear they helped chart some new, important territory.
Shortly before the legislative decision came down, McArtor attended the annual Southwest Airlines Christmas party--traditionally held in the fall, so as not to conflict with its busiest traveling season.
Southwest CEO Herb Kelleher, who no doubt had been watching the events of preceding months closely, greeted McArtor warmly. "You guys are sure stirring things up," he said to McArtor, in whom he surely must recognize a kindred spirit.
"Well, Herb, I learned from you," McArtor replied. "If you don't make dust, you eat it.
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