By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
The legal brawl, which is being duked out in state court in Fort Worth and is giving new meaning to the phrase "home-court advantage," has delayed Legend's efforts to launch its lower-cost, high-service, business-oriented airline by scaring off investors and costing it an unseemly amount in legal bills.
But earlier this week, Legend launched a potentially costly salvo of its own aimed directly at the pocketbook of Fort Worth.
Late Tuesday, Legend filed a complaint with the U.S. Department of Transportation and the Federal Aviation Administration accusing Fort Worth, the DFW Airport Board, and American Airlines--the primary carrier at DFW--of discrimination. The complaint demands that DOT make Fort Worth repay millions of dollars in federal aviation funds it received over the years to build and maintain Alliance and Meacham airports. In addition, Legend asks that DOT deny Fort Worth future airport improvement funds--as the federal agency recently did in a similar case involving an airport in Colorado.
When Legend won a change in federal law last year that would allow it to fly long-haul service from Love Field, Fort Worth and American, supported by the DFW board, sued Dallas in an effort to force the city to restrict flights from Love, threatening to ground Legend.
That lawsuit, before Fort Worth-based state District Judge Bob McCoy, led to a summary judgment in which McCoy essentially ruled that federal law concerning Love Field takes a backseat to the contract between Dallas and Fort Worth that created DFW.
The gist of Legend's complaint with DOT is that McCoy's order, which gave Fort Worth, American, and the DFW Airport Board everything they wanted, forces Dallas to regulate routes and services of Legend, Continental Express, and other air carriers in an arbitrary and discriminatory manner, contrary to federal law. To wit:
* Fort Worth's lawsuit claims the DFW Airport bond ordinance, approved by Dallas and Fort Worth to provide funding for DFW, limits operations at Love Field in order to protect DFW from competition, but the federal courts ruled in the past that it does not.
* The parties to the lawsuit acted in a discriminatory manner by deciding what operations are consistent with the bond ordinance. For example, federal law allows interstate flights from Love Field to the four states adjacent to Texas, though the bond ordinance does not. Fort Worth and the airport board are willing to accept those flights, but not the federal provision that allows aircraft with 56 or fewer seats to fly unrestricted from Love Field. This is the provision under which Continental Express attempted to launch nonstop service from Love Field to Cleveland last spring on its 50-seat regional jets.
* The local parties accept part of the Shelby Amendment, passed by Congress in October 1997, that added interstate flights from Love to Mississippi, Alabama, and Kansas, and they have not challenged Southwest Airline's recent operations to provide through-ticket service to Jackson, Mississippi, and Birmingham, Alabama. But they don't accept the Shelby Amendment provision that would allow Legend to fly unrestricted from Love Field on large jets reconfigured with 56 seats.
"The parties can't pick and choose what parts of federal law they will abide by," says T. Allan McArtor, president and chief operating officer of Legend Airlines. "We don't accept that the Shelby Amendment is OK for Southwest, but not for Legend."
"In my view, the purpose of this complaint is to say to these three parties, enough is enough," says Ed Faberman, a Washington-based attorney for Legend Airlines. "These issues have been debated since Southwest Airlines first announced plans to begin air service from Love Field in 1978, and it has been ruled on and ruled on. But these three parties continue to do anything they can to limit competition. We're saying you can't continue this behavior--behavior you agreed not to engage in when accepting federal funds--and not face penalties."
Dee Kelly, the lawyer representing Fort Worth in its suit against Dallas, did not return phone calls for this story. His secretary, however, said that he had not yet seen a copy of the complaint.
Presently, the complaint asks only that Fort Worth be penalized, but a demand might be included in the future for penalties against DFW Airport as well. The amount of money at stake for Fort Worth is substantial. The federal government gave the city $50 million to build Alliance Airport and continues to provide the city funds each year for both Alliance and Meacham. In 1997, for instance, Alliance received $1 million and Meacham $3.6 million in federal airport improvement funds.
Alliance Airport raises another issue the complaint touches on, says Faberman. "The parties suggest it is OK to limit operations at Love, but it is OK to permit competition and growth at Alliance with little or no explanation. Why is it all right to violate the bond ordinance for one airport and not another?"