Literally, that is true. Only those who would lose in free market
competition want protectionism. In this case, American Airlines can't
compete against a certain discount carriers, so they have abused the power
of government to make Southwest Airlines less competitive.
http://72.14.203.104/search?q=cache:L72JMiS4P6YJ:news.yahoo.com/news%3Ftmpl%3Dstory%26u%3D/latimests/20050626/ts_latimes/battleatlovefield+%22Battle+at+Love+Field%22&hl=en&gl=us&ct=clnk&cd=2
What a mess!
The Wright Amendment is named after its sponsor, former House Speaker Jim
Wright. As early as the late 1970s, American Airlines had to use Wright to
protect their status in the airline industry, because Southwest was already
so competitive. Like all other cases of protectionism, American Airlines
abused the power of government to sustain high prices and its profits;
meanwhile it has cost society far more than the profits made.
I don't doubt Southwest's figure that, if it could fly to and from Love
Field without the legislated restrictions, passengers could save $700
million a year. Also consider the valuable time saved by not having to take
connecting flights, and not having to fly through the Dallas-Fort Worth
airport. This dwarfs the paltry concessions offered by the Dallas-Fort Worth
airport: free rent for a year, and $22 million in other incentives. It turns
out that this isn't a generous offer in the least; it's merely DFW
executives' desperate hope that Southwest's executives are schnooks.
Since no airline has taken the deal, we can surmise it's a pretty crummy
deal. Southwest wisely wants to avoid the antiquated, congested DFW, because
that would wreck Southwest's business model of efficient flights and cheap
fares. Furthermore, what does it matter that "billions" have been invested
in DFW? That should not compel or encourage Southwest in the least to use
it. After all, no rational person will patronize a new business just because
a great deal of money was invested in it.
American Airline's argument essentially boils down to, "But Southwest will
cause prices to fall!" More specifically, Southwest causes prices to fall so
low that the airline dinosaurs, like American and United, cannot compete.
Since when are lower prices, which Bastiat reminds us mean a greater
abundance of goods, a bad thing? And did this Steven Morrison, an economics
professor at Northeastern, really say it's "bad news" that Southwest's entry
forces existing airlines to cut their prices to compete? Unless he meant
it's "bad news" for the competitors, and not "bad news" in an absolute
sense, he's a bad economist.
Similarly, American Airline's bad economics is to assert "disastrous
economic damage" for DFW and north Texas if Southwest can use Love Field
without restriction. The only damage would be American and DFW losing
business. The gains would be in passengers saving approximately $700 million
on fares -- remember that's just on flights to and from the Dallas-Fort
Worth area. Not the DFW airport, but the vicinity.
In fact, it's unnecessary, and in fact illogical, that Southwest should have
to perform a "study" of how it would impact ticket prices at Love Field. The
only relevant "study" Southwest needs to do is if they can make a profit.
American Airlines is merely grasping at straws, trying to pin any kind of
blame on Southwest.
If you want a cheaper flight with exceedingly few frills, you can fly
Southwest. Conversely, if you're willing to pay more for additional legroom,
you can fly American Airlines. The fundamental issue is our freedom to
choose, above and beyond what government thinks is "best" for us --
particularly when government is lobbied by a company seeking protectionism,
because the company cannot compete.
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