Washington Rewards Poor Performance

George Will writes today about the airline industry and how Washington has chosen over the years to punish efficient carriers and reward poorly operated ones:

In 1971, after years of harassing litigation by two airlines averse to competition, Southwest was born. It had just three aircraft and flew only intrastate, between Dallas, Houston and San Antonio. This first of the no-frills, low-cost airlines would, under the leadership of its ebullient founder Herb Kelleher, democratize air travel and revolutionize the airline industry.

The cities of Dallas and Fort Worth, and the Dallas-Fort Worth airport that opened in 1974, tried unsuccessfully to force Southwest to move its operations from close-in Love Field out to DFW, arguing that the new airport depended on this. Today, Kelleher laughingly recalls telling a judge: "If a three-aircraft airline can bankrupt an 18,000-acre, nine-miles-long airport, then that airport probably should not have been built in the first place."

But in Washington, reasonableness is no match for the routine and lucrative corruption known as rent-seeking -- economic interests getting government to impose handicaps on competitors. House Majority Leader Jim Wright, from Fort Worth, rode to the rescue of the strong -- DFW and Fort Worth-based American Airlines. In 1979 he muscled through Congress a measure designed to stifle the growth of Southwest and punish it for not moving out to DFW -- an expensive move that would have made it sensible for many Southwest customers to drive rather than fly to their destinations.

The Wright Amendment restricted interstate service from Love Field to cities in just four states -- Louisiana, Arkansas, Oklahoma and New Mexico. In 1997, senators wanting to bring Southwest's low fares to their constituents amended the Wright Amendment to allow flights to Alabama, Kansas and Mississippi. Today, if you want to fly Southwest from Love Field to Los Angeles, you must buy a ticket to Albuquerque, collect your baggage there, buy another ticket, go through security again and board another plane.

Today DFW is the world's sixth-busiest airport and American Airlines is the world's largest carrier. American is, like all the older airlines, losing money. But is that a reason to punish Southwest? Unlike other airlines, Southwest is not asking Washington to take on its pension burdens or to give it other subsidies. It is asking only for liberation.

I'm not a huge fan of Southwest Airlines (though I get a kick out of their show on A&E) mainly because of the cattle call mentality of their boarding process. I realize that by not assigning seats they save some money which helps reduce fares, but it just makes the whole process feel more like a bus trip than an adventure. However, I can appreciate what they're trying to do: move folks about the country as inexpensively as possible, and that's a good thing for anyone who can't afford to travel otherwise or doesn't mind dealing with the hassle.

I would hope that Washington would recognize the value of the low-fare carriers and get as much regulation out of their way rather than make life difficult for them. I recently flew JetBlue from Long Beach, CA across the country for the first time and it was a delight. We had assigned seats, lots of leg room, DirecTv at each seat, and fairly new, comfortable aircraft. I'll take them any chance I can.

I'm going to be making the same trip in a few weeks (to Washington DC) on American Airlines out of LAX. I hate LAX, and if it wasn't for the fact that my tickets are free thanks to frequent flier miles, I would have quickly switched my reservation to JetBlue. With free tickets I could have flown out of nearby John Wayne airport, but that would have required a plane change in Chicago and I just don't want to roll the dice that everything is going to go smoothly with that connection. Non-stop flights remove a lot of worry.

I know the country cannot afford to have its largest carriers, like American and United, fail. There's too much of the economy at risk if a large part of our airline system ceased to operate. But Washington could ease up on some of the silly regulations that bar growth of more economically operated airlines which would allow the big boys to spin off some of their less profitable routes and the whole industry would benefit.

Will sums up his column with a reminder of the resiliancy of the American market, and he inflexibility of Washington:

Government is preserving precisely what ails the industry -- excess capacity. Suppose a major carrier were to go out of business. A salient fact about the airline industry is, Kelleher says, that "its principal capital asset travels at over 500 miles per hour." Which means: If one airline fails, unserved markets will be served swiftly. He notes that on the afternoon of May 12, 1982, Dallas-based Braniff Airlines -- one of those that had urged government to strangle Southwest in its cradle -- went out of business. The next morning at least five airlines started up on some Braniff routes.

Ronald Reagan said that Washington's approach to intervening in industries is: If it moves, tax it; if it keeps moving, regulate it; if it stops moving, subsidize it. Regarding airlines, the policy is: If they are failing, keep them flying; if they are prospering, burden them. But surely Washington, although difficult to embarrass, is embarrassed enough to repeal the Wright Amendment.