Southwest Airlines and Campbell-Hill Introduce Study on Consumer Benefits

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Campbell-Hill study illustrates the consumer penalty imposed by the Wright Amendment.

Southwest Airlines (NYSE: LUV) today released results of a three-month study by an outside commercial aviation consulting firm that said the gain to local economies should the Wright Amendment be repealed would be at least $4.2 billion annually. To view the entire study, please click on this link:

Using a list of 15 potential new nonstop markets from Love Field, the study found that:

-- North Texas would reap an additional $1.7 billion in economic activity annually due to increased air travel to the region.

-- 3.7 million more passengers would travel in the 15 markets annually due to new competition and lower fares.

-- Passengers would save nearly $700 million annually compared to airfares charged by American Airlines at DFW International.

-- The total Wright Amendment burden on passengers, North Texas, and cities beyond the seven-state perimeter exceeds $4 billion per year.

Southwest hired Campbell-Hill Aviation Group to demonstrate the "Southwest Effect" in real numbers. Campbell-Hill used data readily available to the public, such as passenger traffic figures from the Department of Transportation (DOT) and current air service as published in the Official Airline Guide (OAG). The Washington, D.C. consulting firm has done work for the DOT and Federal Aviation Administration (FAA), in addition to working with such airports as Baltimore/Washington International, DFW International, the Houston Airport System, and Pittsburgh International.

"There have been many attempts to confuse or scare the consumer into thinking that the best course of action is to do nothing about the Wright Amendment. This issue is about the fares and the cost of doing nothing is just too great," said Gary Kelly, Southwest's CEO, at today's press conference.

Southwest said it wished to answer a question that had not been addressed in the seven months the Wright Amendment has been making headlines. Communities all over its 60-city network report record traffic figures and airfare savings for consumers, but in the 26-year reign of the Wright Amendment over the Dallas area, a comprehensive look at the positive economic impact to be gained from repealing the Wright Amendment had not been done.

"Unlike others, this story can have a happy ending," Kelly said. "It's about unrealized potential; money that could be going to area businesses; money that travelers to and from the Dallas area could be saving on airfares; and how much the entire region stands to gain in additional tourism, convention, and business travel-related dollars."

The Campbell-Hill study considered what destinations from Dallas could look like by studying Southwest's operations in similar markets. Eighty-five percent of the U.S. population lives outside the restricted seven-state Wright Amendment zone. The study assumed Southwest could add 15 new nonstop destinations from Dallas, not currently allowed by the Wright Amendment. Using Southwest's average fares to markets on a like-mile basis, C-H determined consumers would have saved $397 million in airfares from the Metroplex area alone in 2004, just in those 15 markets.

"We must never forget that it is the consumer who is penalized by the status quo and who must be set free. It is the consumer who pays the greatest price to maintain corporate bottom lines and ancient history," said Herb Kelleher, Southwest's Executive Chairman, also onhand for the Dallas press conference.

Southwest is well known for expanding markets due to its lower airfares and frequent service. Through a price elasticity model validated by the FAA, C-H determined that just these 15 new destinations from Love Field would produce 3.7 million more passengers to those markets to and from the Dallas area.

Increased air travel also generates enormous positive impact on the economies of the cities and regions involved. Philadelphia recently credited Southwest for saving citizens there about $1.2 billion on an annual basis in Southwest's first year of service in that city. C-H determined that the economic impact of allowing competitive service from Love Field in just the

15 new markets studied would provide a $1.7 billion annual gain to the Dallas-area economy. C-H estimates a 46 percent gain in new passenger traffic from nonresidents visiting the Metroplex.

"Dallas' Love Field Airport is an underutilized facility and the wobbly wheel of the economic engine which is the entire transportation infrastructure in North Texas," Kelleher said. "You might not know that Love Field is now Southwest's eighth-largest airport in terms of departures, but it is only 17th-largest in terms of passenger traffic. Dr. Campbell's view would pump much-needed air into a flattening tire for a much smoother ride overall."

"It's foolhardy to argue with prosperity," said Dr. Brian Campbell, chairman of Campbell-Hill Aviation Group." Hotel occupancy in Dallas declined drastically by 22 percent from 1996 to 2003. For a city its size, Dallas cannot afford to ignore this issue and not actively market itself to the rest of the country through healthy airline competition."

It appears that lawmakers are listening. Texas Congressmen Jeb Hensarling and Sam Johnson recently introduced "The Right to Fly Act" to immediately repeal the Wright Amendment. Kelleher praised the leadership and vision shown by that effort. The bill now has seven co-sponsors: Congressmen Jeb Bradley (NH), Lee Terry (NE), Jim Cooper (TN), Joe Wilson (SC), Butch Otter (ID), and Texans Ron Paul and John Culberson. Kelleher said he looks forward to a similar effort in the Senate.

The Nevada State Senate and the Salt Lake City Chamber of Commerce are the latest in a string of community efforts and editorial positions to support repeal of the Wright Amendment, including the North Dallas Chamber of Commerce, the Wall Street Journal, Houston Chronicle, Tampa International Airport Authority, and a growing list of Dallas-area economists and academics who say the competition presented by an unfettered Love Field would lower airfares within the region.

Southwest Airlines launched a web site, , as part of its education campaign. The site received thousands of registrations within the first few days. The site provides information on the Dallas Love Field Master Plan, the benefits of state-of-the-art aircraft operated by Southwest, illustrates the fare premium charged to Dallas-area travelers as a result of the Wright Amendment, and Southwest's business reasons for not choosing DFW International Airport as its next new start-up.

"Herb and Colleen (Barrett) set the pace at the beginning, and Southwest Airlines has remained steadfast, in its mission of low costs, high productivity, great Customer Service, and low fares. It's why repealing the Wright Amendment is so important," Kelly said.

Southwest Airlines, the nation's largest carrier in terms of domestic passengers enplaned, currently serves 60 airports in 31 states. Based in Dallas, Southwest currently operates nearly 3,000 flights a day and has 31,000+ employees systemwide.

Editors' Advisory:

This event was Web Cast. To view a replay:
B-Roll will be made available via satellite:

Tuesday, June 7th, 2005

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Public Relations of Southwest Airlines


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