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May 07, 2014

Southwest CEO Kelly: We want to work with the city, not fight with the city

Photo 1While Dallas City Council was discussing the future of two gates at Love Field in closed session, I had a chance to talk with Southwest chief executive Gary Kelly.

Kelly talked about why he believes Southwest's only opportunity to grow is at Love Field with these two new gates.

ST: Why was it important for you to attend the city council meeting?

Kelly: It’s an important question for the city and the city has a great opportunity here to further the development of Love Field, increase competition in the Dallas/Fort Worth area, lower fares. It’s an opportunity for us to grow, as you know, it’s the first time in 35 years. So it is important, and I thought it was important for me to be here and we have a number of our employees who are Dallas citizens that are here as well. This is what we do and we have this unique situation in Dallas where Love Field is restricted as to its size. Normally when there is opportunities to grow you simply work with the city and the airport and the airport owners to expand the airport. That’s just not an option. The expansion opportunity here is DFW airport and that creates the issue. We’re here because it is important and we’re here to support the city and their process.

ST: What is your response to the U.S. Department of Justice’s conclusion that the gates should not go to Southwest?

Kelly: Our focus is on the city of Dallas. The city of Dallas is the owner of the airport. The city of Dallas is the one who will decide what to do and that’s where we directed our efforts. We’ve obviously worked with the Department of Justice throughout the American-US Airways merger process and we have certainly shared our arguments with all necessary parties but the whole point is to create more competition for American Airlines in this market. That’s the whole point. That is the whole point of divesting two gates. It’s not about Love Field. It’s about the whole market. This is one air market. Dallas Love Field has 20 gates which is about 11 percent of the total capacity of the DFW market. DFWAirport has the rest. That’s the issue and we face very, very significant competition from the Dallas area and it comes from DFW airport. It always has because we’re the only one who has chosen to operate in any significant amount at Love Field. No restrictions at all. That’s the way it is at Midway. That’s the way it is in Hobby in Houston. There is nothing that is so unique about this situation. We like the smaller airports. We’ve taken the risks over decades to develop them and we simply would love the opportunity to grow more. I don’t think anybody begrudges us that. Here’s what’s important though is for the city to decide what is best for the city.

ST: Are you saying you want the 20-gate restriction at Love Field lifted?

Kelly: I’m not arguing that. I’m not raising that. That has been agreed upon and legislated and I am not challenging that. I’m just simply pointing out that this effort to get two gates is caused by the fact that Love Field can’t be expanded so you just don’t have a choice here, and other airlines, as you know, other airlines have the choice between DFW and Love Field. We do not. Our only opportunity to grow is at Love Field and the good news is we have an opportunity to grow. Cities fall all over themselves to get more air service and get more competition.

ST: Virgin America has argued that you could operate your planned flights from the 16 gates that you have. Is that true?

Kelly: That’s totally false. That’s just ridiculous and it’s widely known that Southwest Airlines is the most efficient airline, probably in the world. We absolutely maximize the gate utilization. Our flight activity will vary seasonally somewhat but this is not about keeping flight activity constant with two more gates. We’re talking about adding 20 more daily departures beyond what we can do with 16 gates and 12 new destinations. That is what we have planned.

ST: Have you discussed your plans with council members?

Kelly: Sure. I think the facts are very well-known. I don’t think there is anything to be shared today. I think City Council is very well briefed. They’ve had their consultant study. We’ve obviously shared our views. Two other airlines would like to be able to get access to gates at Love Field. They’ve shared their views. I don’t think there are any new facts today.

ST: Are you expecting a decision today?

Kelly: Honestly I don’t know what to expect. This is on the agenda as a briefing, not as an action item. Our understanding is the city manager has the authority to execute a sublease so this is a briefing with the City Council and what they will decide to do with their next step, we don’t know. That is one of the reasons we are here and we want to be available in case there are questions.

ST: Do you plan to take legal action if the city chooses to give the gates to Virgin America?

Kelly: We want to work with the city, not fight with the city. I think what we do from here is premature. We just need to let the city work through its deliberation. There’s no threat from Southwest one way or the other. We are partners with the city of Dallas. We have rebuilt Love Field. I am very proud of that. This is a year for us to celebrate and we’re just going to do our best to work with the city to grow Love Field. I think let’s just be patient and wait to see what they say here.

-Andrea Ahles

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