Discount fares at D/FW too few By Mitchell Schnurman Star-Telegram Staff Writer The leaders of Dallas/Fort Worth Airport did some chest-thumping a month ago, when the facility sold $1.5 billion in bonds for some big capital projects. It was a notable achievement, not only because the deal was large but because it happened while D/FW's main squeeze, American Airlines, was flirting with bankruptcy. There was never much doubt about the airport raising money, not with the Metroplex's appetite for air travel and D/FW's ability to increase fees and taxes. Still, the deal ensures that the airport will have a grand billion-dollar terminal for international passengers, along with an $800 million people-mover. Maybe those gleaming improvements will impress visitors from Tokyo and Rio and other exotic places. By the time the terminal opens in 2005, maybe even the French will be stopping by more often. As for common folk like me, I'd be a lot more excited to hear that D/FW had landed JetBlue. And that AirTran was doubling its service here. And that Frontier and ATA were putting some real money on the table. These discount carriers are part of the only growth class in the air travel business today. They're even adding passengers at D/FW, as is America West, which has reinvented itself as a discounter. But frequent travelers should keep their hopes in check. Discounters still account for less than 3 percent of flights at D/FW, and I don't see how a new international terminal and transit line does much for them -- or helps lure other low-cost carriers to North Texas. Especially after the new bond debt kicks in big time in a few years. By 2006, an airport consultant forecasts that the airport's aggregate debt service will nearly triple, and that airlines at D/FW will be paying three to four times more for fees and landing rights. That's the price of progress, I guess. If only it were the kind of progress that more passengers are clamoring for. The discounters' limited service isn't all D/FW's fault. It's a free world and a free marketplace, and if discount airlines think D/FW is a losing proposition, that's their prerogative. But if airport executives can sell billion-dollar spending packages to their board members from Dallas and Fort Worth and to hard-nosed money managers from New York, how about doing something special for the rest of us? Max Wells, a Dallas banker who chairs the D/FW Airport board, says that the airport staff is trying to recruit more discount service. They even dangle limited marketing allowances, offering to supplement the carriers' local advertising. They also won't lease the new terminal to American or Delta, as they already do with three terminal buildings. That means the airport will have all the say -- and flexibility to respond to any carrier with growth plans. "If they see opportunity, they'll come, and we'll have the gates for them," Wells said of the discount carriers. When the airport started on this capital project in 2000, it seemed like a good idea. Air traffic was still climbing, planes and airports were packed, and international travel was on the rise. American, which has more than 70 percent of the business at D/FW, must have savored the prospect of delivering high-paying travelers to what D/FW calls "a world class" terminal. Now that vision seems as outdated as the bubble economy. International traffic fell sharply after 9-11. It has begun to rebound but still accounts for just 8 percent of the business at D/FW. Terminal D, as it's called, will have 27 gates. That's two more than Dallas Love Field, according to a report issued with the bond sale. Which makes me wonder: Could D/FW turn the international terminal into a haven for discounters? Maybe cutting the facility's costs and finding a way to route traffic would enable airlines to get in and out quickly. Big, struggling airlines, including Delta, have experimented with discount airlines within an airline. How about a discount airport within an airport? Wells says that D/FW is already positioned to cater to this segment of the market. Gates are available right now, and Wells says that turnaround times for planes are relatively fast because the airport has so many runways. The problem isn't access to the airport; it's the competition there. In past years, American has squashed discounters that have tried to establish a foothold in its fortress hub. And discounters have said they're more interested in markets where low-cost carriers have a record of success. Wells, who is chairman of Oaks Bank & Trust, says he understands. "I wouldn't open a branch of a small bank right between the two biggest banks in the state," he said. With so few discounters, D/FW has already missed one growth spurt. From 1996 to 2000 (before the 9-11 terrorist attacks), passenger traffic increased just 1.1 percent annually at D/FW, according to the report in the bond offering. Compare that with cities that have more discount business: Las Vegas and Phoenix each gained 4.3 percent. Traffic at smaller airports with growing low-cost carriers surged by double digits annually, including Baltimore and Chicago Midway. Fort Lauderdale was up 9.2 percent annually, while Miami -- a traditional hub also dominated by American -- was flat over the period. D/FW remains one of the best airports anywhere for connections, local traffic and, at least until the new debt service starts, landing fees. But airfares are another story. According to the consultant's report in the airport's bond offering, airlines at D/FW had 47 percent higher yields than the national average. American's advantage was even greater. The study looked at airline results from 1995 through 2001, and the numbers are similar to the gaps reported by the Transportation Department. Guess who's paying the D/FW premium? And which companies are benefiting? If more discounted fares were available at D/FW, it would be tougher for American to get such yields. Lifting the Wright Amendment at Love Field would have the same effect. It would free Southwest to compete on longer routes with the big guys at D/FW, and they'd have to respond, just as they must in other parts of the country. Talk about a pair of long shots: D/FW becomes a beacon for discount carriers, or Southwest is unchained at Love Field. Hold on to your wallets, because the big money isn't going for either of those options. It's building a fancy international terminal and an automated people-mover. *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@xxxxxxxxx Trinbago site: www.tntisland.com Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/ Steel Expressions www.mts.net/~ejames/se/ Mas Site: www.tntisland.com/tntrecords/mas2003/ Site of the Week: http://www.natalielaughlin.com/ TnT Webdirectory: http://search.co.tt *********************************************************