The road to deregulation is often marred by unanticipated pitfalls. Yet such is the case in a saga over airline deregulation in the Dallas-Fort Worth market. The story begins over forty years ago, and its final chapter is now being played out in the courts. In 1978, Congress decided to abolish a hoary New Deal agency, the Civil Aeronautics Board, which was created by the Civil Aeronautics Act (1938) to determine routes and to set prices for airline passenger traffic throughout the United States. But the New Deal law’s price setting powers were quickly used by airlines to suppress competition among themselves, so that interstate fares were consistently higher for short hauls than intrastate fares were for longer ones.
The deregulation movement of the late 1970s had its intended consequence of hastening competition among airlines. But it also created a backlash in one market, Dallas-Fort Worth, located in the backyard of then-Speaker of the House Jim Wright. Wright feared that vigorous competition to the new Dallas/Fort Worth airport (DFW) would come from the Love Field airport, the home of the upstart Southwest Airlines, which was now poised for the first time to expand operations into the interstate market. Wright thought that flights from Love Field would reduce the air traffic at DFW, which in turn would reduce the revenues needed to fund the debt service on DFW bonds. So in 1979, he induced Congress to pass the Wright Amendment, which perversely restricted all flights out of Love Field outside of Texas and four contiguous states—Arkansas, Louisiana, New Mexico, and Oklahoma—to aircraft that had 56 or fewer seats.More