Airport's future tied to fortunes of suffering industry

BWI COMES BACK TO EARTH

March 01, 1992|By John H. Gormley Jr. | John H. Gormley Jr.,Staff Writer

During the past decade, Baltimore-Washington International Airport soared from a sleepy regional airport serving a local market into a busy hub with a national reputation and international pretensions. But in the past year, BWI has come crashing back to earth, its wings clipped by the financial suffering of the airline industry and by life-threatening losses at USAir, the airport's dominant carrier.

For USAir the issue is a simple one of how to stay alive after two straight years of huge losses. With a higher cost structure than the biggest U.S. carriers, USAir's future may depend on persuading many of its 46,000 employees, beginning with unionized workers, to accept wage cuts.

For BWI the question is one of stature. Will the airport cease to be a true national hub and become once more a regional airport, limited to a smaller and perhaps declining local market?

"BWI is going through one of the more important and challenging times in its history," Maryland Transportation Secretary O. James Lighthizer said last week.

In his view, the state must take "some different approaches" and demonstrate more innovation and creativity in marketing if BWI is to compete. "I have every confidence USAir and BWI will come through this difficult time in the history of the aviation industry as strong players."

Not everyone is confident that BWI will find a way to prosper in the next few years, in view of its close affiliation with USAir, which has been moving jet flights away from the airport as part of a systemwide restructuring (see accompanying map).

The airport's passenger traffic fell in 1990 and 1991, and further declines are forecast. In 1990, the 10.2 million passengers passing through BWI represented a slight decline from the year before. And in 1991, the figure fell 3.3 percent to 9.9 million. The Maryland Aviation Administration is projecting that traffic will continue to decline this year and next. Figures provided to the state legislature show that traffic is expected to fall to 9.2 million passengers in 1993, or about the volume of traffic BWI saw in 1987.

In 1989, USAir offered 147 jet departures a day at BWI. This spring, when USAir puts into effect the latest cuts, the number of jet flights will be down to 88. That represents a 40 percent decline in jet flights by the airline that controls two-thirds of the traffic at BWI.

During the same period, USAir has increased its jet flights substantially at its other big hubs -- 31 percent at Philadelphia; 24 percent at Pittsburgh; 17 percent at Charlotte, N.C. Even its smallest hub, Indianapolis, which has only 55 jet flights a day, has seen an increase of 17 percent.

Jeffrey R. Miller, a Gaithersburg lawyer specializing in the travel industry, said he believes USAir has, for all practical purposes, given up on Baltimore as a hub.

"I expect USAir to be around. I don't expect them to be at BWI as a hub," Mr. Miller said. "There's no economic justification for a hub there."

He thinks that more cuts in jet flights are coming. When the cutting is done, he said, "I'll bet you don't have more than 50 jet flights a day."

USAir denies it has given up on Baltimore. Patricia A. Goldman, the airline's senior vice president of corporate communications, said of BWI, "It's still important. It's a good producer in some markets."

Nonetheless, substantial numbers of passengers are about to discover that flying out of BWI will not be what it used to be. Starting in May, the number of USAir commuter flights out of BWI will significantly exceed the number of USAir's jet flights.

Passengers will still have much the same choice of destinations, but more often those passengers will find themselves aboard a propeller plane instead of a jet. It's not a prospect many passengers find pleasing.

Ms. Goldman acknowledges the preference most passengers feel for jets over propeller planes. "There's no question it's not as pleasant," she said of flying on the commuter planes. But she thinks much of the sentiment against small planes no longer applies to the aircraft and service offered by USAir Express commuter flights. Planes now are often state of the art and the service is comparable to that on jets, she said.

The kind of planes USAir is flying out of Baltimore is important for many passengers. But at BWI, the the biggest question may be whether USAir, after losing more than $750 million in 1990 and 1991, will be flying at all in a year or two.

A buffeted industry

USAir is not the only airline whose very existence is threatened. Two years ago, the war in the Persian Gulf sent fuel prices soaring and passengers scurrying.

Then came the recession. The industry lost about $6 billion over the two years -- an amount roughly equal to all the profits ever earned in the industry's history.

This financial turbulence has already brought down Eastern and Pan Am, two of the most venerable names in the industry.

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