Southwest poised to start service at BWI Airline's debut on East Coast could bring lower fares

July 08, 1993|By Dallas Morning News

DALLAS -- Southwest Airlines Co. is poised to begin service to Baltimore-Washington International Airport later this year, taking its low-fare service to the population-rich East Coast for the first time, airline industry officials said.

The officials said Southwest is expected to offer daily flights from Baltimore to Chicago and Cleveland. An announcement is expected next week.

Southwest officials declined to confirm or deny that the fast-growing airline will begin BWI service, saying they do not like to tip off their competition.

"That is just one of the cities that we've considered in the past," Southwest spokesman Ed Stewart said yesterday. "We've gone on the record to say we'll add another new city this year, but exactly which city that will be, we're not prepared to say at this time."

The addition of Dallas-based Southwest, often rated the best major airline for customer service, would represent an important boost for BWI, which has been fighting to increase the number of passengers flying in and out of the airport.

Southwest, the nation's only consistently profitable major airline, currently serves about three dozen cities, from California to as far east as Cleveland, Ohio. Analysts said its entry to the East Coast should mean lower fares for consumers and tough competition for other airlines used to charging higher prices. After beginning service in Baltimore, analysts expect Southwest to add service to other major cities.

The service to Baltimore is "just the start," said airline consultant Michael Boyd.

Added airline analyst Vivian Lee of Smith Barney, Harris Upham & Co.: "The fact that Southwest is going to hit the East Coast is big."

The analysts said they expect Southwest to attract fliers from Washington, to Philadelphia. That would hurt carriers in the two Washington airports in the region, National Airport and Dulles International Airport.

Ms. Lee said Southwest's entry is "going to shock a few people." A primary victim may be ATX Inc., a proposed airline that former Texas Air Corp. Chairman Frank Lorenzo is trying to launch, she said.

Currently, American Airlines Inc., United Airlines Inc. and USAir Inc. fly nonstop between Baltimore and Chicago, and USAir and Continental Airlines Inc. have nonstop service between Baltimore and Cleveland.

Southwest's Mr. Stewart confirmed that at least some flights from the new city will go to Chicago's Midway Airport, where Southwest has been expanding rapidly since late 1991.

American, which pulled out of markets from San Jose, Calif., after Southwest entered them this year, called Southwest's planned entry into Baltimore "very interesting."

"They've done very well wherever they've gone, particularly in California," American spokesman John Hotard said. "But it'll be interesting to see if the dynamics of the Washington market are the same of the California market."

He said the East Coast is "traditionally not a short-haul market," referring to Southwest's strategy of providing frequent flights between relatively short distances.

Southwest traditionally drives down average fares when it enters a market. According to U.S. Transportation Department data, the average fare on Sacramento-Burbank, Calif., flights was $112 before Southwest entered the market in 1991, and $43 a year later.

For nonstop service, the unrestricted coach fare to travel the roughly 600 miles from Baltimore to Chicago currently is about $335 one-way; to fly about the same distance from Washington to Chicago costs about $395.

By comparison, Southwest charges a maximum of $89 for its 645-mile Oakland-Phoenix flight; $129 for the 684-mile Houston-St. Louis flight; and $178 for the 676-mile Houston-El Paso flight.

"This is going to be a major hit on both American and United," said Mr. Boyd, president of Aviation Systems Research Corp. of Golden, Colo. "The fares they'll be able to charge to Baltimore if they stay in the market will have to drop about 50 to 70 percent."

Mr. Boyd said that Baltimore is the type of airport Southwest likes to use: less congested, but near a lot of potential passengers.

"It's the perfect airport. It's a major metropolitan airport, and without the problems you'd have at Dulles, which is out in the middle of nowhere, or National, where you have to have slots [rights to take off and land]. It's perfect. It's guerrilla warfare," he said.

Southwest's Baltimore service may once again send Mr. Lorenzo and Southwest battling head to head.

Mr. Lorenzo's airline, which plans to offer north-south service from Baltimore, has been stalled by U.S. Department of Transportation hearings to determine his fitness to run an airline. Union leaders have opposed his attempt to launch ATX, originally named Friendship Airlines.

Mr. Lorenzo's Texas International Airlines Inc. unsuccessfully fought Southwest's efforts to stay at Dallas Love Field after other carriers moved to the new Dallas-Fort Worth International Airport in 1974.

Their airlines chased the same Texas markets through the 1970s, and regional markets in the 1980s after Southwest expanded outside Texas and Mr. Lorenzo's Texas Air Corp. took over Continental.

ATX spokesman Richard Danforth said company officials had heard from the Baltimore airport that Southwest had requested gates, but did not know whether Southwest had finalized plans to enter the market.

An airport spokeswoman declined comment on any inquiries from Southwest.

Jay Hierholzer, associate administrator for BWI declined to

comment late yesterday.

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