Southwest Airlines prompts rival cuts before Sept. arrival

AIR FARES DESCEND AT BWI

July 15, 1993|By Ian Johnson | Ian Johnson,Staff Writer

Southwest Airlines triggered a mini price war with its formal announcement yesterday that it would start service at Baltimore-Washington International Airport on Sept. 15.

At an airport ceremony, the Dallas-based carrier, known for its reliable, Spartan service and low prices, said it would start five daily nonstop flights to Cleveland, with tickets costing $49 one-way.

Two of those flights will continue on to Chicago's Midway Airport, for a total of $89. Direct Baltimore-to-Chicago service will also be available three times daily for the same one-way price.

The fares are good any time and for all seats and do not require early bookings or travel on a certain day of the week.

The company also said customers would be able to connect to 17 other cities, including Los Angeles, Phoenix and New Orleans. In addition, the company said it was considering nonstop service from Baltimore to St. Louis if the Cleveland and Chicago routes prove popular.

Southwest's move to Baltimore immediately set off price reverberations. USAir, which accounted for 57 percent of traffic at BWI last year, said yesterday that it was slashing its one-way unrestricted fare to Cleveland to $49, down from $309. The airline said it was considering price cuts to Chicago, but was still working out details.

USAir also said it would add nonstop flights from its BWI hub, where it employs 2,400, to Cleveland and Chicago, as well as new flights between BWI and New Orleans, Las Vegas, Indianapolis and Pittsburgh, beginning Sept. 7.

On Tuesday, Continental Airlines, apparently in anticipation of Southwest's entry into the market, also announced fare cuts for its Cleveland and Chicago runs, to $59 and $109 respectively.

Southwest Chief Executive Officer Herbert D. Kelleher, speaking BWI yesterday, was quick to credit his airline with forcing fare cuts.

"Prices are much higher in the East than in the West, and that's because we haven't been there. That's going to change now," he said.

Those low prices, which have generated consumer demand that has helped make Southwest the only consistently profitable airline over the past two years, could help revitalize BWI, state officials said at the announcement ceremony yesterday.

Gov. William Donald Schaefer said Southwest's decision to fly into BWI showed that the underused airport is viable. BWI has the capacity to serve 16 million but currently serves 9 million. Southwest could boost customers by up to 500,000 a year.

"From an economic impact point of view, this will have a larger impact on the city of Baltimore and the state of Maryland than the All-Star Game," Mr. Schaefer said.

Mr. Kelleher said that while Southwest will employ only 38 at BWI, and many of those could come from other Southwest offices, the airline's impact would be much deeper than that number indicates.

In other areas served by Southwest, for example, people ride buses for more than an hour to get the airline's cheaper fares, helping to boost the number of customers flowing through the airport, buying food and gifts from airport stores and spending their money in nearby communities.

"Visitors will spend more money in Baltimore because they will leave less of it in the airplane," Mr. Kelleher said.

Southwest's strong reputation for generating traffic and business made it a prime target of Maryland marketers.

Maryland Transportation Secretary O. James Lighthizer said the state had been courting the company for five years. The $H company was approached by dozens of states and communities, including 90 last year, but the state's arguments in favor of BWI eventually found an audience, Mr. Lighthizer said.

Mr. Schaefer and Mr. Kelleher said the state did not promise any financial incentives, marketing efforts or BWI upgrades to win over the airline. "They didn't have to. This is a good airport in a good location," Mr. Kelleher said.

BWI also fits into the company's basic strategy of moving into relatively underused airports free of congestion and delays. BWI offers the Dallas-based airline access to Baltimore and Washington customers without the expense and costly scheduling problems of other regional airports such as National.

The company also cuts costs by not serving meals, assigning seats or transferring bags to other airlines.

The relatively modest move to Baltimore is also in keeping with the company's deliberative pace of expansion, said Robert McAdoo, an airline industry analyst with Prudential Securities Inc. Mr. Kelleher said the airline had no plans to use Baltimore as a base for other routes to the Northeast, saying the company probably would not add any more cities this year.

Besides Baltimore, Southwest started service to San Jose, Calif., and Louisville, Ky., this year.

Wall Street reacted favorably to the announcement; Southwest stock rose 75 cents, to close at a record $46.125. Over the past two months, the price has risen $10.

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