Bwi: Should Fly High If Low Fares Continue Maryland's Economy: Looking Up

January 02, 1994|By Suzanne Wooton | Suzanne Wooton,Staff Writer

Baltimore-Washington International Airport, which became an East Coast megacenter of fare wars last year, expects to handle 1 million more passengers in 1994 and perhaps shed its image as the stepchild of Washington-area airports.

Southwest Airlines, which sparked the fare wars with its BWI debut in September, will add one city, probably St. Louis, to its schedule this year. Other airlines, like Continental, are considering new flights and cities as well.

If the double-digit percentage gains in passenger traffic experienced in the last three months of 1993 continue, the state-owned BWI will likely exceed 10 million passengers, thus closing the gap on Dulles International Airport in 1994.

"There's no question we've had that stepchild image, but I don't think we have it any more," said O. James Lighthizer, Maryland's transportation secretary. "BWI is a player in the Baltimore-Washington metropolitan area."

The airport's success, however, will hinge on the continuation of low fares and on the financial health of USAir, BWI's dominant carrier, which must find ways to cut costs and make a profit in 1994.

"I think the low fares are here to stay," Mr. Lighthizer said. "It's a national trend that other airlines will have to comply with or go out of business."

Last year, BWI handled more than 9 million passengers; nearly 11 million people flew through Dulles in Loudoun County, Va. The number of passengers at National Airport, just outside Washington, topped 15 million.

Low fares sparked 44 percent growth in BWI's traffic in October, the first full month of operation by Dallas-based Southwest, which forced down fares among other carriers that handle far more passengers at BWI.

Although low fares -- as low as $19 one way to Cleveland and $39 one way to Chicago -- are good for passengers, they are bad news for some airlines, particularly USAir, which handles nearly half of BWI's average daily traffic of 26,000 passengers.

USAir has been forced to match the rock-bottom fares -- triggered by Southwest to Chicago and Cleveland and by Continental to a dozen cities. After having lost $1.2 billion since .. 1989, the Arlington, Va.-based carrier can ill-afford to continue to compete with the discount carriers, unless the passenger loads are extremely high.

"Clearly, they have to change their cost structure if they're going to compete long term," Mr. Lighthizer said.

In 1993, USAir's share of traffic at BWI declined from 54 percent to just under 50 percent -- and that's down from its heyday shortly after its merger with Piedmont Airlines in 1989, when it handled more than 70 percent of BWI's traffic.

Recently, USAir added 10 jet departures at BWI. It was the first significant increase in jet service since the airline downsized its BWI hub in 1991 and replaced many jet flights with smaller commuter planes.

Still, state officials fear that further losses for USAir in 1994 could precipitate cuts at BWI. "We would have to hope that other carriers would pick up the slack," Mr. Lighthizer said.

"But we still would very much like to see a healthy USAir. Their financial health is of paramount importance to us."

Although BWI could pull ahead of Dulles in total passenger volume, the Northern Virginia airport will remain dominant in international traffic. In 1993, international traffic fell significantly at BWI, largely because KLM shifted its operation to Dulles in May.

Mr. Lighthizer says he expects international traffic to be flat in 1994.

In accordance with the British Airways/USAir alliance earlier this year, British Airways took over USAir's daily service to Gatwick Airport in London.

It is not clear, however, whether that will boost international traffic at BWI. And Mr. Lighthizer said he does not expect another European carrier to begin operation at BWI this year.

Pending legislative approval, a $130 million expansion of the international terminal, known as Pier F, is scheduled to begin this summer.

State transportation officials have long insisted that the existing three-gate facility is inadequate to handle traffic at peak times and too small to attract more global carriers.

USAir, however, has been lobbying state officials and legislators to scale the project back substantially. A legislative committee recently asked the Transportation Department for more information about the need for Pier F.

Although the short-term success of BWI is tied to fare wars, its longer-range future depends on international traffic, Mr. Lighthizer says.

"Pier F is crucial to long-term future of the airport," he said. "To be a player, you have to have a quality facility."

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