As USAir cuts, BWI worries Up and away: USAir has moved flights away from BWI, and the shift may accelerate as it struggles to remake itself.

April 28, 1996|By Suzanne Wooton | Suzanne Wooton,SUN STAFF

As he travels across the nation meeting with USAir workers, Stephen M. Wolf, the airline's new CEO, hammers away at one theme: Burdened by the highest costs in the industry, USAir must make drastic cuts to survive, much less thrive, as it does today.

If that message creates more than a little consternation at Baltimore-Washington International Airport, there's good reason.

The Arlington, Va.-based carrier long has operated too many expensive hubs, clustered too close together on the East Coast, according to most analysts. Since 1990, USAir has trimmed its daily flights at BWI by 25 percent, from 249 to 185, and there are troubling signs USAir could make further cuts, perhaps even abandoning the stepchild hub the carrier inherited in its 1989 merger with Piedmont Airlines.

To the north, USAir has clearly designated Philadelphia International, just 90 miles away, as its hub of choice, adding numerous flights -- even as it cuts at BWI and elsewhere -- in order to connect passengers to its new trans-Atlantic service there.

To the south, it has aggressively built service at Washington-Dulles International Airport -- tripling the number of flights there in the past year -- to protect its lucrative Washington market against a discount airline, ValuJet. At the same time, National Airport, in the heart of the nation's capital, has remained a stronghold for USAir.

"The Washington-area presence will be focused on National and Dulles, and they'll refocus on their hub in Philadelphia," said Michael J. Boyd, president of Aviation Systems Research in Golden, Colo. "The one that's really going to take the heat is BWI."

Furthermore, in the first sign that it may abandon its head-to-head competition with Southwest Airlines at BWI, USAir will end its service from Baltimore to Nashville, Tenn., and Birmingham, Ala., in June and reduce its number of flights to Cleveland as well.

"Perhaps the new regime is saying we don't have to do that anymore," Mr. Boyd said. "It's a new regime. There's a change coming."

Instead of a strategically located airport where USAir passengers connect for flights, BWI could become an end point, with perhaps just three or four dozen dailyflights, Mr. Boyd predicts.

For passengers, downsizing would indeed mean fewer flights overall, and more commuter service rather than jets. For businesses, a significant loss of service by a hub carrier could affect decisions about expansion and relocation. For the 2,350 full- and part-time USAir employees here, jobs could be at stake.

With its new management team -- including Mr. Wolf and other top officials -- in place only months, the airline is closely scrutinizing its route structure and strategic plan.

"This is an industry in which there is constant change, and with our high costs and continuing losses, our entire route system, Baltimore included, is under review," said Richard M. Weintraub, a spokesman for the airline.

Airline officials refused to comment further on plans for BWI.

Last year, USAir cut 7 percent of its daily flights at BWI as part of a systemwide effort to scrap unprofitable flights and divert planes to more lucrative areas. And in June, it will again shift its service at BWI more heavily toward less popular commuter flights, operating 95 compared with 89 jets.

By contrast, USAir operates 301 flights at its hub in Philadelphia, 500 at Pittsburgh and 482 in Charlotte, N.C, with far heavier emphasis on jet service.

Sandwiched between Philadelphia and Washington, BWI is clearly vulnerable in the airline's strategic game plan. Just how much so hinges largely on whether the airline can secure critical cost cuts .

"The bigger issue is how are they going to deal with labor costs and the structure of the company," said Jon F. Ash, managing director of Global Aviation Associates, a Washington, D.C., aviation consulting firm.

"Baltimore is marginally profitable for USAir," he said. "But if you bring costs down, all of a sudden Baltimore, which is marginal, starts to look fairly good. The solution isn't necessarily that you close hubs."

Despite cost-cutting efforts that saved more than $500 million last year, USAir still has the highest costs in the airline industry. That makes it a target for Southwest and other low-cost, discount fare carriers that have accounted for much of BWI's phenomenal growth in recent years.

Indeed, the proliferation of discount service by Southwest could prompt USAir to back away from Baltimore. And its reaction to Southwest's anticipated new service to the Boston market later this year will be telling.

Attempts to gain concessions from labor unions have thus far eluded USAir. Last year, it spent 39.4 percent of its total operating expenses on labor, compared to an average of 34.3 percent for other U.S. carriers, according to a recent survey by Solomon Brothers Inc. of New York.

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