A hub-less BWI? US Airways: Threat to leave is negotiating ploy with unions, but it still could happen.

April 20, 1997

WHAT WOULD Baltimore-Washington International Airport do without its prime tenant, US Airways? Officials at BWI are pondering that question as the airline threatens withdrawal if unions refuse its cost-cutting demands. Unless US Airways gains labor concessions, its long-term viability is very much in doubt.

Given another rejection by the pilots' union, US Airways could sharply reduce flights at BWI or shut its operations here completely. That would be a bitter blow to BWI. Seven years ago, US Airways owned 70 percent of the local air market. It used BWI as a key "hub" airport for connecting flights. That market niche has shrunk to just 37 percent, thanks to discount competitor Southwest and aggressiveness from other airlines in the local market.

If US Airways leaves BWI, its competitors would rush in. The Baltimore-Washington airline market is very strong and quite fTC appealing. Eighty percent of the traffic now terminates or begins at BWI; the number of connecting passengers has dropped by half. It is a clear signal to other air carriers of BWI's vast potential.

For US Airways, with the highest costs in the airline industry, its BWI operation loses money. But other carriers, with far lower expenses, see it differently. That's why US Airways desperately needs to reduce overhead. Otherwise, it will continue losing market share to lower-cost competitors and may not survive another recession.

While US Airways is cutting nine flights at BWI by August, other carriers are adding nine or 10 flights. There would be short-term pain from a US Airways pullout, but the airport's long-term outlook remains positive.

Come September, BWI's International Terminal opens, with existing airlines immediately occupying 60 percent of the space. New carriers are negotiating with BWI for gates, too. Airport business also is likely to rise as the light-rail line connects downtown and the northern Baltimore area to BWI this fall.

A "hub-less" BWI, minus US Airways, would hurt this region for a few years. Rebuilding the airport's lost flights would take time and patience. But the airline industry's heated competition is working in BWI's favor. Any retreat by US Airways would give other carriers a prime opportunity to fill that void.

Pub Date: 4/20/97

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