Dogfight over BWI is looming

Fledgling MetroJet wants to help dislodge Southwest's new crown

Savings for air travelers

US Airways' stepchild set to grow even faster as bottom line mends

Airlines

May 09, 1999|By Robert Little | Robert Little,SUN STAFF

Baltimore-Washington International Airport has a new king. Southwest Airlines, six years after its inaugural East Coast flight, now flies more passengers through BWI than any other carrier.

The news might seem like a blow to former No. 1 US Airways, which last year formed a low-fare subsidiary airline, called MetroJet, specifically to compete with Southwest.

But airline industry observers don't think US Airways has lost the fight for Baltimore just yet.

The real fight, they say, might be still to come.

As MetroJet approaches its first birthday, it is planning a rapid expansion. It flies 184 daily flights throughout the country today; it will fly 272 by October. It owns 31 airplanes; it will have 47.

Southwest, too, has expansion plans, and is reportedly considering service to a new city this year.

The result, some predict, could be a boon for local travelers: two airlines pushing the East Coast's market for low-fare air travel to more cities and for less money than ever before.

"If there's anything that an airline hates, it's to have someone come in and beat them up in their own hub," said Tom Parsons, editor of Bestfares.com, which tracks airfare prices.

"US Airways cut back in Baltimore a few years ago, but it looks like they're not giving up.

"If they both keep trying to grow, it's going to be a dogfight."

The top executives at US Airways admit it themselves: Their airline was described as "financially troubled" for so long, the term almost seemed like part of its name. But the profits are back at the Arlington, Va.-based carrier these days, and industry analysts think that MetroJet deserves much of the credit. Before creating MetroJet in June, US Airways was losing as much as $100 million in Florida alone to low-fare carriers such as Southwest and Delta Express. By bringing forth a low-fare, lower-cost subsidiary airline and offering frills-free service, US Airways has re-emerged as a competitor in the markets it was losing.

Analysts doubt that MetroJet is yet profitable as a stand-alone service, but it has greatly reduced US Airways' losses on its most competitive routes. Company officials say returns have exceeded their goals. With an eye toward making MetroJet one-fourth of US Airways' service, corporate officials are embarking on an expansion that some think suggests that it is waging a more offensive attack against its competitors.

"MetroJet is kind of like Southwest repellent," said Brian Harris, an analyst with Salomon Smith Barney Holdings Inc. in New York. "It's designed to allow the carrier to perform better in markets where it's likely to face a lot of low-fare competition.

"I think it's clear that it's worked."

As usually occurs when giant airlines knock heads, air travelers get the most benefits. Since the arrival of Southwest Airlines at BWI in 1993, fares to cities that Southwest serves have dropped by 75 percent or more. And Southwest has expanded its reach from two cities to 20, with another coming in June.

USAir was name then

BWI was a secondary hub for US Airways -- then called USAir -- when Southwest first came to Baltimore. The airline had already begun cutting back service from its 1989 peak of 189 flights a day, concentrating instead on hubs in Charlotte, N.C., and Pittsburgh.

USAir's initial reaction to Southwest's arrival was to retreat further. With higher costs and slower aircraft turnaround times, it had difficulty competing against Southwest's no-frills service. It canceled service altogether to some cities -- Cleveland, for instance -- because of Southwest's competition.

"Cleveland was just a market we couldn't afford to be in," said S. Michael Scheeringa, vice president of MetroJet. "But now we can."

With MetroJet, a service with lower costs, faster turnaround and more uniform pricing for passengers, US Airways has become competitive again in low-fare markets. It now flies five daily flights from BWI to Cleveland through MetroJet.

Not every new MetroJet flight means a new option for the flying public. At BWI, MetroJet planes replaced about half the service offered by US Airways.

Still, US Airways is growing at BWI again. It handled almost 370,000 passengers in March, a 4 percent increase from last year.

Southwest has grown even more, however, dethroning US Airways as BWI's largest carrier for the first time.

According to figures released by the Maryland Aviation Administration, Southwest Airlines moved 982,999 passengers through BWI during the first three months of this year, representing a 27.2 percent share of the airport's traffic. US Airways, including its MetroJet service, handled 966,140 passengers, or a 26.8 percent share.

The data also suggest how competitive the battle between the two low-cost carriers has become.

The competition for top carrier at BWI is tight, and could change soon. US Airways will inch up with new MetroJet service to Chicago's Midway Airport that started Tuesday. Southwest will counter with new service to Las Vegas and Raleigh-Durham, N.C., in June.

BWI their top Eastern airport

Both Southwest and MetroJet consider BWI their top airport in the East Coast. Southwest will fly 87 daily departures by the end of the year. MetroJet will have 49 daily flights there, more than in any of the other 24 cities it serves.

But MetroJet's expansion isn't all good news for the Maryland Aviation Administration. US Airways claims that it wants to remain the top carrier in the Washington-Baltimore market -- not necessarily at BWI. Much of MetroJet's recent growth has been channeled into Washington-Dulles International Airport, the airline's second-largest airport.

"MetroJet will continue to grow," said Scheeringa. "When we first started talking about MetroJet, we said there were two places where we needed to maintain our service in the market -- Florida and Baltimore-Washington.

"And that is still our goal. We offer the low-fare solution for the region -- not just an airport."

Pub Date: 5/09/99

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