Merger may cut flights, jobs

United's plans mean MetroJet would lose 29 flights at BWI

Airlines

June 02, 2000|By Paul Adams | Paul Adams,SUN STAFF

United Airlines' plans to cut MetroJet service from Baltimore-Washington International Airport to eight cities would eliminate more than half of US Airway's discount operation at the airport and a third of US Airway's total jet service.

The cuts would result in a net reduction in daily flights - and possibly jobs - at the nation's second-fastest growing airport immediately after United's acquisition of US Airways, if regulators approve the $11.6 billion deal.

Industry analysts say United's plans to eliminate the MetroJet routes signals its apparent decision to cede to Southwest Airlines much of the competition for budget-conscious leisure and business travelers at BWI.

The eight cities being cut currently are served by 29 MetroJet flights - 58 percent of MetroJet's daily departures at BWI. MetroJet accounts for 50 of US Airways' 79 jet flights out of BWI every day. US Airways currently employs 2,085 at BWI, which also serves as a base for MetroJet's 200-plus pilots.

Disclosure of the cuts last week sparked concern, but not alarm, among US Airways union officials, who say they expect United to ultimately expand the airline and honor commitments to preserve jobs after the proposed merger. However, that may mean some pilots, flight attendants and other airline staff will be forced to move to other United or US Airways hubs.

"More than likely, we will be moved around," said Earnest Anderson, local chairman of the International Association of Machinists at US Airways. "We all expect that - that's a given."

"If they shrink growth at BWI and grow elsewhere, that would meet the contractual requirements," said Roy Freundlich, a spokesman for the US Airways unit of the Air Line Pilots Association. But any reduction of pilot hours would be protested by the union.

Airport officials are reserving judgment for now until they see how the merger takes shape. A net reduction in flights would not necessarily be frowned upon, provided the merger resulted in new service that the airport needs, such as more international flights, said BWI spokesman William Castleberry. However, airport officials don't like what they see.

"We're clearly not pleased with losing service at BWI. United and US Airways are going to have to come up with how this plan benefits our airport, not only for us, but also for the [U.S.] Department of Justice," Castleberry said.

MetroJet is the "airline within an airline" US Airways created in 1998 to compete with Southwest, which with 95 flights per day is the dominant carrier at BWI.

Though United says it would add a new route to Seattle and an extra flight each to Chicago, San Francisco and Los Angeles, the additions won't make up for the 29 flights per day slated for elimination at BWI if the merger is approved. Cities that will no longer be served include Cleveland; New Orleans; Providence, R.I.; Manchester, N.H.; and four Florida destinations - Miami, Fort Lauderdale, Jacksonville and West Palm Beach.

"Baltimore will have less service than it does today," said Sam Buttrick, an airline analyst with PaineWebber. "US Airways' position in Baltimore is increasingly tenuous today as Southwest expands its service, and overall market concentration issues in the greater Washington area resulting from the transaction will likely cause United to focus elsewhere."

For now, United says its focus is on business travelers. That's the impetus behind its plans to add the Seattle route and extra flights to business hubs in the Midwest and West - all destinations it says are in high demand among Baltimore-area business travelers.

"United doesn't run from the fact that we are a business airline, and our primary traveler, if you will, is the frequent business traveler," said Matthew Triaca, manager of media relations for the airline.

Without revealing specific passenger numbers, Triaca said customer demand doesn't justify continuing service to the eight routes United proposes to eliminate. All but one of the cities - Miami - are served by other airlines, primarily Southwest.

"The routes we will stop all have adequate service already, and it's service that is meeting customer demand," Triaca said.

Wall Street largely agrees. Despite wage and work rules concessions from pilots, airline analysts say MetroJet has never been effective as a buffer against Southwest's encroachment on US Airways' territory, and the routes have contributed little to the bottom line.

If United backs off from the MetroJet strategy as anticipated, industry observers expect Southwest to pick up some of the pieces, further expanding its share of the Baltimore market and maintaining the airport's status as a low-cost hub. However, the airline says it is too soon to comment on its plans.

"We don't know who the winners are going to be out of this deal," said Southwest spokeswoman Christine Turneabe Connelly. "But we really feel the losers are going to be the general travelers, because it means less competition."

How the route changes will affect fares at BWI after the proposed merger is unclear. Though less competition is rarely a good thing for consumers, few expect Southwest to view the elimination of key MetroJet routes as an opportunity to raise prices.

Southwest's fares are typically about 80 percent of the industry average.

"One reason they wouldn't [raise fares] is because they don't want to create the history for themselves that other carriers have of raising rates and damaging demand," said Paul Ruden of the American Society of Travel Agents.

"Their philosophy has always been to keep prices low and demand up."

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