Crisis cost BWI, hurt rivals more

State-owned airport isn't affected by soured bond market

Expansion to continue

Past figures suggest local facility lost about $4.7 million

October 05, 2001|By Paul Adams | Paul Adams,SUN STAFF

Like major airports nationwide, Baltimore-Washington International expects to lose millions of dollars as a result of higher security costs and a precipitous drop in passenger traffic after last month's terrorist attacks.

But analysts say BWI's historic weaknesses - a slow-moving bureaucracy and a heavy dependence on thrifty domestic leisure travelers - could prove to be strengths as the state-owned airport strives to recover from a crisis that has prompted Congress to consider a financial aid package for airports.

With businesses curtailing travel budgets and many passengers worried about going abroad during a potential U.S. military assault, domestic leisure travelers have emerged as the driving force behind rebounding passenger counts reported at airports nationwide in recent days.

And with the financial community soured on airport bonds, BWI has the luxury of state financial backing and the potential for lower borrowing costs in times of crisis.

"It probably has resulted in a proportionately smaller impact than at many other airports," said Robert Aaron- son, president of Strategies for Airports Inc., an airport consulting firm in Encino, Calif. "It almost certainly offers improved chances for a quicker recovery."

Whether the recovery costs will have to be passed on to passengers or taxpayers is still uncertain. BWI officials say they don't have a detailed estimate of their losses since the Sept. 11 attacks because they are awaiting monthly usage reports from airlines and vendors who operate the airport's parking facilities and retail shops.

But historical revenue data suggest the airport may have lost an estimated $4.7 million in revenue from all sources as a result of the two-day airport shutdown and subsequent decline in passenger traffic. The airport took in about $133.8 million in revenue last year.

"Obviously, for the first week after the crisis there certainly was little in the way of activity, and fortunately it has picked up," said Beverley Swaim-Staley, acting executive director of the Maryland Aviation Administration, which oversees state airports. "I'm hopeful that with some of the growth we saw over the weekend, our [losses] will not be that high."

However, the airport faces difficult months ahead as US Airways, BWI's second-biggest customer, eliminates its entire MetroJet fleet, which the airline said accounts for 49 of its 75 daily mainline flights. And the airport's meager international service faces the potential for more cuts as foreign carriers announce cutbacks. Irish carrier Aer Lingus plans to stop its BWI service this month and the future of Icelandair, British Airways, Air Canada and others remains uncertain.

Also unknown is whether the airport will ever regain the use of about 1,500 parking spaces lost as a result of new federal security regulations that prohibit parking within 300 feet of terminals.

Last year, BWI received $75.6 million, or about 56 percent, of its revenue from a combination of parking and concessions, according to a legislative budget analysis.

The airport received about $23 million in revenue from flight-related activity; $22.9 million from rents and user charges; $11.5 million from federal sources used strictly for capital projects, and $747,000 from various other sources.

Concession income down

HMSHost says income at its airport concessions is down about 40 percent since the attacks. The Bethesda company operates stores and restaurants at BWI and 69 other airports worldwide.

Airports Council International, an industry trade group, estimates that U.S. airports will lose $3 billion to $3.5 billion in revenue as a result of the attacks, said Stephen Van Beek, a spokesman for the group.

About two-thirds of the loss will come from reduced landing fees paid by airlines, terminal rents and concession income. The rest can be attributed to increased security costs resulting from new Federal Aviation Administration regulations implemented after Sept. 11.

Aviation experts said airlines have strict contracts with airports requiring them to pay a specific amount in the form of landing fees and airport rents, so it is unlikely that most airports will take a major financial blow in terms of landing fees. But passenger service fees, parking and other concession income has declined sharply.

The airports council is pushing for Congress to pass a relief package that would compensate airports for increased security costs and allow them to restructure certain debt, among other measures.

More passengers

"I think we're going to take a hit," Van Beek said, referring to lost airport revenue. "We're not asking to be just compensated for the losses we've taken, but to be compensated for the new [security] mandates after Sept. 11."

Amidst the bad news, there are signs of hope. Airlines report that passengers are beginning to return, drawn in part by fare sales and pent-up demand for travel since last month.

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