Southwest adds Dulles in defensive move

April 05, 2006|By MEREDITH COHN | MEREDITH COHN,SUN REPORTER

Southwest Airlines said yesterday that it would begin flying this fall from Washington Dulles International Airport in a move aimed at blocking other discount airlines from challenging it in the Baltimore-Washington area.

Gates at Dulles became available when the discount start-up Independence Air folded in January, opening the way for another low-cost carrier to fill the void. Southwest plans to operate two gates.

Southwest was concerned that another discount airline might siphon passengers from its major terminal at Baltimore-Washington International Thurgood Marshall Airport. In its 19 months of operation, Independence Air had begun to lure passengers to Dulles.

Half of BWI's passengers come from the Washington metropolitan area and 10 percent come from Virginia. New passengers and Southwest's limited initial service at Dulles should blunt losses to BWI, the airline and analysts said.

"The population and business growth in Northern Virginia means a great opportunity is rapidly getting even better," said Gary C. Kelly, Southwest's chief executive officer, in a statement. "As the Washington, D.C. metropolitan area continues to expand, the need to serve our customers in Northern Virginia becomes more urgent."

In the past, Southwest would not have considered moving into a congested metropolitan airport such as Dulles. The airline likes to dominate the airports it serves, something that's harder at major international hubs such as Dulles.

Increasingly, though, fast-growing low-cost carriers are competing for customers at airports big and small. Discount airlines already operate at Dulles and at Ronald Reagan Washington National Airport.

Independence Air had helped Dulles become the region's biggest airport in the region last year with 27 million passengers, edging out BWI's 19.74 million. MAXjet, an all-business class trans-Atlantic discounter, began service from Dulles to London on Monday.

To continue to grow and compete, Southwest has broken out of its model of serving only smaller airports, sometimes far from urban centers.

Southwest's newer airports include Philadelphia International Airport and Denver International Airport.

Southwest also entered into its first major partnership with another airline at Chicago's Midway International Airport to grab more business and keep rival AirTran Airways from expanding there, said Darryl Jenkins, an airline consultant in Northern Virginia.

"At Dulles, definitely part of it is defensive, because Independence hurt them and they want to make sure no one hurts them again," he said. "But Fairfax and Loudoun counties in Virginia are such strong economic engines that moving there makes sense."

Jenkins said the airline could work around the congestion at Dulles that tends to occur only in the late afternoons. He expects Southwest's Dulles operation to grow.

He doesn't see Southwest's move into Dulles having much impact on BWI, where the airline is the largest carrier with 26 gates and 166 daily flights. It will add another flight in June from BWI to New Orleans.

Southwest would not say how fast it would grow at Dulles, or even what flights it plans when it begins service there in the fall. The schedule and fares will be announced this summer, the airline said.

Whitney Eichinger, a Southwest spokeswoman, said two gates would allow up to 20 daily flights. But the airline rarely begins service with so many.

"Like at any airport, we want to grow cautiously," she said.

BWI officials said they believe the airline remains committed to growing at the state-owned airport, which a year ago opened a new terminal dedicated to the carrier.

Jonathan Dean, a BWI spokesman, downplayed Southwest's move to Dulles.

Dean said the airline often moves into neighboring airports in a region, such as in New England, Southern California and the San Francisco Bay area.

"The Washington-Baltimore region is among the largest and fastest-growing and wealthiest markets in the country," he said. "Airlines operate in a deregulated industry and they can enter and exit a region as demand dictates. If you look at the three major airports in this region, most carriers service them all."

For its part, Dulles views Southwest as Independence Air's replacement, even though the airline will initially take only two gates on Concourse B.

United Airlines filled the three dozen gates that Independence Air abandoned on Concourse A. United left behind a temporary concourse that may be torn down during a $4-billion expansion of Dulles.

"We've been in conversation with Southwest for a while," said Tara Hamilton, a Dulles airport spokeswoman. "We're glad they decided to serve the Washington region."

meredith.cohn@baltsun.com

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