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Airtran Riding High Despite Recession

Profitable Airline Looks To Expanding Service At Bwi

May 07, 2009|By a Baltimore Sun staff writer

AirTran started serving BWI in 2001 when US Airways got rid of some of its gates at the airport.

"We are in the middle of a very deep recession, but part of our focus on Baltimore is because of the way it fits in our company," said Fornaro, who explained that BWI Marshall is an important hub for the airline.

In general, discounters are faring better than more expensive airlines because they haven't been hit as hard by the decline in business travel and are benefiting from people looking for cheaper flights.

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Discounters also weren't hurt as badly by the decline in international travel.

"The low-cost guys are domestic only, so they're not getting hit as hard in the Atlantic, trans-Atlantic, Pacific and Europe," said Vaughn Cordle, chief analyst at AirlineForecasts, a research firm in Washington.

Cordle said AirTran has also been helped because its labor costs are lower since it pays its workers less across the board.

Meanwhile, Southwest hasn't seen the benefits of being the country's largest discount airline and instead watched its first-quarter profit decline more steeply than it expected as traffic declined because of the economy, especially among business travelers. It also has higher labor costs than the other discount airlines and was paying high fuel costs.

Southwest, which has 161 flights at BWI, has responded with plans to cut capital spending through 2010 by $1.4 billion by retiring some planes earlier than expected and delaying aircraft deliveries, among other things.

The airline is also offering voluntary buyouts to its 35,000 workers and has frozen hiring and executive pay. Southwest is also looking at adding Internet service to its planes as a way to raise revenue.

"Given the economic environment and the recession, we're not surprised to see declines," Southwest spokeswoman Wendy Eichinger said. "We're looking at all ways to return to profitability."

Eichinger wouldn't say whether Southwest was worried that its competitors that are performing better would take some of its market share.

"The benefit right now for customers is there are a lot of low-fare services like ours," Eichinger said. "In an economy like this, low fares are the name of the game. We'll still be able to offer those fares."

AirTran also isn't totally immune to the sluggish economy. It is cutting capacity by 3 percent to 4 percent this year and revenues are weak, declining 9 percent in the first quarter, because fewer people are buying tickets. It doesn't expect to add capacity until 2011.

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