- The Washington Times - Monday, October 22, 2001

Allen Bushong knows intimately the condition of commerce at Ronald Reagan Washington National Airport. The picture could not be gloomier, and it's not getting better anytime soon.

Nearly three weeks after the airport reopened under intense security and with a greatly reduced flight load, Mr. Bushong's sales at Sunglass Hut and Watch Station in Concourse C hardly fill the coffers.

He did $1,000 in sales on a good day before the Sept. 11 terrorist attacks. One day last week, he took in a measly $30 dollars. Mr. Bushong is looking forward to the further opening of Reagan Airport that is scheduled for this week, but it hardly portends booming business or more jobs where he works.

"I can handle everything here," Mr. Bushong says of the level of business he is seeing. "Ten more flights don't mean another employee I'd need 60 flights."

Before Sept. 11, Reagan Airport was considered a jewel in the regional economy's crown. With a stylish new terminal, it had been prosperous and accessible with a picturesque view of Washington's landmarks as planes landed next to the Potomac River. At its peak, it handled 792 daily commercial flights, and few clouds marred the horizon.

The airport saw heavy traffic from major airlines such as Arlington-based US Airways, United Airlines of Dallas, and the world's largest airline, American, based in Fort Worth, Texas.

Last year, upstarts such as Alaska Airlines of Seattle and America West of Phoenix jockeyed for, and won, six new takeoff and landing slots at Reagan.

Now, with federal air marshals on each flight and the National Guard patrolling the concourses, it is perhaps the most secure airport in the country, though scarcely the most prosperous.

Phase Two of Reagan Airport's reopening is expected to take place this week. Beginning Friday, the Department of Transportation will allow airlines to fly to an additional 17 cities from the airport, in addition to the eight they now serve, and boost the number of flights to 414 per day.

In the following six weeks, a planned final phase the details are still fuzzy will herald the full opening of the airport back to its normal traffic loads. But the airlines and businesses worry greatly about when the public will regain its old appetite for air travel.

From Oct. 8 to 14, airlines ferried 7.5 million passengers, down 25 percent from the same period last year, according to the Air Transport Association, which represents the airlines. Without greater public readiness to fly, local leaders worry that Phase Two will be a bust.

"I'm delighted we're getting more flights, but I'm still not sure it's enough to make the airport economically viable," says Rep. James P. Moran, the Virginia Democrat in whose district the airport lies. "It will depend on passenger loads."

From the retailers in the airport to the businesses around the airport to the airlines themselves, the refrain is the same: Open Reagan Airport as far as it can go and hope for the best.

The Metropolitan Washington Airports Authority, which administers both Reagan and Washington Dulles International airports, now faces the sobering reality that some of the adverse changes of the past month are permanent, and business could take a long time to recover.

How long?

Airports Authority President James Wilding says he would be "delighted" if getting back to normal took only one year.

"We are proceeding in the belief that this is a long-term adjustment," Mr. Wilding says. "Getting National back on line is a large step, but it's only a step."

Airline backbone

Some of the airlines are talking positive, but the numbers cannot match the rhetoric.

"We want to get back to the full load [of flights] eventually," says Rick Weintraub, spokesman for US Airways, which uses Reagan Airport as a major hub and is facing an uncertain future.

US Airways had 186 flights per day going through Reagan Airport before Sept. 11. Now, it runs 22. Phase Two will boost that number, but will leave the airline far from its pre-attack levels, Mr. Weintraub says.

More ominous are the signals from UAL Corp., parent of United Airlines, which warned last week it faced financial ruin within a year if current trends continued.

Last week, the world's second largest air carrier said it would eliminate an additional 200 flights from its schedule, further reducing service from the record-low levels after Sept. 11.

United is running six flights daily from Reagan Airport, down from 15 before the attacks. Phase Two most likely will boost that number to 11, but the airline will not automatically go back to 15 flights when the airport is fully open.

"We'll ratchet up the flights when there is demand," says United spokesman Joe Hopkins. "Demand has to precede the flights."

With fewer passengers, little can be done to boost airport-related business, regardless of federal restrictions, says Richard DeiTos, president of the Metropolitan Washington Airlines Committee, which represents the air carriers at Reagan and Dulles.

"If traffic comes back, we could still be in trouble," he says.

Behind the scenes

When airlines put fewer planes in the air, it means less activity on the ground as well.

Bob Fisher, president of Local Lodge 1759 of the International Association of Machinists and Aerospace Workers, points out that 54 mechanics toiled at Reagan Airport before Sept. 11. Now there are 16.

"Take a look for yourself," Mr. Fisher says, waving his hand toward the window that reveals a quiet gate and runway area. "It's bare there's nothing here."

United used to roll one plane into a hangar at Reagan each evening, where a team of mechanics would conduct routine maintenance and have the plane ready to fly again the next morning. When the airport got back up and running on Oct. 4, United concentrated its operations in Boston, and quit leaving a plane at Reagan Airport each day.

That change seems to be more permanent than temporary, and the laid-off mechanics are looking for new jobs, Mr. Fisher says.

"For us, the second phase can't make that much of a difference," he says. "The shop is closed, there's nothing to do."

Mr. Hopkins, the United spokesman, confirms the consolidation, but says United is restructuring for the long term.

"We're in the process of making United Airlines a leaner airline," he says. "With a smaller schedule, we're doing things differently."

For the businesses that rely on Reagan Airport to bring customers to the Washington region, the phased reopening of the airport is one part of a long process.

Steven Smith, the general manager of the Crystal City Courtyard Marriott, saw occupancy rates as high as 85 percent as businessmen and tourists streamed into Washington. Now, occupancy lingers around 60 percent, abnormally low for this time of year.

Mr. Smith hopes for a return of the well-heeled business traveler that has money to spend on good hotel rooms and restaurants. But he doubts that his hotel will be full anytime soon.

"Whether we can get back to normal remains to be seen," Mr. Smith says. "We need regular flights to the gateway cities."

With airport traffic at a trickle, Mr. Smith has canceled the hotel's free shuttle trips to Reagan Airport that used to run at 20-minute intervals. Now, guests have to request the van ride.

Taxed finances

As a result of the drop-off in air travel in general and the restrictions on Reagan Airport in particular, the airports authority is bracing for financial turbulence.

It imposed a hiring freeze as soon as the extent of the travel slowdown became clear, and the 70 positions that were open for jobs such as drivers and administrative staff will stay that way for the foreseeable future, Mr. Wilding says.

With heightened security, the airports authority is hiring new police officers.

Smaller maintenance contracts for "a couple of hundred thousand dollars a crack," such as repaving airfields or replacing transformers, are on ice, he says.

Dulles, which is in the middle of a six-year, $3.4 billion expansion project, has twice delayed bid deadlines for construction of a pedestrian walkway which will cost between $3 million and $6 million.

Contracts for paving a taxiway and erecting a building in the cargo complex are also on hold.

"Everything we've done at this point has been to bide time," Mr. Wilding says. "We're trying to give ourselves all the elbow room we can."

The toughest decisions are yet to come.

The airports authority gave notice in a financial report issued on Oct. 12 that it may have to adjust the fees that the airlines pay for flying to Reagan Airport and Dulles. Under its current agreement with the carriers, the airports authority can take this step when its budget drops into the red.

Operating income at Reagan Airport dropped in September, since it was closed for most of the month, from $4.4 million in September 2000 to $2.3 million last month. October will be a tough month as well, given the limited operations.

Mr. DeiTos, the airlines' representative, says that raising takeoff and landing fees should be a last resort, and Mr. Wilding, for now, agrees.

"We'd very much like to avoid rate increases, given that the airlines are in such tough shape," he says.

The airports authority also hopes Congress will inject money into its regular operations, Mr. Wilding says. An airline security bill approved by the Senate would allow airports to tap a special federal fund normally used for capital expenditures, but the House has yet to act.

The financial distress has caught the attention of financial markets.

On Sept. 20, Standard and Poor's put the entire nation's airport bonds on a "credit watch negative" status. It did not downgrade the value of airports authority bonds they still carry a rating three notches from the top. But Standard and Poor's now will regularly review the authority's creditworthiness.

The financial situation is particularly acute for Washington because it is the only city where an airport faces restrictions above and beyond those applied elsewhere, says Laura McDonald, a public finance analyst with Standard & Poor's in New York.

"When credit quality deteriorates, the future borrowing costs could be higher," she says.

The silver lining for Reagan Airport is its relationship with Dulles.

The airports authority's balance sheet combines assets and liabilities for both facilities. Dulles saw an unusually large upswing in traffic after the Sept. 11 attacks because of the diversion of flights that normally would land at Reagan, making it in effect the sugar daddy that supports Reagan Airport.

"Dulles is effectively carrying National right now," Ms. McDonald says, "so it helps keep the airport [system] as a whole stable."


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