Sunday, October 5, 2003

The number of passengers at Baltimore-Washington International Airport has returned to about the same level as before the September 11 terrorist attacks, in large part because of Southwest Airlines.

The low-fare airline is not only one of the industry’s most profitable carriers, but also the biggest airline operating out of BWI, representing 40 percent of its airline traffic.

“The numbers speak for themselves,” said BWI spokesman Jonathan Dean. “In 1993, about 9 million people used BWI Airport for their travel needs. Last year, more than 19 million passengers passed through BWI. The growth of Southwest has helped to fuel this incredible demand.”

Equally encouraging for BWI are the figures since the September 11 attacks. The number of passengers using the airport has returned to roughly 2 million per month after a loss of nearly 1 million passengers in the weeks immediately following the attacks.

“Business has been very good at BWI,” Mr. Dean said. “Throughout the summer, passenger traffic has outpaced national statistics.”

Part of the new traffic resulted from international flights. Southwest Airlines played a role in this as well.

By increasing its flights and forcing BWI to expand its facilities to accommodate them, Southwest Airlines made the airport a more attractive gateway for international airline business.

“In July, international traffic at BWI jumped more than 20 percent,” Mr. Dean said. “International carriers like British Airways, IcelandAir, Air Jamaica and Ghana Airways have a strong presence here at BWI.”

While the rest of the industry sought government bailouts to stay in business after September 11, officials at the Dallas airline were concerned only that they made less money than normal.

The airline’s keep-it-simple approach is transforming the airline industry while drawing complaints from competitors about the “Southwest effect.”

In other words, all major airlines have to lower fares to compete when Southwest Airlines moves into an airport.

Southwest Airlines, which is restricted to mainly midsize cities, does not fly to Washington Dulles International or Ronald Reagan Washington National airports.

The airline started at BWI 10 years ago with eight flights, three to Cleveland and five to Chicago. Now, it offers 156 daily flights out of the airport to 35 cities.

“Southwest Airlines has also had an important economic impact on the local community,” Mr. Dean said. “The airline currently employs about 2,500 people in this region.”

Southwest Airlines moved into BWI to fill a void left by the exit of Arlington-based US Airways, which had been using the airport as a hub.

The key to Southwest Airlines’ 30 years of success lies behind the scenes of its operations.

Passengers notice only the same kind of airplanes, flight times, food and attendants as any other airline.

What they would not notice is that the airplanes tend to stay in the air longer than most others. They fly only nonstop flights, usually between airports with relatively low landing fees. They also change routes frequently to follow shifting passenger demand, which is known in the airline industry as point-to-point service.

Major airlines rely on hub-and-spoke service, in which their flights are clustered around peak flying times at big-city airports. In addition, many flights get routed through hubs for connections to other cities.

Southwest Airlines flies only Boeing 737 airplanes, which avoids the high costs of training pilots and maintenance crews for a variety of aircraft. It also was among the first airlines to switch to electronic ticketing, in which passengers show identification to board, rather than using tickets.

“Our low cost structure allows us to weather cyclical changes in the airline industry,” said Linda Rutherford, a Southwest Airlines spokeswoman. “Low costs allow us to keep fares low, and that stimulates travel demand.”

In the second quarter of this year, Southwest Airlines earned a $246 million profit on revenue of $1.52 billion. Last year marked the airline’s 30th year of profitability in 30 years.

Meanwhile, major carriers, such as American Airlines and United Airlines, posted losses. Many of them are revamping business plans to add subsidiaries that operate like Southwest Airlines.

“I think major carriers are diversifying their offering,” said Tara Hamilton, a spokeswoman for the Metropolitan Washington Airports Authority, which manages Dulles and Reagan airports.

The alternative is a continuing exodus of passengers to low-fare airlines and more worries about bankruptcy.

Delta Air Lines started flights Sept. 10 out of Dulles with its new subsidiary, called Song.

American Airlines has juggled flight schedules for more efficiency, reduced the number of different jets it flies and tested lower prices for business travelers, all of which follow Southwest’s model.

United Airlines also is introducing a budget subsidiary, similar to Delta.

“If imitation is a form of flattery, then Southwest is being flattered quite a bit by these other successful low-cost airlines that to one degree or another are imitating them,” said Ray Neidl, an airline industry analyst for the Wall Street investment firm Blaylock & Partners. “The model is good.”

Delta, American, Northwest and United are reporting drops in the number of passengers this year compared with a year earlier.

Southwest Airlines is reporting a 5.2 percent increase. Its stock is up 30 percent from a year ago to about $18 per share.

“They will continue to capture market share,” Mr. Neidl said.

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