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Depressed air travel demand and its crippling effect on travel-related business has spread across the nation. But the good news from Baltimore-Washington International Airport is that the bad news isn't that bad.

Last year, 10.2 million passengers flew in and out of BWI, a 1.1 percent decrease from 1989, according to data released by Maryland Aviation Administration.

The figures for the first month of this year -- described by some in the travel industry as the worst January in air travel history -- reflected a 3.2 percent decrease in passenger traffic from a year earlier.

"I am very pleasantly surprised," said Jay Hierholzer, associate administrator in charge of marketing and development at the airport. With industry estimates that air travel demand has declined as much as 10 percent across the country, Mr. Hierholzer says BWI's performance is encouraging.

The MAA, the state agency that manages Maryland's 37 airports, estimates BWIcould end 1991 with a decline of just 1 percent in passenger traffic. "The numbers we've got so far don't really reflect a serious downturn in our business," Mr. Hierholzer said in a recent interview.

Not that BWI hasn't seen its share of troubles.

The nation's airlines posted a combined loss of $1.7 billion for the fourth quarter of last year as the nation slid into a recession and the Persian Gulf crisis intensified. The financial drain on the airlines was quickly felt at BWI as its tenants struggled to weather the storm.

Eastern Airlines, which had spent two years under bankruptcy law protection, shut down its operations throughout the country in January. And many carriers, including Netherlands-based KLM, and Trans World Airlines, which used BWI, announced cutbacks in service at the airport due to weak demand.

The largest retreat from BWI, however, came from USAir Group Inc., the Arlington, Va.-based parent company of BWI's largest resident airline. In response to a $454 million annual loss for 1990, USAir announced in January that it planned to cut 25 flights from its BWI hub operation as part of a major restructuring.

The carrier said it would lay off more than 3,600 workers nationwide.

USAir employs 3,150 workers locally and accounts for 60 to 70 percent of the air travel to and from BWI. In response to queries concerning the fate of BWI's USAir operation, the company has insisted that the airport will remain a part of its hub network, which includes the airports at Charlotte, N.C., Philadelphia, Pittsburgh and Dayton, Ohio.

In fact, since the restructuring announcement, USAir has announced that it will restore 13 flights from BWI when its new 139-flight schedule takes effect May 2.

Adding further financial pressure, the MAA is streamlining its budget in an effort to offset projected deficits. BWI must trim its budget as part of an administration-wide belt-tightening.

"I think just like everybody else who has an important mission within state government," said Mr. Hierholzer, "we all have to find more creative ways to carry out those missions."

Mr. Hierholzer's department, for one, is facing a loss of $100,000 of its operating budget. Keeping within this year's $650,000 marketing budget means his staff will be attending fewer trade shows, cutting back on its mailings and reducing advertising. The staff will have to concentrate on less expensive methods of selling travelers on BWI.

Weathering the national recession and the current downturn in travel isn't BWI's only challenge.

Coming off strong growth during the 1980s, BWI is at the point of redefining its place in the airport industry. With a handful of international flights, BWI is an "airport wanna-be for travel overseas," Mr. Hierholzer said, referring to the state aviation agency's desire to increase international flights.

International carriers KLM and Icelandair set up service from BWI during 1990. With Eastern's demise, USAir picked up the rights to fly to Ottawa and Montreal from BWI and now flies two flights each to those cities. Eastern formerly flew once a week to Ottawa and had ended its service to Montreal before it shut down operations nationwide.

Airlines and travel agents reported a drop in the number of international flights after the gulf war began Jan. 17, but BWI reported a 34 percent increase in international traffic compared to last year.

That boost, in large part, reflects the fact that the airport had very few international flights before this year. The additional flights offset a portion of the domestic decline during 1990, lTC though KLM also suspended one of its three flights to London in response to weak demand.

International flights make up only 10 percent of the U.S. aviation market, but they are seen as an outlet for future growth.

Before the war, "That was the market that was growing the fastest," said Air Transport Association spokesman Tim Neale.

BWI managers hope to further strengthen its international service through the 1990s. Increased globalization of national economies and the consolidation of European markets next year promise increased demand for international travel, said Mr. Hierholzer.

Mr. Hierholzer said his office has been working to attract Israeli carrier El Al and carriers serving Canada and South America.

The airport has remained profitable, despite the slump in travel, state aviation officials say. During fiscal 1990, BWI pulled in $43.9 million in revenues and a $14.3 million profit. The aviation agency estimates profits will rise to $16.1 million for fiscal 1991.

BWI's fiscal strength lies primarily in its lucrative parking and concession businesses. It earns money from landing fees paid by the airlines and from its food and retail shops.

But surface parking is its No. 1 cash generator, Mr. Hierholzer said. During fiscal 1990, almost $20 million of the airport's revenues were earned from food and parking, with the parking fees accounting for $9.5 million. BWI has more than 10,500 parking spaces.

The state Aviation Administration is building an airport parking garage that will add another 2,100 public spaces when it is completed in the fall.

To bolster revenues further, the airport raised parking fees $1 during the year.

It is also raising employee parking rates, and counts on an infusion of new parking dollars once the garage is completed.

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