Hoping to capture a large chunk of the discounted fare market along the East Coast, Continental Airlines Inc. announced yesterday that it would expand its low-price service out of Baltimore-Washington International Airport by adding more daily flights and a new destination.
The planned expansion came just six weeks after the Houston-based airline cut its unrestricted fares from BWI to nine cities by as much as 72 percent, and more than doubled its daily departures to 15.
Effective Dec. 16, Continental said, it would add four daily flights to Norfolk, Va., and increase the number of flights to Newark, N.J., Cleveland and Greensboro, N.C. In addition, Continental said it would lower its previously announced Peanut Fares to Jacksonville, Fla., and sharply discount its prices on connecting flights from BWI to Kansas City to compete with Southwest Airlines, which also offers a connection from BWI.
Its new one-way unrestricted fare to Kansas City, for instance, would drop to $149 from $410.
Emulating Southwest Airlines' highly successful style of operation, the so-called Continental Lite program offers low fares, quick turnarounds and no-frills service on flights of fewer than 500 miles.
"What Continental has realized is this North-South market is very lucrative and has the potential to be very profitable," said Brian Keene, Continental's general manager at BWI. "We plan to grow now as opposed to waiting."
The ticket prices announced yesterday could further heighten the fare war that began at BWI more than three months ago when the upstart, Dallas-based Southwest announced it would begin service to Cleveland and Chicago for $49 or $89 one-way, respectively.
But yesterday, USAir, one of Continental's chief competitors at BWI, took a cautious approach about Continental's latest move.
"We have no immediate plans to match them right now. We looat each market on an individual basis," said Mary Jo Capezio, a spokeswoman for USAir, which is the largest carrier at BWI, with nearly 200 flights a day.
USAir serves most of the cities targeted for Continental's Peanut Fares. But the Arlington, Va.-based airline's operating costs are roughly 50 percent higher than Continental's.
Compared to most major airlines, Continental has the luxury of moving ahead quickly with lower fares. Having reorganized under Chapter 11 bankruptcy laws, Continental has far less debt service and lower labor costs than most other major airlines.
Since the airline began its Continental Lite program, revenues have exceeded the carrier's projections, according to Rob Curtis, director of marketing at BWI. But neither Mr.Curtis nor officials at the corporate headquarters in Houston would comment on whether the program is making money.
Citing its new discount service, the airline recently reported third quarter earnings of $12.4 million, or 53 cents a share, after losses in the first half of the year. But Continental, the nation's fifth-largest airline, said it still wasn't attracting its share of higher-fare business travelers and it expects to lose money in the final three months of 1993.