Fare-war windfall dwindling at BWI

THE BALTIMORE SUN

BWI's coming back to Earth.

The bargain fares that transformed Baltimore's once sleepy airport into the nation's fastest growing are nudging upward.

"Your boom days are over. The bargain days there are gone," said Melisssa Abernathy, a spokeswoman for American Express Travel Related Services in New York.

While airfares at BWI remain lower than those at many cities, they are rising at a much faster pace. Between February and March this year, the average one-way fare from Baltimore to six key cities jumped 15 percent, according to a recent American Express survey. That compared to a 6 percent increase nationwide.

The fare increases at BWI reflect a national trend toward higher ticket prices as the troubled airline industry struggles to return to profitability. But the price boosts appear to be more pronounced at airports like Baltimore-Washington International where passengers have enjoyed phenomenal fare wars.

Overall, the most dramatic increases have occurred on North-South routes, largely because of the demise of Continental's CalLite discount program. The average one-way fare from Baltimore to Boston -- which hit a low of $97 last summer -- rose from $160 to $200 between February and March.

"Everyone thinks of BWI as the low fare airport," said Lisa W. Haber, owner and manager of Travel Agents International in Timonium. "But prices are definitely going back up."

For sure, bargains still abound at BWI, particularly on the routes where Southwest Airlines and USAir compete. A one-way ticket to Louisville can be purchased for $69.

"Prices have increased, but you can still wheel and deal," said Bill McGlone, a CSX employee who recently bought a round-trip ticket to Chicago for $89.

But whether or not those kind of fares remain -- and BWI continues to lure hordes of travelers -- hinges largely on Southwest, the Dallas-based discount carrier that spearheaded fare wars at BWI in September 1993.

"BWI is going be driven by whatever Southwest does," said Jon Ash, director of Global Aviation Associates, a Washington-based aviation consultant. "I think you can assume that fares won't revert to pre-Southwest levels. But the question is how much will they expand and how much will they raise fares."

In an industry that has seen six consecutive years of losses, tallying more than $13 billion, fare increases seemed inevitable.

Airlines have been cutting costs significantly through layoffs and cutbacks in passenger service. In addition, they've grounded planes and deferred purchases of new ones. With fewer empty seats, there's less incentive to discount fares.

But it hasn't been enough.

"Airlines have been doing a great job on the cost side, but they haven't been able to get the revenues up because of the pressure of low cost carriers," said Mr. Ash.

While some major carriers posted small profits last year, the entire U.S. airline industry is still expected to lose $100 million, according to the Air Transport Association, the industry's trade group in Washington. Much of that comes from USAir's continuing heavy losses.

But now, thanks to dwindling competition and fewer planes in the air, airlines seem poised to drive up fares wherever they can.

For Jerry and Evelyn Ferguson of Abingdon, the one-way excursion fare they pay on trips to visit his parents in Atlanta has gone from $120 to $150 since December. "I think we're seeing the end of it," Mr. Ferguson said last week at BWI.

Most of the major airlines expect to impose at least a $20 fare increase on full-fare tickets over the next two weeks, according to Ms. Haber. Even excursion fares are rising and some airlines have changed the criteria for advance bookings from 14 days to 21 days.

"Look for fare sales in the summer, but they won't be as cheap as last year," she said.

Consumers who've grown accustomed to low fares often seem perplexed and sometimes angry with the increases, Ms. Haber said. "I had one business traveler who took a trip to Detroit for $300 two months ago and recently had to pay $500. He was really upset."

BWI has enjoyed a reputation as a mecca of low fares since September 1993, when Southwest launched its first East Coast operation here. The carrier's arrival prompted Continental Airlines to introduce discounts on numerous short-distance routes.

To protect its East Coast turf, USAir responded aggressively with discount prices and more flights. In a domino effect, other major carriers matched prices too.

Those moves turned BWI into a frenzied center of competition. Between October 1993 and October 1994, fares from BWI to six major cities surveyed by American Express plummeted 26 percent.

Early this year, however, the competitive picture began to change. Continental began reducing its flights, ultimately terminating its CalLite program two weeks ago. At BWI, it has reduced its daily flights from 39 to 20 since January. Small discount carriers, who were drawn into the competitive fray, bowed out.

USAir, which handles half the 31,000 daily passengers at BWI, is cutting 10 of its 115 jet flights and raising fares in markets where it competes with Continental.

After growing by more than 2 million passengers in 1994, traffic at the state-owned BWI is expected to increase only slightly this year -- from 12.5 million to 12.8 million.

"As fares start creeping up, some people, particularly families of four and five, will make the decision not to fly," said Theodore E. Mathison, administrator for BWI. "Not knowing where the fares will level off, it's hard to judge the impact right now."

But he predicted that "most people who have discovered BWI through low fares will continue to use the airport."

In the near future, the number of daily flights at BWI is not expected to increase nor are any new discount carriers expected to begin operating here. In August, Southwest plans to add four nonstop flights to Nashville, making it its sixth city served directly out of BWI.

The carrier will take over two new gates at BWI in June and two more before the end of 1995, bringing its total to six. While the added gate space will give Southwest the ability to nearly triple its 25 daily flights, no additional destinations are expected to be added before 1996.

And the airline -- facing intense new competition on the West Coast and declining profits -- has given no indication that it will add north-south routes out of Baltimore.

Another wild card for BWI is ValuJet Airlines, a discount carrier that operates out of Washington Dulles International, serving Atlanta, several Florida cities, Montreal and Chicago. Currently, ValuJet has 27 planes and the lowest operating costs in the airline industry.

The Atlanta-based discount carrier recently announced plans to add at least 60 planes to its fleet in the next five years. Depending on its routes and fares, the carrier could siphon passengers away from BWI, much the way Continental and Southwest did with Dulles during the past 18 months.

But, according to Mr. Ash, passengers at BWI and elsewhere should continue to find attractive fares even as the airline industry finally recovers this year.

"The majors will be profitable in 1995," he said. "Overall, consumers are looking at a pretty good future in a competitive environment."

AIRFARES HEAD UP

Here are February-to-March percent changes in typical air fares from Baltimore to six selected cities.

City, Full coach, Typical business, Lowest discount, Average*

Atlanta, 4%, -2%, 5%, 10%

Boston, 14, 26, 6, 25

Chicago, 5, 0, 0, 11

Dallas, 4, 9, 7, 8

Los Angeles, 4, 5, 6, 30

Pittsburgh, 3, 3, 4, 5

Average, 6, 8, 5, 15

Full coach -- unrestricted economy class. Business -- lowest fare available to business traveler. Seats may be restricted and may require advance purchase up to 3 days. Lowest -- most restrictive fare. Average -- one-way average price paid by all

business travelers booked by American Express.

* Jan. to Feb.

Source: American Express Airfare Index

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