"At BWI, Southwest brought a boom"

Sunday, May 9, 2004

At BWI, Southwest brought a boom
The airline's arrival led to massive airport expansion. Business after
business moved to the area. Philadelphia might be different.
By Larry Eichel
The Philadelphia (PA) Inquirer


LINTHICUM, Md. - In 1993, Baltimore-Washington International Airport,
despite its grandiose name, was an underused, mid-size facility stuck in
the woods south of Baltimore.

Then Southwest Airlines arrived on the scene with its low fares and
nonstop flights. And things began to change.

Today, BWI is in the midst of a $1.8 billion expansion and renovation,
and it has firmly established itself as one of the nation's
fastest-growing airports.

It serves twice as many passengers as it did before Southwest arrived,
more now than either of its regional competitors, Reagan National and
Washington Dulles.

The woods that once surrounded the airport have all but disappeared,
replaced by low-rise office buildings, corporate headquarters,
distribution centers, hotels and a vast, new shopping district.

"Southwest Airlines was the central spark that got it all going, the
improved airport, the economic spillover, all of it," said Paul
Wiedefeld, executive director of the Maryland Aviation Administration,
which runs the airport.

The coming of Southwest, the low-fare carrier that opens for business in
Philadelphia today, is not the only factor that turned the airport
district into an economic hot spot.

Also working in the area's favor has been a superb highway network,
substantial population growth, and the nearby presence of the National
Security Agency and related contractors - for whom business is booming
in a post-9/11 world.

But what has happened at the airport itself has been crucial. The
reduced fares, started by Southwest and matched by others, have
benefited local travelers and created new business.

"For a while, it seemed that every time Southwest opened a new route,
we'd get business from the city at the other end," said Gerard Wit, vice
president for marketing at MIE Properties, owner of much of the office
space surrounding the airport.

"I'd ask, 'What brings you to the BWI area?' and the answer would be:
'We're headquartered in Buffalo, and Southwest just started flying from
Buffalo to BWI for $49. So we're thinking about a new office there.' "

Talk to representatives of companies that have moved here in recent
years, and you hear similar explanations. Hydro Aluminum, a
Norwegian-based firm, put its U.S. headquarters in the airport district
two years ago.

"The ease and cost of travel, domestic and international, was a key
consideration," said company vice president Lynn Brown. "Being five
minutes away from this airport, with its schedule and fare structure, is
a great convenience factor."

Last year, the American Urological Association moved into a new,
four-story building near the airport, consolidating offices in Baltimore
and a training center in Houston. One benefit is the ease of access for
doctors coming in for training sessions.

How much of that sort of thing might happen if and when Southwest grows
in Philadelphia is hard to predict; the situations are far from
analogous.

The area around Philadelphia International Airport is hardly virgin
woodland, and US Airways, which once controlled the Baltimore market,
looks ready to mount a tougher, more desperate defense of its
Philadelphia stronghold.

"At BWI, everything came together for us," said Gary Kelly, Southwest's
chief financial officer. "It remains to be seen whether we have other
Baltimores, like Philadelphia, in our future."

Southwest began its BWI service on Sept. 15, 1993, with eight daily
departures to Cleveland and Chicago-Midway. Today, it has 162 flights to
35 cities.

In 1993, US Airways, then already in the process of down-sizing at BWI,
dominated the airport with 54.5 percent of the domestic traffic. Today,
Southwest leads with 47 percent; US Airways has fallen to 6 percent.

A decade ago, BWI had 9,438,729 passengers a year. Now, it is on pace
for 20,000,000, still about 5,000,000 fewer than Philadelphia
International.

But BWI has a wide lead over Philadelphia on a different measurement,
the number of passengers who begin or end their trips at either airport.
That is seen as the better indicator of the relative strengths of the
two air-travel markets.

Maryland officials say the presence of Southwest has been a big regional
plus, albeit a difficult one to quantify. They cite such evidence as the
numbers of out-of-town fans in the stands whenever the Orioles host the
Boston Red Sox or Cleveland Indians, teams from Southwest markets.

Some of the airline's growth at BWI is new traffic - people traveling
more often or flying distances they might otherwise drive - and some is
not.

A big chunk comes from travelers shifting to BWI from the two Washington
airports. Average fares run 40 percent to 60 percent higher at those
places, according to the U.S. Department of Transportation.

A recent license-plate survey done for BWI management found that 47
percent of the cars in the garages came from the Washington area. About
14 percent were from Pennsylvania, mostly from the Harrisburg, York and
Lancaster areas.

The impact on the airport district, though, is obvious. "BWI is
Maryland's top economic development anchor," said Anirban Basu, an
economist at Baltimore's Sage Policy Group.

The district is home to 6 million square feet of office space (about 15
percent of what Center City Philadelphia has), more than 2,000 hotel
rooms, and a 1.4-million-square-foot shopping mall with a
medieval-themed dinner-theater and a 24-screen cineplex made to look
like something out of ancient Egypt.

Most of that development has come since the arrival of Southwest, and
more is on the way.

"A new, full-service Hilton is going in right here," said Robert
McGlotten, senior vice president of the Anne Arundel County Economic
Development Corp., pointing to a nearby stand of trees, "and another new
extended-stay hotel there."

The airport itself has expanded to keep up with the passenger growth. At
the entrance to the airport property stands a new, nine-story,
8,400-space garage. A mile away there is a consolidated rental car
center. Both projects have eased what had been an acute parking
shortage.

The lobby in the ticketing area is being widened, and skywalks are being
built from the close-in garage. A new A/B terminal is to be ready next
spring; it will provide Southwest with 26 gates (up from 18) with an
option for five more.

There is some concern that Southwest's coming to Philadelphia might hurt
BWI, by reducing the now-modest flow of passengers from the Philadelphia
and Wilmington areas. Some concern, but not much.

What has happened here in the last decade is too deeply rooted to be
easily undone.


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