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"Marketing the market"

April 1, 2000

Marketing the market
Air Transport World

Getting new airline service for an airport means showing a carrier it can
make money there

If you build it they will comebut only if you convince them they can
generate profits operating there. The Maryland State Aviation Administration
figured this out nearly 30 years ago after it bought Friendship Airport from
Baltimore City and turned it into Baltimore/Washington International. "We
hired a consultant to do studies on potential service that could be offered
by various airlines, and how airlines would profit by serving these markets
from BWI," recalled Paul B. Moore, who was the airport's director-trade
development in 1973-79. "At that time we focused on the [Washington] D.C.
market" because the goal was to position BWI to serve an expanded region
encompassing Washington to the south and parts of Pennsylvania to the north.

Moore and his team, including State Aviation Administrator Robert J.
Aaronson, visited airline top managements and took what they called their
"dogand-pony show" to carriers' reservation centers. Travel agents also were
courted, and a separate marketing office was established to build cargo
business. The airport often advertised specific airline services, Moore

Baltimore-Washington International airport

BWI still is following essentially the same blueprint, concentrating now on
filling the 370,000-sq.-ft., $110 million international terminal that opened
in 1997. Right now the military's Air Mobility Command is the largest
operator there, carrying some 140,000 passengers a year. AMC moved to BWI in
February 1998 from Philadelphia. Air Aruba started service last year and two
charter operators added Cancun flights.

"Our newest success story is Aer Lingus," said William D. Castleberry, BWI's
associate administrator-marketing and development. The Irish airline hopes
to start daily nonstop A330 service to Dublin this summer. This requires US
DOT approval and BWI and its backers are lobbying hard to win it. Maryland
political figures from the governor through the 10-person Congressional
delegation are involved in this effort, Castleberry said. Dublin will be
BWI's first new destination in about 20 years and the service will mark the
first-ever nonstop flights to Ireland from the area.

"Lt. Gov. Kathleen Kennedy Townsend was a leader in making the service
happen," Castleberry said. She worked with Aer Lingus and the US government
to get the service and with the business community to support it. A number
of Irish businesses have ties to the region, Castleberry noted, and millions
of residents claim Irish ancestry.

When the airport targets a carrier, "The first thing we do is show them the
numbers," he said. "We show them the benefits of the region," which is the
fifth-largest consolidated metropolitan area in the US and has the
secondhighest disposable income. "We start by working with the route
planners, and sometimes with the North American offices of foreign

Once the new service is set, "We develop a partnership with the airline" to
sell it at both ends. In February Castleberry and a high-level group from
Maryland went to Ireland "to tell them how we're going to market the
service," discussing advertising and public relations campaigns. "I don't
know how to market in Ireland," he said. "Aer Lingus has people who can do
that. I can market in Maryland and D.C."

BWI is concentrating on, filling the 370,000-sq.-ft., $110 million
International terminal (foreground) that opened in 1997. Most recent
customer is Aer Lingus, pending US DOT approval.

He also knows how to market in London. The airport's 1999 joint campaign
with British Airways to sell BA's BWIGatwick service, which included
television spots and ads on London taxis and in Underground stations, won a
top prize at an international meeting in Rome.

Advertising and trips come out of the airport's $2.8 million marketing
budget. "Seventy percent of our resources are used in assuring that the
carriers we have here today are profitable," Castleberry said. "We start the
marketing once we have them established. We have very strong cooperative
agreements with our partners Icelandair and BA. The worst thing would be to
get an international carrier that fails." This dedication to profitability
"gets the attention of other airlines," he believes.

Although BWI has never given a new carrier concessions in airport charges,
he said "this is a distinct possibility" for Aer Lingus. As of February,
"talks are ongoing."

While they work on details of the Irish service, BWI marketers also are
negotiating hard for new African service. "There are 1.5 million native-born
West Africans living in this area," Castleberry said. "We have met with
Ghana Airways and Air Afrique and are talking with Nigeria Air. We think
they're now very much aware of the advantages of using BWI. This would be a
very successful service."

Service to Frankfurt is another goal, along with flights to Paris and
Amsterdam. Although the airport "can't build gates

fast enough" on the domestic side, it would like to add nonstop service to
underserved cities such as Seattle, San Diego and San Jose. These
destinations "get 175,000 passengers a year from this area," Castleberry
said. "I want big, wide nonstop airplanes" from BWI to these cities.

Ten new domestic gates opening in June will be used by Southwest Airlines,
which established its first East Coast service from BWI in September 1993
and now has pilot and flight attendant bases there. The airport won the
Southwest hub over stiff competition from other eastern airports.

Southwest and BWI talked about the service for more than five years, Bill
Oven, the airline's senior planner, told ATR? "They really helped us
understand how the area divided out among the other airports," he said. "The
airport was not congested, on the ground or in the air, [and] availability
of gates and passenger areas was not a problem . We were wary of the
congestion and slot restraints at Washington's other airports.

"The greatest thing an airport marketing department can do for a prospective
airline is help them understand the finer nuances of the marketplace," he
added. "A lot of data is available to tell us about who lives where and what
their travel habits are, but we may not know that a new microchip plant is
moving into the area, or that the local economy is thriving after a short

The Metropolitan Washington Airports Authority understands this. "Obviously
it's important to know our market, especially if it is undergoing changes,"
said General Manager James A. Wilding. ` Just in the last few years the
explosion of hightech industry along the Dulles corridor has introduced an
entirely new segment of traveler and shipper" to Washington Dulles
International. "Our air service team had to learn that market, work with our
existing air carriers and find opportunities with new carriers to bring in
additional service . . . The result was a 25 % increase in passengers and a
corresponding increase in air service at Dulles in 1999."

Some 60 mi. south of BWI, Dulles has been the object of intensive marketing
efforts that began even before its November 1962 opening. Then-FAA
Administrator Najeeb E. Halaby and other government officials leaned hard on
airlines, with little initial success, to move flights from convenient
Washington National to the new federally owned airport 26 mi. out in the
Virginia countryside.

In recent years Dulles has overtaken BWI as the area's leading international
airport. Its newest service is Austrian Airlines' Vienna trip, which began
in March. In November Sabena added Brussels service and BWIA began flying to
Barbados, Antigua and Trinidad.

BWI's Castleberry insists he does not see Dulles as a competitor. "At worst
our relationship is one of sibling rivalry. We're looking for new service,"
not to take service away from Dulles. He believes all three airports are
needed to serve the Washington-Baltimore market. "BA does tremendously well"
with its flights at both BWI and Dulles, he noted.

But on the other US coast, Oakland International Airport blatantly competes
with San Francisco International, telling the region's residents and the
airlines that serve them that for many it is the more convenient airport.
Oakland has had extensive marketing campaigns for decades. In the 1970s it
used billboards and print advertising and had a central airport-information
telephone number to boost traffic for its carriers. The airport still rents
the billboard at the east anchorage of the Bay Bridge and offers it to
airlines to promote their OAK service.

"After working to fill the seats that are already offered at Oakland
International," an airport spokesperson said, "officials make annual
visits.to the route-planning staff of each incumbent carrier as well as
potential airlines. The main message is simple: Oakland's passenger
potential is understated by DOT statistics . . . As weather delays continue
to push SFO's ontime arrival performance an average of nearly 10 % lower
than OAK's, the argument becomes more and more compelling." Oakland's latest
marketing success was the addition of Aloha Airlines nonstop service to
Honolulu and Maui in February.

Melbourne, Fla., International is also in the shadow of a formidable
competitor. Sixty-two miles from Orlando International, Melbourne is working
hard to establish its own market "serving Florida's space and treasure
coasts." Melbourne has a 10-year-old, 120,000-sq.ft. terminal with six
gates. Its 2,800-acre site includes 1,200 acres of industrial space that
bring in enough rental income to provide a budget surplus that, by law, must
be spent on airport programs.

The Melbourne Airport Authority is using this money to entice airlines to
serve the airport, offering at least $200,000 for initial marketing and, for
the first year, no landing fees and free ticket-counter, baggage-handling
and office space as well as $8 in marketing money for each enplaned
passenger. The program could be worth as much as $1.2 million to an airline,
the airport says. Carriers must agree to provide at least two daily flights
to at least one destination not now served from Melbourne for at least three
years. They must accept the program by July 31 and begin service by the end
of this year.

In February, said Melissa B. Altman, public relations manager, Melbourne was
negotiating with TWA for service to St. Louis and New York JFK, with
Continental for Newark and Cleveland flights and with Delta for nonstop
trips to Dallas/Fort Worth and Cincinnati. In midFebruary she told ATW that
airport management was in "hard negotiation" with one of the three for
service to start later this year. At the beginning of February MLB began a
campaign to get local residents and businesses to write to these airlines
requesting the new service. The airport was "swamped" with copies of the
letters, Altman said.

Next goal is service to Germany and England, the most-popular foreign
destinations for Melbourne travelers.

Atlantic Southeast Airlines began flying between Melbourne and Atlanta in
June with load factors nearing 80%, and added two daily flights in July.
Spirit Airlines, Melbourne's first marketing partner, was paid $4 per
enplaned passenger and given free airport use for a year after it began
service in September 1998. Spirit now pays full airport charges. The
authority also worked with Spirit to get slots at LaGuardia.

Last November Spirit replaced 117passenger DC-9s with 164-seat MD-82s on its
two daily Melbourne-New York flights. "Spirit increased the market to and
from New York's LaGuardia Airport by 964 % and reduced average passenger
ticket costs by 63 % ," said MLB Executive Director Jim Johnson.


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