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State guarantees payment to British Airways to keep flight

ANNAPOLIS — Maryland will guarantee British Airways $11 million over the next two years to maintain the airline’s service from BWI to London, a move state officials hope will help grow the airport’s international business.

“It’s the way we’ve been able to keep British Airways, which is our only significant international carrier,” said Maryland Transportation Secretary Beverley K. Swaim-Staley.

The state has paid British Airways $18.8 million in the past five years to keep the daily round-trip flight alive at Baltimore-Washington International Thurgood Marshall Airport. Without it, British Airways would stop flying to BWI, as it has at other American cities, said Paul J. Wiedefeld, the airport’s executive director.

The Board of Public Works approved the deal, the only one of its kind at BWI, Wednesday morning.

Under the agreement, which stretches from April 2011 to March 2013, the state will guarantee British Airways an 8 percent margin on its operations at BWI, capped at $5.5 million per year. In 2009 and 2010, the state paid the maximum amount to the airline as the economic woes dampened the demand for air travel.

Airline industry analyst John Pincavage said other airports use subsidies to lure carriers to their gates.

“It’s more likely to be seen in regional airports or secondary airports that don’t have a lot of service. Wilkes-Barre/Scranton, Pa. might be one of those places,” Pincavage said. “The same things happen on a different level [of airport] with international service.”

The state estimates the British Airways flights carry about 100,000 passengers a year, 52 percent of them visitors to the country, and yields about $110 million in spending in Maryland.

Wiedefeld said the airport is working on deals to bring more flights to BWI’s William Donald Schaefer International Terminal, which opened in 1997 to great expectations that it has never lived up to.

“We’re working through a number of leads right now, both with legacy carriers and new entrants, particularly in Europe,” he said, adding that Mexico and Canada are other potential destinations.

The British Airways flight could serve as a test case for the airport’s potential international market.

“If we lose them, it just puts us at such a disadvantage in trying to build that international business,” Wiedefeld said.

The airport already faces a challenge for international travelers, sandwiched between airports to the north and south that have more robust and proven international offerings.

“You have international flights out of Philadelphia, even though it’s a hike, and [Washington Dulles International Airport, in Virginia] has a huge international business with flights all over the world,” Pincavage, the analyst, said. “Does it [the British Airways subsidy] work? This is one of those time will tell things.” Indeed, comptroller Peter Franchot asked what would keep British Airways from packing its bags, like Ghana Airways and Aer Lingus, both one-time international carriers at BWI. The airport and the airline can opt out of the deal.

Wiedefeld said he was “confident” British Airways will stay and the market will pick up.

He said the airport has already seen an increase in bookings from a new alliance between British Airways and American Airlines, which allows American to feed customers directly on to its partner’s international flights. It also opens the BWI-to-London flight to federal workers flying on government business, which airport officials have already pointed out to the growing federal work force in the state

Wiedefeld said the Inter-County Connector could also benefit the airport’s international business, making the commute to BWI for well-heeled travelers in suburban Washington more convenient than the trek to Dulles.

The strong presence of Southwest Airlines could also help BWI’s international standing by “feeding” passengers into Maryland from its expansive, nation-wide network, Pincavage said.

“Feed is key,” he said.