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BWI ponders expansion as largest carrier Southwest continues record growth

There is fresh pavement outside and new high-end stores, a chic lounge and even a French spa setting up inside as Southwest Airlines Co.’s acquisition of a top rival inspires hope of even more record-setting growth at Baltimore/Washington International Thurgood Marshall Airport.

Expansion plans for BWI, however, are written in pencil and aren’t saddled with start dates because the airport’s fortunes will continue to rise and fall with the volatile airline industry’s bankruptcies, titanic mergers and ever-advancing technology.

“To think that what we know today is how it’s going to stay is a mistake. The competition [to Southwest] isn’t going sit on their hands,” said airport Executive Director Paul J. Wiedefeld, sitting in front of a floor-to-ceiling bird’s-eye-view photo of the airport hanging in his office.

“What’s driving [the airport] is the strength of the region,” he continued. “The amount of people who start and end a trip here is tremendous, and it’s a growing region.”

BWI appears better positioned than many of its peers to grow, as evidenced by its above-average performance during and after the recession.

The number of passengers flying from BWI bounced back in 2009 by 1.2 percent, even as 5 percent fewer people flew at all of the country’s airports that year than did the year before.

Much of that local growth was driven by Southwest’s identical 1.2 percent BWI expansion in 2009, a bright spot as the airline saw its number of passengers dip just 0.5 percent nationwide.

“[BWI] won the prize,” said George Hamlin, a Northern Virginia airline consultant. “They got to be a major focus city for Southwest. This is like winning the lottery.”

John D. Kasarda, a University of North Carolina professor who studies airport development, said airlines and airports will be spurred to grow by a recovering economy and higher demand for business travel.

“Time is becoming more and more important. People and businesses are spreading across the country,” he said. “Airlines will grow. They’re reactive, not proactive.”

The biggest gets bigger

This fall, AirTran Airways will move from its home on Concourse D to Southwest’s wing of BWI, which consists of Concourses A and B. Southwest closed its $1 billion acquisition of AirTran in May.

Gary Kelly, Southwest’s president, chairman and CEO, said this month that he expects the airlines to operate under a single Federal Aviation Administration license in early 2012.

That would make the new Southwest by far the largest carrier at BWI, accounting for 70 percent market share. It would also make BWI the largest Southwest airport, edging out second-place Chicago Midway and the current title holder, Las Vegas McCarran International, according to the airline.

“They’re huge players” at BWI, said Wiedefeld, “and they’re going to continue to be huge players.”

Some fear the acquisition of AirTran will give Southwest too much control over ticket prices in some markets. Southwest will carry at least 90 percent of the passengers bound for 16 airports served by flights from BWI after the takeover is complete, according to a report by state legislative analysts.

Southwest and AirTran are the only airlines that fly from BWI to Milwaukee, New Orleans and six Florida destinations, including Orlando and Fort Lauderdale.

Kelly said this month the merger will give the new Southwest the ability to expand in new markets, particularly in the Southeast.

AirTran, for instance, flies 200 daily departures from Atlanta’s Hartsfield-Jackson, the country’s busiest passenger airport. Southwest flies none.

“I think the merger with AirTran is going to be a significant positive,” Hamlin said. “Yes, there’s some overlap right now. They’re not going to run as many [domestic] flights. They don’t need to.”

International flights, however, present an opportunity for the company. Kelly said Southwest will first look to the Caribbean and Mexico, where AirTran already has a presence, and later, Europe.

BWI has “more than adequate facilities here to think about an expansion, including international,” Kelly said. “The geography is good, and the local market is very strong.”

Southwest’s overseas aspirations could be a turning point for BWI’s international efforts. The airport’s William Donald Schaefer International Terminal has only five daily commercial departures, including a state-sponsored British Airways flight to London. Hamlin, the airline consultant, said there is potential for Southwest to fly to Amsterdam, Paris and Frankfurt in addition to London, feeding those flights with passengers from domestic routes to and from 47 U.S. cities.

Pondering growth options

BWI Executive Director Paul J. Wiedefeld

Passenger traffic at BWI has increased for 14 straight months and 22 of the past 23. The streak was broken only by the back-to-back blizzards of February 2010.

Still, nearly 10.6 million passengers took flights from BWI in 2010, according to federal figures. The 5 percent jump in passengers last year pushed BWI’s total beyond its previous all-time high in pre-recession 2007.

BWI has several options available to accommodate further growth by Southwest or one of its other tenant airlines.

One option, Wiedefeld said, is to build a passenger walkway between Concourse B and its neighbor.

“It would allow us to expand Southwest over to C concourse,” he said.

Concourse A, the other leg of Southwest’s wing, can be extended by five gates. An aerial view of the airport shows concrete parking areas for planes already in place for that addition, although Wiedefeld said it is “not in the immediate future” of BWI.

The other side of the terminal, a U-shape opening to the northwest, can be extended to add a Concourse F and make the terminal J-shaped. On the stem of the J, the international terminal can be expanded to add more gates if the Southwest overseas venture needs the space.

“In a few years, that may be something that’s very pressing for us, to figure out more capacity on the international side for them,” Wiedefeld said.

But, he cautioned, the calculus is more complicated than adding more gates to handle more flights and more passengers.

Airlines could squeeze more flights into the existing gates or fly bigger planes. Southwest is planning to add 737-800 class jets to its fleet; they hold 38 more passengers than its 737-700s.

Advances in air traffic control technology that will come when the FAA and airlines invest in the needed equipment will enable airlines to fly more direct routes and take off and land more efficiently.

Keeping up appearances

For now, work at the airport is more about upkeep than expansion.

Inside, French spa Be Relax is scheduled to open at the end of the month and Fire & Ice, a local jewelry store chain, just set up a second location. The Airspace Lounge opened in May.

Outside, BWI is spending $41 million, including $15 million in federal stimulus funds, to repave the concrete apron between concourses C and D and to upgrade utility lines that have been buried there since the 1950s, when it opened as Friendship Airport.

In September, BWI will close its two main runways for 54 hours to resurface their intersection. Air traffic will be diverted to an alternate runway during that time.

Repaving the rest of the 22-year-old asphalt strips — one is 9,501 feet, and the other is 10,502 — will take another three years.

The airport is also looking at opportunities to forge stronger connections with trains, buses and highways.

The InterCounty Connector, when completed this year or in early 2012, is expected to cut travel time from Gaithersburg to BWI from 71 minutes to 37. The Maryland Transit Administration also plans to run bus service from the Shady Grove Metro stop to the airport, further opening the Washington suburbs to BWI.

“Anything that improves the access from the Washington area is a benefit to BWI, particularly the ICC,” said Wiedefeld. “It connects to the I-270 corridor, a high-growth area of the state.”

BWI officials are also following redevelopment of the airport MARC train station. More tracks there will bring more trains from a region Wiedefeld expects to be gaining in potential air passengers. The military’s realignment of military base functions could play a large role in that, as the areas around Aberdeen Proving Ground and Fort George G. Meade expect to see the bulk of the 60,000 people projected to come to the state as part of the shift.

“Some of them are going to fly in and some of them are going to move here and use the airport for business,” Wiedefeld said. “We’re very fortunate to be in this region.”