Southwest plans to put more 'I' in BWI; Airline will add international service by 2009

Southwest Airlines Co. expects to offer connections to Europe through Baltimore-Washington International Thurgood Marshall Airport by 2010, its chief executive said yesterday - a move that could lure more international service to an airport that has struggled to attract and hold it.

Gary Kelly, speaking at a meeting yesterday of the BWI Business Partnership, said the now all-domestic carrier will expand on a current partnership with ATA Airlines to offer service to Canada, Mexico and the Caribbean by 2009. "We promise to do that," he said.

Similar marketing arrangements, called codesharing, that would allow Southwest to sell tickets to Europe could come shortly after that, once the airline upgrades its computer systems to allow multiple partnerships, he said.

As Southwest's fourth-largest gateway - behind Las Vegas, Chicago-Midway and Phoenix - and its principal East Coast center, BWI would be a good launching point for international service, Kelly said. Baltimore is "one of the best airports in our system," he said. "We're ready to grow."

Kelly's statements show the extent to which Southwest sees its record of consistently outperforming the industry through low fares, frequent flights, no frills and efficiency being challenged by high jet-fuel prices and intensifying competition.

BWI currently offers flights to London, Toronto, Iceland, Bermuda, Cancun, Ghana, Greenland and parts of the Caribbean, but it has also seen a number of international carriers come and go, including Aeromexico and Ireland's Aer Lingus. The airport built a $140 million terminal for international flights in 1997.

Unlike nearby Dulles International and Philadelphia International airports, which can draw passengers to international flights from the domestic hub operations of United Airlines and US Airways, BWI has had to rely on local passengers to feed its foreign flights. But that would change if Southwest, BWI's largest carrier with 178 daily departures, agrees to connect its huge domestic traffic base through BWI to international carriers.

"We're poised to move forward," said Tim Campbell, executive director of the Maryland Aviation Administration, in response to Kelly's comments. "We're ready right now in terms of our facilities."

Southwest launched service at Dulles and Philadelphia in 2006 and 2004, respectively, but Kelly said he's not concerned about expansion at BWI taking traffic away from those two airports.

"This airport is well-prepared for more growth," Kelly said. "Philadelphia is strained. ... I don't really see it as a cannibalization issue here at all."

Southwest's business model stands out in the industry for emphasizing flights to secondary or "alternative" airports - not concentrated gateways such as John F. Kennedy International Airport or LaGuardia International Airport. "I don't know - can we say that about BWI anymore?" Kelly said with a light laugh. "But we love BWI."

Southwest has for months been studying whether to abandon or modify its open-seating policy, which it has insisted is necessary to get planes in and out of airport gates rapidly. "For 30 years, the primary feedback we got from our customers is that they preferred assigned seating, but we wanted to do a lot of careful research first. What we're looking at is still comparing our options.

"You'll see some changes soon," he said, without elaborating.

Kelly also said yesterday that Southwest is looking into offering onboard wireless Internet connectivity and having customers pay for it. Southwest cannot "nickel-and-dime our customers," he said, but finding ways to bring in new revenue besides raising fares is critical to an airline that prides itself on 34 years of consecutive profitability.

Southwest has saved about $3 billion since 2000 by locking in fuel prices in advance, allowing it to avoid much of the damage its competitors were dealt by soaring prices. But the advantages from that hedging strategy are not as great as they once were and, according to Kelly, Southwest is entering a period of transformation.

"We need to deal more intensely with a wider variety of choice," he said. "We need to compete more on service and less on fares."



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