BWI sees plenty of growth in Southwest’s 25 years
Jay Hierholzer remembers the exchange with Southwest Airlines executives as he offered the low-cost airline two gates at BWI Airport in 1993.
“What if we need more?” Southwest officials replied.
“Well, we have these other four … ” Hierholzer said. “What if we need more?” they repeated. That’s when Hierholzer, then the airport’s development director, realized the upstart airline was serious about BWI’s role in its future. “And it was going to be really big.”
Twenty-five years after the first Southwest flights landed at BWI on Sept. 15, 1993 — greeted by the Phillips Restaurant ragtime band and the Oriole Bird — the airline that grew into the largest U.S. carrier now offers more than 240 departures per day from Baltimore to 64 other cities. Over the years, Southwest transformed BWI as the state hurried to keep pace with its growth, building a terminal exclusively for the airline.
“There’s no way to look at the success of
Southwest without putting it into the context of BWI,” Maryland Transportation Secretary Pete Rahn said. “The success of BWI has very closely followed.”
Southwest CEO Gary Kelly called the airline’s partnership with BWI “one of the greatest success stories for Southwest Airlines over the past 25 years.”
Today Southwest accounts for roughly 70 percent of the passenger volume through what is now Baltimore-Washington International Thurgood Marshall Airport, which has seen record passenger growth in recent years.
When Southwest debuted service at BWI, the airport had fewer than 9 million passengers a year. Last year, the airline alone carried more than 18 million passengers through the airport.
The airline employs more than 4,800 people at BWI, including more than 2,000 flight crew. The airline says its operations support another 25,000 jobs in Maryland and its activity stimulated more than $6 billion in economic activity in the region last year.
Southwest’s low-cost business model has paid off for both the airline and Maryland, attracting a loyal following from business travelers and tourists, spurring growth of the airport and, thanks to a multitude of direct flights, making the state a viable place to do business, said Daraius Irani, chief economist for the Regional Economic Studies Institute at Towson University.
“It has helped Maryland,” Irani said. “It’s provided a great source of cheap, low-cost flights around the country for business travelers. They offer a great value for the money for the flying public.”
Donald C. Fry, president of the Greater Baltimore Committee, a group of business and civic leaders that includes Southwest, said the airline’s large presence makes Maryland more business-friendly by making the state more accessible.
“It’s beneficial for the business community throughout the state,” Fry said. “It certainly has opened up the networking opportunities even more so for Baltimore businesses.”
Southwest also buoys Baltimore and attractions near the airport, including the Live Casino and Laurel Park racetrack, said Cate Sheehy, the chief operating officer of the BWI Business Partnership, of which Southwest is also a member.
“There’s no doubt about it that the impact Southwest has had on the region has been a positive one,” she said.
Even as Southwest helped Maryland, the state and BWI helped Southwest, partly by investing hundreds of millions of dollars in the airport.
“Our presence at BWI has played an instrumental role in our route development all along the East Coast, and it continues to be a focal point of our plans for the future,” Kelly said in a statement. “We look forward to serving BWI for many more decades to come.” After 25 years at Baltimore-Washington Thurgood Marshall Airport, Southwest Airlines employs more than 4,800 people at the airport.
Moving into BWI allowed Southwest to tap into the lucrative D.C. market — and allowed the airport, which had been a distant third in the region behind Dulles and what is now Reagan National airports to truly claim the “W” in its name.
Southwest “made BWI one of Washington’s major airports,” said Samuel Engel, senior vice president and aviation consultant at ICF, a global consulting firm whose clients include BWI.
The proportion of Washington-area passengers departing from BWI has risen from 27 percent in 1993 to 41 percent, Engel said.
When Southwest arrived, the airline was expanding rapidly from a regional airline into the first successful low-cost airline.
Its ability to undercut competitors’ fares hinged in part on its use of a fleet made up entirely of Boeing 737s, which were smaller and less costly to operate than the fleets used by other airlines. It also kept its crews with the same planes through multiple destinations, which enabled it to efficiently turn planes around in roughly 20 minutes, getting more flight time out of each plane.
Southwest’s selection of BWI was part of the airline’s broader strategy to serve secondary airports on the outskirts of major cities — others included Chicago Midway and Oakland international airports — where the airline could maintain its efficiency but still reach large markets.
It bolstered those airports, which might not have survived otherwise, said Tom Mayor, an aviation industry expert and partner at the global consulting firm KPMG.
“Southwest really took some secondary or tertiary airports that might’ve gotten shut down and turned into shopping malls and really revitalized them,” Mayor said.
BWI became the hub of Southwest’s East Coast expansion, a crucial step in becoming the national airline it is today, Engel said.
“The story of Southwest Airlines and BWI is the story of the institutionalization of low-cost carrier air service at a national scale,” he said.
The airline’s strategies disrupted the industry, which had only been deregulated for a little over a decade. It set off “fare wars” with other airlines and created a model for low-cost air service that has been copied both in the U.S. and in Europe.
It debuted in Baltimore not long after USAir merged with Piedmont Airlines and canceled that carrier’s plan to develop a hub at BWI, Hierholzer said.
A fare war ensued with USAir and Continental Airlines matching Southwest’s fares. But Southwest’s efficiency, lower operating costs and all-737 airplane fleet gave the airline an advantage, said Dave Ridley, the carrier’s then-director of marketing and sales. The airline, which embraced the zany, fun-loving personality of its co-founder and then-CEO, Herb Kelleher, reveled in the competition.
“We had no inhibitions about getting involved in aggressive fare wars,” Ridley said. “We could make money where the others couldn’t, and the public was benefiting from that.”
Southwest leapfrogged US Airways as BWI’s leading carrier in 1999 and solidified its presence by opening bases at the airport for its pilots, flight attendants and a maintenance crews. The airline’s growing investment in BWI gave state officials the confidence to construct the 25-gate A/B terminal, a $264 million project funded partially by the airline, in 2005.
It was the only terminal at the time built exclusively for a low-cost airline, which raised concerns.
Ted Mathison, the airport’s former executive director who oversaw the effort to land Southwest, acknowledged the risk in investing so significantly in one airline, especially a low-cost one. But despite its low fares and wacky corporate persona, Southwest was, and remains, conservative and financially sound, which sets it apart in an airline industry in which many others had gone through bankruptcy.
“Southwest became the big kid on the block,” Mathison said. “It’s built on a very solid foundation.”
Ricky Smith, the airport’s current CEO, said the state’s spending to expand its largest airport has paid off.
“Every dime the state has advanced the airlines has been a benefit to the state,” Smith said.
And the state continues to invest in BWI to accommodate Southwest. A state spending panel approved plans in July to spend $60 million to expand Concourse A, adding five new gates, passenger waiting areas, food and retail concession space, and restrooms. The renovation also will accommodate the replacement of the airline’s outdated baggage handling system.
While Southwest has played a big role in the airport’s growth, the economist Irani cautions that dependence on one airline could be a disadvantage if Southwest ever runs into trouble or decides to leave.
And not everyone is happy with BWI. Noise complaints have jumped since the Federal Aviation Administration recently adjusted flight paths to allow jetliners to fly lower on their approach. Nearby residents petitioned the state to halt the A Concourse project until the noise is addressed.
“We are cognizant of the [noise] issue, and we want to be good community partners,” said Steve Goldberg, Southwest’s senior vice president of operations and hospitality.
The expansion will add room for Southwest’s new Boeing 737-800s, which are larger and quieter planes, he said.
Despite its size and dominance of travel from BWI, the airline remains popular, as much for its quirky personality as its low fares and bags-fly-free policy.
As a traveler, “I’ve never had a bad experience,” Irani said. “They are able to reinforce that there is good customer service in airlines. … Whatever you can do to make people feel less miserable, that’s what Southwest does.”
Carolyn and Donald Raff of Bel Air, Rapid Reward members who were flying to Dallas one morning this week, said they got a laugh from a flight attendant recently singing the Federal Aviation Administration-required safety briefing. Another paused after “If you’re traveling with a child,” to quip, “I’m sorry.”
“It’s a fun airline,” Donald Raff said. “They let their people have fun.”