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Dulles Airport seen as potential engine for revenue

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Reagan National Airport is the region’s smallest commercial airport. Boxed in by the Potomac River and Arlington County, it is popular with carriers and travelers, but it has no room to grow.

Dulles International Airport, 25 miles west of downtown Washington, doesn’t have that problem. It has already grown, thanks to $4.1 billion in improvements since 2000, and it has the space to grow even more. Yet while National and Baltimore-Washington International Marshall Airport have seen increases in travelers, Dulles has seen a decline.

But officials at the authority that manages Dulles and National say they see far more than a problem. They see potential.

“Dulles is the opportunity for our future,” Margaret McKeough, chief operating officer of the Metropolitan Washington Airports Authority, told members of the authority’s board Wednesday. “It is a tremendous asset. . . . We are not close to maximizing the potential of that infrastructure.”

In a presentation to the board, staff members outlined two ways to generate more revenue from Dulles.

One option focuses on the airport itself, with plans to improve concessions, increase advertising, and add shops and restaurants.

The other option looks beyond the airport. The land managed by the authority around Dulles is largely undeveloped, and when Metro’s Silver Line extension reaches the airport in several years, McKeough said, that land will become more vital — and valuable.

“As far as I’m concerned, when it comes to Dulles, the sky’s the limit,” Jack Potter, the authority’s president and chief executive, told board members.

In an interview after his presentation, Potter stressed that there are no specific plans for development of the 3,000 acres surrounding Dulles.

Still, the MWAA board took a step in that direction Wednesday, approving an amendment to the lease that transferred control of the airports from the federal government to the authority in 1987.

The amendment loosens the lease’s restrictions on business in and around the airports. The lease largely restricts land use to business relating to air travel. But under the amendment, as long as the U.S. transportation secretary approves, the authority can use the land around Dulles to generate revenue.

“We need that flexibility,” Potter told the board.

Dulles has not seen the increase in travelers that the authority had projected for the past decade, a period that saw billions of dollars in renovations and expansion.

The number of passengers traveling through National increased to 18.8 million last year from 18 million in 2010. Officials are projecting about 19 million travelers this year.

Meanwhile, the number of travelers at Dulles declined to 23.2 million from 23.7 million in 2010 and 24.7 million in 2007.

BWI, which is operated by the state of Maryland, has seen year-to-year increases in four of the past five years, jumping from 21 million travelers in 2007 to 22.3 million last year.

The authority expects growth at Dulles this year to be relatively flat. That lack of growth and debt from the airport expansion have increased Dulles’s average cost per traveler.

It costs $25.30 per traveler boarding a plane at Dulles, roughly double the $12.72 per traveler boarding at National and nearly three times as much as BWI’s $9.29 per passenger.

Eventually, Dulles is expected to see the number of travelers increase, driven by overall growth in air travel. The Federal Aviation Administration projects that three times as many passengers will be boarding planes at Dulles by 2040.

MWAA officials say that the efforts of the past several years have positioned Dulles well to handle additional future travelers. With only minor alterations, Dulles could handle about 45 million passengers per year, said Frank Holly, MWAA vice president of engineering.

Even as board members weighed the future of Dulles, they were busy dealing with the aftermath of recent investigations into the authority. A report issued last month by the Transportation Department’s inspector general castigated the authority for ethical lapses and a dysfunctional corporate culture.

Potter said that the authority will complete each of the report’s 12 recommendations by next year.

“We believe we’re on the right track. . . . We know we have work left to do,” he said.

As part of the lease amendment approved Wednesday, the authority must adopt, maintain and follow the “best practices” regarding transparency, travel and ethics.

At the meeting, the board approved an update to the authority’s travel policy. The new policy, approved in September, requires directors to sign off on board-related travel. But the audit noted that “gray areas” remained under the new policy, which encouraged travelers to find reasonable rates but didn’t specify what that meant.

The update specifically directs travelers to use lower group rates when available and says that luxury hotel costs will be reimbursed only up to the rate of a more affordable hotel nearby.

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