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Competition for domestic fliers still tight among area airlines

By Derek Kravitz
Washington Post Staff Writer
Friday, August 27, 2010; 12:11 AM

Competition for domestic passengers is still tight among the Washington region's airlines, leading to lower fares for travelers, according to an analysis of last year's federal airport data.

The analysis of annual U.S. Department of Transportation travel data, prepared by a consultant for the nonprofit Washington Airports Task Force and reviewed by The Washington Post, shows that the proposed merger between United and Continental airlines is expected to increase competition, allowing for more international trips out of the region's three airports: Dulles International, Reagan National and Baltimore-Washington International Marshall.

"It will help us expand and increase our international market share in this region," said Leo Schefer, president of the task force and a longtime British Aerospace executive. "They will have a stronger system to feed their international hubs now."

The merger will probably increase the number of flights between Washington and Latin America, said William S. Swelbar, a research engineer at MIT's International Center for Air Transportation.

About 97 percent of the more than 37 million domestic travelers flying to or from National, Dulles and BWI had a high level of competitive choice for their business - no one airline held more than 80 percent of any one connecting airport's travelers.

Only a few route monopolies remain nationwide out of the Washington region: Southwest has an 81 percent share of flights between BWI and Providence, R.I., and it controls routes to and from Islip, Long Island, while Delta handles 85 percent of those traveling between Dulles and Cincinnati.

Only four small markets lacked competition, when other airports within an hour's drive were taken into account: Grand Rapids, Mich.; Lansing, Mich; Panama City, Fla.; and Wilmington, N.C.

Low-fare carrier Southwest is still Washington's largest domestic carrier, with more than 8.2 million passengers at BWI and Dulles. After its October 2008 merger with Northwest, Delta moved into second place, with 6.1 million passengers at all three airports. United fell to third, with a little more than 6 million domestic travelers; U.S. Airways was fourth with 5.2 million passengers; and American Airlines was fifth with almost 3.7 million passengers at the three airports.

Despite mergers and increased competition over landing and takeoff slots at the region's airports, several newer airlines have been able to enter the Washington market and thrive.

Last year, Virgin America became the second-largest carrier between San Francisco and the Washington region.

"This is still a very competitive area. United is the big dog at Dulles, U.S. Airways is the biggest at National, and Southwest is the largest at BWI," said Michael Morstein, director of route planning and analysis at InterVISTAS Consulting, an industry analyst in Washington. "There is a lot of mixing and matching, with passengers choosing different airports regardless of where they live."

The highest average fare for domestic routes with more than 50,000 passengers a year was for United's flights between Dulles and Honolulu International Airport, which typically required one layover and cost about $408 one way. The yield-per-mile for the airline was relatively low, however, and about 13 percent of those passengers - almost 8,000 people - flew the Honolulu trip for free because of frequent-flier or other programs.

The cheapest average fare for large routes was JetBlue's BWI-to-Logan International Airport in Boston, about $65.

The top-grossing route: United's San Francisco flights in and out of Dulles. The $259, 2,446-mile trips brought in more than $125 million last year. Nearly 484,000 people flew on those flights, making it the third-most-trafficked route. The top two were Delta's National trips to and from Hartsfield-Jackson Atlanta International Airport, with almost 591,000 passengers, and Southwest's BWI to and from Orlando International Airport, with more than 510,000 travelers.

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