Odd thing is, Piedmont Airlines originally was opposed to deregulation of the airline industry.
Like a lot of small regional carriers, the Winston-Salem, N.C.-based airline worried about what would happen when the big trunk airlines were cut loose to fly where they wanted and pit their considerable resources against the Piedmonts of the world.
But as deregulation neared in the late 1970s, Piedmont officials dropped their opposition.
"First of all, we weren't going to win that battle," William R. Howard, the airline's president, says of the anti-deregulation lobbying campaign the carrier had mounted.
And second, Piedmont realized that it might not do too badly in the war. "We were operating the right airplanes, we were a low-cost airline," Howard says. "It seemed to me that there were a lot of reasons why we should not fear being gobbled up."
Indeed, it's Piedmont that's done the gobbling. Using a variation on the hub-and-spoke route system made popular since airlines have been able to fly just about anywhere they please, Piedmont has become one of the fastest-growing airlines in the business. It has put its hubs into medium-sized cities--first, Charlotte, N.C., and then Dayton, Ohio--and flown from there on many routes most other airlines won't touch.
Last week, the airline unveiled plans for its third hub, based at Baltimore-Washington International Airport. (Airline officials say they considered and rejected the possibility of locating the hub at Dulles Airport; Howard says BWI was "the clear choice.") Piedmont will start flying 28 daily flights in and out of BWI July 15--up from six currently--and plans steady expansion of the hub in the future.
The expansion in Baltimore is not intended to take traffic away from Piedmont's operations at National Airport, where with two dozen daily flights it claims to be the third-busiest operator. "Our aim is not to try to attract Washingtonians, D.C. people, to this area," Howard says. "We don't intend to wean people from Washington who logically should be in Washington."
Piedmont's plans mesh nicely with BWI's efforts to catch up with Dulles and National airports as a major transportation center for the Washington area. The Piedmont flights will add considerably to BWI's current daily log of 97 flights, and could drum up business for the airport from other airlines attracted to the passenger base created by Piedmont's strategy.
Maryland officials are helping Piedmont out by spending $20.9 million on a new terminal structure to house the airline's expanded operations. Construction of the 12-gate, 128,000-square-foot structure was begun in late February and is to be completed later this year.
The new gates will increase BWI's capacity nearly 50 percent. Piedmont has signed a long-term lease for the gates that Maryland officials say will eventually cover the construction costs. In addition, Piedmont is leasing one-third of the space in a new 60,000-square-foot cargo warehouse at the airport; Piedmont officials expect the airline's freight business at BWI to expand along with its passenger traffic.
Maryland took over Baltimore's old Friendship Field a decade ago and began revamping the airport, giving it the BWI name and putting up modern terminal facilities. Now they're working on attracting flights to the airport, which serves most major carriers with the notable exceptions of Pan Am and Northwest Orient.
Airport officials are working at bringing those airlines into the fold, as well as expanding BWI's schedule of overseas flights, an area in which both those airlines are strong. "This airport would offer both those airlines substantial traffic," says Maryland Aviation Administrator T. James Truby, who predicts additional Western European flights out of BWI within a year, but gives no details.
Piedmont's plans will help BWI's efforts to increase the airport's schedule of foreign flights. Among the cities the airline has targeted for expansion from the Baltimore hub is Toronto. "We want that and we want it badly," says Howard. Piedmont also is looking at other Canadian and Mexican cities, although it has no plans to fill Truby's hopes for additional European service from BWI.
But Piedmont has ambitious plans to add domestic routes to the hub. It plans to add service on a monthly basis after the July start-up, and while airline officials are coy about just how many flights they plan to evenutally run out of the hub, they note that the area around BWI is four times as populous as the Charlotte market--and Piedmont is currently flying 129 flights a day into and out of its Charlotte hub.
"We intend to be a very, very major portion of the air transportation in the Baltimore area," Howard says. "We will add transportation to the hub until we find there are no more logical spokes to be added."
The routes that Piedmont chooses as its spokes are a little different than those used by most airlines in a hub-and-spoke system. Rather than fly routes between big cities that might be competitive with several other big airlines, Piedmont has tried to select routes that connect big cities to smaller cities, often with the hub city--Charlotte, Dayton or Baltimore--as the smaller of the two.
Many of these routes were not being flown by other airlines. For instance, Piedmont found plenty of traffic for a Charlotte-Dallas route, a stretch previously served only through Atlanta. And one of the airline's biggest success stories is a Dayton-Dallas route: American Airlines, which had two Dayton-Dallas flights a day with little success, dropped out of the market shortly after Piedmont announced its plans to fly the route. Piedmont's two flights a day, by contrast, are well-traveled.
The difference, Howard says, is that Dayton's role as a hub for Piedmont's flights gives the airline passengers to put on the Dallas flight who weren't available to American. "We had feed, American did not," Howard says. Piedmont has also managed to create sort of captive markets by locating its hubs away from major transportation centers.
All this has given Piedmont virtual monopolies on some routes. "The one good thing about developing markets of this kind is that they tend to be somewhat competition-immune," Howard says, adding that many of the routes were unattractive to other airlines even before Piedmont started flying them.
How successful has this strategy been? Take Charlotte. Four years ago, Piedmont accounted for 8 percent of the traffic at the airport there. Now two out of three flights leaving Charlotte is a Piedmont jet. And the airline made money in Dayton in the second month of that hub's operation last summer.
Financially, Piedmont has avoided some of the problems that have hurt the rest of the airline industry. Although profits for its parent company, Piedmont Aviation Inc. were off 6 percent last year from 1981's record levels despite an 11 percent increase in revenues, Howard says the company is in its best financial shape ever.
Howard also points out that Piedmont's ratio of debt to equity has been improving steadily in recent years, and the airline has had little trouble issuing stock to raise funds the past couple of years, a luxury few other airlines have had lately. And Piedmont's stock price, a bit under $5 a share in early 1978, is now trading in the mid-30s.
The airline's strong financing is allowing it to pay for the eight Boeing 737s it has on order to add to its 77-plane fleet for the Baltimore expansion, and to fund purchase of additional planes.
Piedmont officials appear to be mulling plans to add another hub in the near future, although they won't comment beyond saying that it won't be this year. And although the majority of the airline's routes are east of the Mississippi, it has expanded to Denver and is eying California markets--but with caution.
Such national expansion would make Piedmont's identity and reputation as a small southern airline obsolete, but Howard says the airline probably won't follow the lead of some other carriers who at similar stages in their history changed their names. Piedmont considered that three years ago and then decided against it after a consultant did a market study on the airline's identity.
"We were viewed as a small, puddle-jumping, good airline," Howard says with a smile. "The small and puddle-jumping we had to correct. . . . We concluded that we'd build on the name, rather than abandon it."