Pan American World Airways announced yesterday it would establish the first hub at Washington Dulles International Airport, giving the underused airport a big boost by adding as many as 10,500 new passengers each week.

Pan Am's plan to quadruple its number of weekly flights from 14 to 56 could inject $100 million more a year into the local economy on spending for fuel, hotels, rental cars, restaurants and other airport services, Dulles officials said.

As Pan Am's hub, Dulles will be used to feed passengers between the airline's domestic, Mexican and South American flights and its European network of 29 destinations.

"This is very significant," said James A. Wilding, director of metropolitan Washington airports for the Federal Aviation Administration. "There has been a very dynamic growth at Dulles; this will be a further spurt. And by making Dulles an international gateway, with significant international service, it sets a whole new pattern" for the airport.

Starting June 1, Pan Am -- whose Dulles service now consists of daily flights to London and New York -- will offer daily nonstop service to Frankfurt and Mexico City, and four weekly flights to Paris and three weekly flights to Rome.

It also will add daily nonstop flights to Miami, Orlando and Tampa/St. Petersburg.

To boost its new service, the airline will offer cut-rate introductory fares. Between June 1 and July 15, a one-way fare to Frankfurt will be $199. After that, an advance-purchase excursion fare round-trip ticket will cost $776.

A round-trip ticket to Mexico will cost $249 between June 1 and June 30 -- as long as the trip is completed by June 30. After that, the round-trip fare will be $349.

Pan Am's move to make Dulles its third major East Coast hub -- after New York and Miami -- comes at a time when other airlines also are increasing their use of the Northern Virginia airport.

New York Air, which began offering service from Dulles last February, now provides about a dozen daily flights. The airline is building its own facilities to allow its passengers to deplane directly into the concourse and thereby bypass the mobile lounge. Two gates have been completed and five more are expected to be finished by the end of the summer, when New York Air plans to expand its service further.

To compete with New York Air, Eastern Airlines has added four daily Dulles-New York round-trip flights.

Meanwhile, a new airline, Presidential Airways, created by the cofounder of the successful discount People Express, hopes to start operating out of Dulles this summer. Initially, Presidential plans to serve Dulles and five other cities between Boston and Jacksonville, using Dulles as its headquarters and its hub, with its southern flights feeding into Dulles for connections to northern points and vice versa.

Pan Am's decision to increase service, "is part of a snowball already rolling," Wilding said. "This will just make it roll that much faster," by attracting more domestic lines to set up or expand service at Dulles.

Merle Richman, Pan Am's director of public relations, said Pan Am is discussing "feeder arrangements" with a number of different airlines. Although Richman declined to name the airlines, he said the arrangements would be similar to agreements in place at JFK International Airport in New York. Under that plan, for example, a passenger flying Empire Airlines from Buffalo can get a seat assignment for a Pan Am flight overseas when checking in at Buffalo.

The new service "is an initial step" for the Dulles area, Richman said, indicating that Pan Am -- which has an agreement to sell its Far East routes to United Airlines -- intends to add more domestic and international flights to its Dulles schedule.

Initially, Pan Am's move will require no new facilities at Dulles, said Thomas Morr, president of the Washington Dulles Task Force, but "There will be a need for additional construction" in the future.

Pan Am's decision further ignites the rivalry between Dulles and Baltimore-Washington International Airport. Pan Am said it chose Dulles because it already has operations there. "We still may have plans for BWI, but not for now," Richman said.