Baltimore-Washington International Airport, for years ignored and unappreciated by travelers dependent on National or Dulles International, is beginning to win their hearts.

While Congress let the two federally owned Northern Virginia airports choke on their own growth, Maryland transportation officials transformed BWI from a deteriorating relic into a spacious showpiece with easy parking and uncrowded terminals.

"I prefer BWI," said David Hawkins, an Iowa salesman who said he uses all three airports on frequent business trips to the Washington-Baltimore area. " . . . I can get in and out quick." Everyone knows about Dulles and National, he said, but BWI is a "hidden secret" on the East Coast.

The Washington-Baltimore area is the sixth largest in the nation in the number of airline passengers, and its three airports compete for many of the 35 million people who use them annually.

Of those three, only BWI has undergone the modernization that makes it fit the type of airline service offered today, nine years after the airlines were freed by Congress from economic regulation and permitted to fly anywhere they wanted within the United States.

BWI is just off the Baltimore-Washington Parkway in north Anne Arundel County, nine miles south of Baltimore and 29 miles northeast of the District. A traveler arriving there finds well-marked roads and ramps, clearly delineated "hourly" and "daily" parking lots with empty spaces, and an easy-to-understand two-level approach to the terminal building, with departures and ticketing on the upper level and arrivals and baggage on the lower.

The terminal is a striking combination of red and white ceramic tile, with the reds covering the oversized pillars and the whites on the floor. The terminal feeds passengers through comfortably wide aisles to gates arranged along three long wings.

BWI "was a slumbering giant that has awakened," said Donald McGuire, a vice president of Piedmont Airlines, which is constructing a $23 million addition to the terminal.

That is part of a 20-year, $583 million plan to keep BWI ahead of the airport growth curve and avoid some the problems that plague National and Dulles. The Maryland Transportation Department, which owns and operates BWI, wants to expand the terminal, runways, parking, cargo facilities and surrounding roads.

At the same time, BWI's managers are hearing more complaints from airport neighbors, who say they are disturbed by increased airplane noise, traffic and the transformation of the surrounding countryside into a patchwork of airport-related warehouse and office parks.Competing for the Future

Despite the growth at BWI and Dulles, National continues to handle the most commercial passengers in the Washington-Baltimore area, with 43.1 percent of the total in May, the most recent month for which figures are available. Dulles served 32.1 percent, compared with BWI's 24.8 percent.

However, the number of passengers using National has stabilized at about 15 million annually. Dulles is now running about 11 million, BWI about 9 million.

But National has become a specialist, serving primarily East Coast traffic to and from the downtown Washington area. The competition for the future is between Dulles and BWI, at opposite ends of a booming regional air traffic market.

In the last five years, the number of commercial passengers at BWI has more than doubled, but the reconstructed airport was in good shape to accommodate them. At Dulles, the number of flights has doubled in only two years, but the airport's terminal was not prepared to handle the crush.

The result: Passengers at BWI find uncongested terminals and easy parking; Dulles is clogged. "BWI has better facilities and ease of access," said former representative Michael D. Barnes (D-Md.), now a director of the Metropolitan Washington Airports Authority, which has taken over the operations and planning for improvements at Dulles and National.

Travelers can find a wide number of flight choices at both airports and simply choose the most convenient one, according to industry and airport specialists.

For example, take Harold and Donna Truax of Annapolis, who were waiting at BWI, the airport closest to where they live, for a flight to San Francisco. They once lived in Alexandria and used National, which "was bad then, I'm sure it's worse now," said Harold Truax.Most From Baltimore Area

About 60 percent of BWI's commercial passengers come from the Baltimore area, including Anne Arundel and Howard counties. About 30 percent live in the District, Montgomery and Prince George's counties and Northern Virginia, said Jay Hierholzer, BWI's associate administrator for marketing and development.

"Baltimore people rarely go to Dulles and Fairfax people rarely go to BWI," said Sanford Rederer, vice president of strategic planning for Trans World Airlines, which has flights at all three airports. "Then there is a substantial market in between that can go either way."

That is Montgomery County, which Hierholzer calls a "swing market." He said the planned intercounty connector, a major east-west highway that would link I-270 with I-95 and Rte. 1, would shorten the driving time from Montgomery County to the airport by 15 minutes, which should divert to BWI some travelers who now use Dulles.

Things weren't always so upbeat for BWI, which 15 years ago was a backwater known as Friendship International Airport. The State of Maryland purchased the airport from the City of Baltimore in 1972 for $36 million, changed the name to emphasize its accessibility to the nation's capital, spent more than $88 million to rebuild the terminal and absorbed annual operating losses until 1981, when BWI began to turn a profit.

Officials such as former governors Marvin Mandel and Harry Hughes, who was Mandel's transportation secretary, made "the conscious political decision to make BWI a top airport to boost the status of the state and the city," said James T. Murphy. "They built a magnificent facility." Murphy is a vice president of the airline industry's Air Transport Association and he watched the transformation at BWI when he was director of National and Dulles airports from 1974 to 1979.

Nonetheless, BWI officials betray a sense that their work is not fully appreciated, despite vigorous efforts to attract more passengers from the Washington area.

"There has been a perception problem," said Theodore E. Mathison, the BWI administrator. Washington travelers "are not fully aware that we have a modern facility . . . . They are not aware of how the airport has been upgraded."

The Maryland investment put BWI in a strong position to take advantage of the escalating growth the airline business has enjoyed since deregulation in 1978. Freed from the strictures of the now-defunct Civil Aeronautics Board, the major airlines quickly began to form "hub" airports.

The primary marketing purpose of a hub is to keep passengers on the same airline for an entire trip. For a hub to succeed, an airline must be able to fly to many destinations available from a central point.

For hubs to work effectively, passengers must be able to change planes quickly, which means an airline needs to acquire several gates in the same wing of the airport so transfers can be easily coordinated.

National was already full and subject to a permanent restriction on the number of flights it could handle. BWI and Dulles, however, had room for growth, and in 1983 Piedmont chose to put one of its hubs at BWI. Continental Airlines and United Airlines later established hubs at Dulles.

Piedmont chose BWI over Dulles, which was then federally owned and operated, because "we had a fast-track proposal and BWI's advantage was that it could be expanded more rapidly," said airline spokesman McGuire. Dulles' decision-making was "too bureaucratic," he said.

Piedmont opened its BWI hub six months after announcing its plans, and its flights there grew from six a day to 76 a day within a year. "We found incredibly pent-up demand," McGuire said. American, Delta, Eastern, TWA and United also have a strong presence at BWI.

Another incentive was the state financing of BWI's improvements. The new terminal was built with money from the state's Transportation Trust Fund, which derives its revenue from sources as diverse as gasoline taxes to fees collected at the Port of Baltimore and uses them for everything from subsidizing Washington Metro to building a highway to Deep Creek Lake.

Ultimately, Maryland expects to recover the costs of BWI expansion through fees paid by the airlines, but most airlines pay less than their costs because of lease agreements negotiated in the 1970s to induce airlines to serve the airport, said Nicholas Schaus, the airport's deputy administrator.Airlines Eager to Invest

"The airlines weren't as anxious to invest in BWI as they are today," Schaus said. The lease agreements, which do not expire until 2003, "reflected a bargaining position when we weren't in the driver's seat . . . but the state knew it would be a success," he said.

For years, the state trust fund covered the losses. But since 1981, BWI has reported more income than operating expenses because of the growing number of passengers spending money on airport food, parking, rental cars and other concessions, he said.

In its most recent fiscal year, BWI recorded an operating profit of $11.5 million. On top of that, the airport received about $9 million from the trust fund and $7 million from the federal government for construction, equipment and other projects. According to state plans, BWI will receive $12.7 million this year and as much as $38 million for improvements next year, Schaus said.

"The state sees the airport as essential to the state's economy," said Mathison, the airport administrator.

Looking ahead, the state has developed a master plan to cope with projected growth during the next 20 years, including an attack on what is seen as BWI's major weakness, an inefficient runway system. In use since Friendship Airport opened in 1950, it comprises three intersecting runways for commercial jets and a separate, shorter runway for small planes.

The plan envisions an additional runway for commercial aircraft and an extension of the small-plane strip. Other elements include a five-level parking structure in front of the main terminal, an extra lane to be added to both levels of the airport roadway, four extra cargo buildings and terminal expansions.

The cost of the airport improvements is estimated at $566 million. The Transportation Department is planning an additional $17 million in related highway construction in the surrounding area to improve airport access.

The federal government is preparing an environmental impact study of the master plan that will review, among other things, the noise issue.

BWI officials, like their counterparts across the nation, are pinning their hopes for relief on the increased use of newer, quieter aircraft, such as the Boeing 757 and the McDonnell Douglas MD80. The master plan predicts that airport noise will peak in 1990 but will decline thereafter as new planes begin to dominate the airline fleets. By 2005, noise levels should be lower than in 1985, the study said.

Some BWI neighbors dispute these projections, arguing that the method of measuring noise levels, which looks at annual averages, understates the effects of many airplanes scheduled closely together, the type of operation a hub demands.

As BWI grows, airport managers also are working to address lingering gaps in service. For example, the airport offers no nonstop transcontinental flights. "We already have a full-service airport . . . but we have a way to go," Mathison said. "We see unlimited opportunities."