The Washington Diplomat / January 2001
By Larry Luxner
After years of relative obscurity, Washington's Dulles International Airport and, to a much lesser extent, Baltimore/Washington International Airport, are finally showing up on the radar screens of foreign airlines eager to crack one of the nation's most lucrative business and ethnic travel markets.
In 2000, a record four million international passengers used Dulles -- representing a 13% jump over 1999 figures. Airport officials say this is the result of a focused effort to attract new foreign carriers while encouraging existing ones to add more service into and out of the suburban Virginia airport.
"Aviation has been growing, particularly in the international sector," says James A. Wilding, president and CEO of the Metropolitan Washington Airports Authority (MWAA), which has jurisdiction over both Dulles and Ronald Reagan Washington National Airport.
"The economy of this region has changed dramatically in recent years, and has attracted a huge concentration of high-tech companies," Wilding told The Washington Diplomat. "The markets for their technology are really worldwide. And while it's true that in this modern age, electronic communication is more and more popular, it's also true that no matter how much you communicate with your markets, you need to follow that up personally."
In 2000, the MWAA's revenues came to $400 million, with Dulles representing 60% and Washington National 40% of the total. Fiscal 2000 revenues for BWI, which is owned by the State of Maryland, were around $125 million.
At present, 16 foreign airlines fly to 30 foreign cities with well over 250 weekly international departures out of Dulles. This is on top of the airport's 14 domestic carriers, which provide service to 75 destinations within the United States.
Wilding, noting that executives on expense accounts "have an enormous propensity to travel," said the region's booming economy has generated lots of leisure as well as business travel, particularly to Europe.
"The income levels of some companies are so high, that some of these people will go to London for the weekend to have dinner or see a show," he said. "It's an extremely attractive market."
According to MWAA statistics, United tops the charts for weekly departures out of Dulles (77), followed by Air Canada (73); British Airways and Lufthansa German Airlines (13 each), and Japan's All Nippon Airways, Northwest, Belgium's Sabena and El Salvador's Grupo TACA (seven each). Other foreign airlines serving Dulles are Austrian Airlines, Spanair, Swissair and Virgin Atlantic (six weekly departures each); Ethiopian Airlines, Trinidad's BWIA International and Korean Air (three each) and Russia's Aeroflot and Saudi Arabian Airlines (two each).
Austrian, which inaugurated nonstop service from Dulles to Vienna this past March, uses a widebody Airbus A330-200 for its transatlantic flights.
"Our fleet average is five years of service-age, one of the youngest fleets in the world," says Wayne Wolk, Austrian's district manager for the southeastern region. "Using our Vienna hub as a gateway, we offer passengers an ultra-modern airport with easy connections to most major continental European cities, virtually every major city in Eastern Europe, the Slavic Republics, the Balkans, Russia and the Russian Federation, Ukraine and the Baltic States plus the Middle East, Asia, Africa and Australia."
On Mar. 25, Lufthansa begins direct service to Berlin, with six flights a week from Dulles. According to Thomas Winkelmann, Lufthansa's vice-president for the Americas, the airline is launching the long-awaited nonstop connection partly because of increasing demand stemming from the transfer of Germany's capital city from Bonn to Berlin.
"We're glad that economic circumstances have finally made it possible to offer this highly anticipated service," said Winkelmann, adding that the new route will boost overall service this summer between Dulles and Germany to 41 flights a week (the airline already flies nonstop to Frankfurt and Munich).
That's not all. On Apr. 30, British Midland will inaugurate daily service from Dulles to Manchester, England. Says the airline's chairman, Sir Michael Bishop, in a prepared statement: "The introduction of these services to Washington represents a major step forward in opening up key American business destinations to genuine competition from Britain's regional airports, We look forward to bringing similar benefits of competition to transatlantic customers from London Heathrow in the near future."
In May, Scandinavian Airlines will begin service to Copenhagen. Initially, the Swedish-based airline will offer five flights a week, expanding in June to daily service. This is the first airline service from Washington to the Danish capital, which boasts Europe's third-largest concentration of biotechnology and pharmaceutical companies, and gives the Washington metro area more direct access to Scandinavia and Eastern Europe.
"Through Washington, D.C., we are improving the accessibility of the North American market for our customers," said Vagn Sörensen, senior vice-president at the business systems division of SAS. "But Washington is more than a traffic hub. Ten million people live within a two-hour radius of the airport, and the region's business sector is in a phase of strong development, with a stream of new high-tech and biotechnology companies becoming established."
While Germany, the United Kingdom and Denmark are all lucrative, wealthy business markets, passengers departing Dulles are often ethnic travelers bound for very poor countries. One example is Ethiopian Airlines, which offers three weekly flights between Dulles and Addis Ababa, the Ethiopian capital.
"They only operate several times a week, but it's our only direct service to Africa," said Wilding. "We had sought that direct service for quite some time."
Mekonnen Abebe, the airline's chief marketing officer, said Ethiopian started flying to the United States in June 1998, encouraged by the fact that over 80,000 Ethiopians live in Washington -- making it the largest Ethiopian ethnic community in North America.
In fact, Ethiopian Airlines' flights to and from Washington are the only ones in the airline's extensive route network that are almost entirely dependent on ethnic travel.
"The initial plan was to cater to both Ethiopians and Eritreans, with daily immediate connections to Asmara," said Abebe, interviewed for this story at airline headquarters just outside Addis Ababa's Bole International Airport. "But right when we started operating, the war broke out [between Ethiopia and Eritrea]. We were at a point of no return, so we continued our plan. Since traffic to and from Ethiopia was not sufficient, we decided to rework our schedule in such a way that we could give immediate connections to eastern and southern Africa, and also to start serving Newark."
Abebe explained that "JFK is very crowded, and Newark is one of the main hubs of Continental. If not for the war, we would have made a fortune out of that route."
As is the case with Ethiopia, ethnic travel is also a key component of the growing airline traffic between Washington Dulles and Latin America.
Only one airline, El Salvador's Grupo TACA, currently serves the region from here, with daily flights to and from San Salvador. Until a few years ago, Transbrasil had offered direct service between Dulles and Brasilia, while rival airline Varig flew passengers between Dulles and Rio de Janeiro. But both routes were shut down because of insufficient demand.
Nevertheless, Washington's vibrant Hispanic community represents a lucrative, untapped opportunity for the airline industry, according to a recent MWAA report entitled "Washington Latin Air Travel Study."
Airport officials readily concede that the region's Latino business travelers are willing to pay a premium for nonstop air service to Latin America -- but that's easier said than done.
"Really, a particular route has to become very popular in order to justify nonstop service," Wilding explained. "Miami and Houston are so well located that to fly into South America you have to have a really strong market to overfly those gateways. Most of our traffic to South America will continue to go through Miami. We'll just try to pick off the strong markets."
In the meantime, Wilding hinted that Varig, Brazil's dominant carrier, will once again serve Dulles with direct flights to and from Rio de Janeiro.
"We're fairly optimistic that Varig will return in the near future," he said. "They had a lot of corporate restructuring, went through some hard times, and are now back on their feet. We're trying to attract them into coming back."
Varig currently serves its Washington-area passengers through a code-share arrangement with United, which flies from here to Varig's two U.S. gateways, Miami and New York JFK. From there, passengers can connect to Varig flights bound for Sao Paulo and/or Rio de Janeiro.
In much the same way, South African Airways offers passengers a convenient way of traveling to not only South Africa but 27 other African countries as well. Thanks to a code-share with Delta, SAA passengers can fly from either Dulles or Washington National any day of the week, and connect with a nonstop evening flight to Johannesburg. Conversely, they can fly from either local airport to Atlanta; from there, SAA offers nonstop flights Monday, Wednesday, Friday and Sunday to Johannesburg, and nonstop flights Tuesday, Thursday and Saturday to Capetown.
"It's more convenient to have it this way," said SAA spokeswoman Jade Rutland, adding that she doubts the airline will fly nonstop from Dulles to South Africa anytime soon. "Our two U.S. gateways are New York and Atlanta. If we were to open up a new gateway, we'd concentrate on the west coast."
"For now," she added, "we travel direct into South Africa from New York and Atlanta, and we're the only carrier that can offer that from the States. We're talking about shaving six or seven hours off flights on Virgin Atlantic or British Airways," which connect through London.
Wilding says the Washington area would have even more foreign traffic if not for the fact that international aviation is still very heavily regulated.
"We are still in a pattern of bilateral arrangements that constrain international aviation. However," said the MWAA chief, "it's being liberalized every year, and there will come a time 10 or 15 years from now when this is no longer true."
Asked about BWI's aggressive efforts to attract foreign airlines, Wilding said the rival airport offers "very little competition" in this sector.
"Washington is Washington," he said. "BWI has some international service, but not much. Frankly, it's a source of frustration to them."
Don't tell that to BWI spokesman John White. Even though the airline has only 19 international departures a week -- less than 1/13th that of Dulles -- White says BWI is pushing hard not only to steal business away from Dulles but also to generate new traffic.
"We're trying to increase awareness that BWI, 26 miles from Washington, is just as close to the nation's capital as is Virginia's alternative, Dulles," said White. "Our focus is on trying to get direct service to the European continent -- mainly the Netherlands, Germany and other business centers."
As such, the airport continues negotiating with foreign carriers for more business, and recently won a marketing award for a clever ad campaign in the London Underground.
In October, the latest month for which statistics are available, Icelandair was BWI's top international carrier, with 9,622 passengers -- a 13.1% increase over previous month's figures. Aer Lingus served 5,659 people in its first reportable month, and the Irish flag carrier announced that service would increase from three to five flights a week on Apr. 30, 2001. Aer Lingus plans to offer daily service between BWI and Ireland from May 29 to Sept. 22.
Ghana Airways, meanwhile, offers direct service between BWI and Accra, and from there to more than a dozen cities throughout the African continent.
"There's a large West African population in this area, particularly in Montgomery County, and this new Ghana Airways service represents the first direct access to West Africa south of New York," said White.
Besides Aer Lingus, Icelandair and Ghana Airways, three other foreign airlines serve BWI: Air Jamaica, Air Ontario and British Airways. Israel's El Al had been serving BWI for years through a feeder service to New York's JFK, though that arrangement was discontinued earlier this year.
According to White, BWI -- one of only three in the country owned by a state government -- employs 10,000 people directly and pumps $5.3 billion a year into the Maryland economy.
At least one regional airport, Washington National, won't be vying for foreign traffic anytime soon. Although the airport does offer limited service to Canada, Wilding said National's nonstop flight limit of 1,250 miles -- not to mention runway lengths, the size of the terminal, noise restrictions and limits on the number of flights into and out of National -- "make it not very practical for international activity."