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Southwest Lifting Airport's Business : Burbank Facility's Once-Sagging Traffic, Revenue Are Taking Off, Led by the Airline's Recent Boom

May 10, 1994|DON LEE | TIMES STAFF WRITER

BURBANK — Southwest Airlines' money-making operations have put the rest of the troubled airline industry to shame. But Burbank Airport couldn't be happier.

Thanks to the no-frills, low-cost shuttle operator, which began service at Burbank four years ago, the airport's once-declining traffic has boomed and its revenues are at a record high.

Southwest started at Burbank Airport with 16 daily round-trip flights to Oakland and Las Vegas, and that's since grown to 48 flights a day to five cities--more than any of the other half-dozen carriers left at Burbank. Last year about 2.7 million people flew Southwest at Burbank, accounting for nearly two out of every three passengers at the airport.

Overall, Burbank Airport's passenger count totaled 4.3 million in 1993, up 60% from 1989--a higher percentage increase than any other commercial airport in the Los Angeles area. Southwest's traffic has helped fill up Burbank Airport's parking spaces and boosted sales of hot dogs and beer, as well as the landing fees the airport gets from airlines every time their planes touch down at Burbank. As a result, the airport's revenue was $21 million in its fiscal year that ended June 30, 1993--up from about $15 million four years earlier--and revenue is up again this year.

Remarkably, this boom came during the state's recession. "I can only fathom what would have happened if we had been in a bullish economy," said Thomas Greer, executive director of the airport, formally known as the Burbank-Glendale-Pasadena Airport.

Greer's glee, though, is tempered by the fact that there are risks in relying too much on one customer. For 30 years Burbank Airport depended heavily on PSA, like Southwest, a commuter airline. But in 1987, amid the turbulent era of deregulation and fare wars, USAir bought PSA and then began to retrench at Burbank Airport, beginning a slowdown at Burbank that only stopped with Southwest's arrival.

Relying so much on one airline could make it tougher for Burbank Airport to get bond financing for its long-delayed $200-million project to build a bigger terminal. "If you're in the hands of a single airliner, it does make you a little nervous," said Dick Mudge, president of Apogee Research, a Maryland firm that consults on airport economics.

Still, Greer isn't worried. Though Southwest won't comment, Greer thinks the carrier is more likely to expand than contract at Burbank. The Dallas-based company is the industry's most profitable airline, last year having earned $154 million on revenue of $2.3 billion. And in its 23-year history, Southwest has pulled out of only two airports--Beaumont, Tex., because of a lack of traffic, and Denver's Stapleton because weather delays were expensive.

But even if Southwest abandoned Burbank, Greer is betting that some other carrier would take its place. Burbank Airport is easier to get in and out of than Los Angeles International Airport, Greer says, and there are 2.5 million people who live within a 15-mile radius of the 64-year-old Burbank Airport. "The market is there."

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Perhaps. But it took a low-cost airline like Southwest to tap that market.

Victor Gill, Burbank Airport's public relations director, vividly recalls Southwest's inaugural flight to Oakland on April 16, 1990. The mood was festive inside Southwest's familiar burnt-orange Boeing 737, as Southwest Chairman Herb Kelleher, dressed in the airline's new beige uniform, passed out bags of peanuts to a full aircraft. But what Gill remembers most was Southwest's fare: $59 for an unrestricted one-way ticket to Oakland, compared with $180 for other airlines then serving that route. "That was a clear indicator of what was going to happen," Gill said.

Overnight, demand for travel surged at Burbank from passengers like Michael Ernst, a Fremont businessman who says he doubled his trips between Oakland and Burbank, to twice a month, after Southwest arrived.

"I pay half as much so I can fly twice as much," he said. Ernst also likes it that Southwest has 13 daily shuttles from Burbank to Oakland, and his unrestricted ticket (now $69 one-way) allows him to take any one of them if seats are open. "If I finish a meeting early, I can hop an earlier flight," he said on a recent afternoon at Burbank Airport.

Southwest's arrival at Burbank forced other carriers to slash their prices. But the pressure was too much for some airlines. In May, 1991, USAir withdrew completely from Burbank, giving up its 15 flights and the Northern California market to Southwest. "It was strictly economics," says Bryan Enarson, USAir's director of airport affairs. USAir is loaded with the highest operating costs of any major U. S. carrier. "Routes from Burbank weren't profitable," Enarson said. "And Southwest just continued that effect."

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