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TheStreet Open House

American Air Deal Could Bring Reagan National 2.5M More Passengers Yearly, Expert Says

WASHINGTON ( TheStreet) -- A new study forecasts that Washington's Reagan National Airport will see a dramatic increase in passenger traffic, much of it at the expense of neighboring airports, due to divestitures accompanying the merger that created the new  American Airlines  (AAL).

Passenger totals at National could rise by 2.5 million annually, said aviation consultant Sandy Rederer, a former TWA vice president for planning, who prepared the study for his clients.

The divestures will mean that bigger aircraft will serve National, Rederer said. The airlines that take over the slots will likely fly airplanes that are bigger than the regional aircraft now using them, and the new American will likely replace regional aircraft with bigger airplanes on some of the routes it keeps.

National "could easily get 2.5 million additional annual passengers and possibly more," Rederer said. "If the 44 divested slot pairs add 100 seats per operation (150 seats vs. 50), that would be 8,800 seats per peak day or around 3.2 million seats per year, (and) 3.2 million seats at 80% occupancy would mean 2.5 million annual passengers."

The airlines that acquire the slots would likely use Boeing 737s or Airbus A320s rather regional jets that now use the slots.

"In addition, if American up-gauges most remaining RJ and Dash-8 operations from 50 seats to 70, that would mean another 700,000 or so annual seats," Rederer said.

Rederer estimated that about 70% of the new traffic would represent passengers switching from Dulles to National, while 25% would switch from Baltimore/Washington to National. Another 5% would represent new traffic stimulated by low fares, he said.

The airport-to-airport shifts would also reflect lower fares at National, which would become equal to or lower than fares at the other two airports, enabling National to reap the benefit of its more central location. Southwest (LUV), which has about 60% of the domestic traffic at BWI, might simply see some of its passengers shift from one airport to the other.

In 2012, Baltimore/Washington International had about 22.5 million passengers, Washington Dulles had about 22 million and National had about 19 million. If fully realized, the potential changes resulting from divestiture could make National the busiest of the three airports.

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