Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 24, 1993 TAG: 9301260172
SECTION: ECONOMY PAGE: EC-24 EDITION: METRO
SOURCE: DANIEL HOWES STAFF WRITER
DATELINE: LENGTH: Long
EVENTS OUTSIDE ROANOKE AFFECT RAILROAD, AIRLINES
For evidence that Roanoke Valley's economy stretches far beyond the mountains, consider the railroad and Roanoke Regional Airport.When a slumping economy causes a slide in metallurgical coal consumption across Europe, Norfolk Southern Corp. feels it. So, too, warmer-than-normal winters and cooler-than-normal summers in North Carolina, Georgia and elsewhere.
It happened in 1992, railroad officials said, and could well again in '93.
Likewise, when mounting losses in the U.S. airline industry force the nation's airlines to cut costs by cutting routes to less profitable destinations, Roanoke travelers suddenly find non-stop service to Richmond and Chicago trimmed from local flight schedules.
It happened in 1992, and could well again in '93.
But that's the downside. Railroad and airport officials, pleased to have emerged from the recession comparatively unscathed, are looking to the upside for encouragement this year.
Mark Courtney, the Roanoke airport's marketing director, thinks cutbacks by USAir and United Express could present new opportunities to healthier rival airlines looking to exploit niche markets.
"There is room for another competitor with jet service," he said. "You have to understand: With the condition of the airline industry, it's real touch-and-go to convince one to jump right in. It's a matter of making your case.
"I'm still targeting and still pursuing aggressively a jet replacement for United Express," Courtney said. Last September, United Express eliminated its daily service to Chicago's O'Hare International Airport and made other changes.
The result: Roanoke was left without direct connections to a hub airport in the Midwest not controlled by USAir. But before United Express eliminated its Chicago service, Northwest Airlink announced service between Roanoke and Detroit, a hub it shares with its affiliate, Northwest Airlines.
Courtney - the person charged with hustling new service for the Roanoke airport - is hoping the precedent of United Express's exit and Northwest Airlink's entrance can be repeated in '93. There are signs it's already happening.
Yet another refinement of USAir hub-and-spoke structure - this time in Pittsburgh - resulted in daily runs between Roanoke and the western Pennsylvania hub dropping from eight to seven, effective Feb. 2.
Enter Atlantic Southeast Airlines, the Atlanta-based regional carrier with close ties to Delta Air Lines, one of the U.S. airline industry's Big Three. Early next month, ASA will add a ninth daily departure from Roanoke to Atlanta - evidence to Courtney that competitive opportunities exist at Western Virginia's major airport.
United Express routes from Washington Dulles Airport to cities in Virginia, North Carolina and Pennsylvania this month were sold to a Sterling-based carrier with plans to improve service between Roanoke and Dulles, an increasingly popular gateway to foreign destinations as well as a domestic hub.
And for now, Courtney said, Mesaba Aviation Inc. of Minneapolis, operating Northwest Airlink flights to Detroit, appears to be filling the niche for service to a midwestern hub. Recently, a New Hampshire-based regional airline, Northwest Regional Express Airlines, also operating as Northwest Airlink, began service between Roanoke and Newark International Airport - the only non-stop service between Roanoke and the New York metropolitan area.
But for all the encouraging signs, hopes of drawing additional full-sized jet service to and from Roanoke may be just that - hopes. The ailing U.S. airline industry increasingly is relying on a new generation of larger, more comfortable commuter aircraft to serve markets the size of Roanoke.
More troubling, perhaps, major airlines desperate to cut rising costs are trimming service to smaller markets. Of 32 hubs still operating across the country, seven to 10 will vanish in the next few years, The Wall Street Journal reported recently.
How cities like Roanoke will fare as the airline industry grapples with record losses and rising costs could become apparent this year, the first time in recent years when economists expect broad, if slow, growth in the economy.
It's really no different for major American railroads, including Norfolk Southern. The coming year likely will determine the tone and direction of the incoming Clinton administration's view toward such environmental issues as coal consumption and taxes on fossil fuels - key concerns for a company whose bread-and-butter is hauling coal.
Despite recent slippage in coal business - accounting for one-third of its $4.4 billion in revenues - Norfolk Southern foresees long-term growth in its coal business once the European economy revives and subsidized coal industries are phased out. The railroad also considers itself well positioned to supply cleaner low-sulfur coal should environmental lobbies command the ear of President Clinton.
"We see some uncertainties, some ominous uncertainties, out there on the coal side having to do with coal's image," said William Bales, Norfolk Southern's vice president of coal and ore traffic in Roanoke.
How Clinton and his advisers respond will influence the railroad's fortunes in the coming years, senior railroad officials say. In a speech this month, Norfolk Southern Chairman David Goode encouraged Roanoke leaders to lobby their federal lawmakers to "ensure that policy decisions are based upon sound science rather than emotion."
"The fact that coal remains the world's most abundant, reliable and cheapest source of energy cannot be ignored," he said. "The world may decide the environmental price of burning coal is too high, but it will pay a steep economic and social price as it forgoes a fuel as available and as affordable as coal."
Then came the kicker: "Reduced coal consumption would hit especially hard in Western Virginia. To the extent coal is diminished, Roanoke will be diminished - and, I suspect, much more significantly in the long run than by bank mergers."