THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, April 14, 1995 TAG: 9504140463
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: Medium: 66 lines
Continental Airlines nosed into second place in passenger market share at the Norfolk International Airport last year with its ``peanuts fares'' and 28 flights a day.
Continental cut into every airline serving Norfolk, including market leader USAir. The Dallas-based airline jumped from fifth place in 1993, leapfrogging over Delta Air Lines, American Airlines and United Airlines.
The airport's latest market-share pecking order will probably be short-lived.
Continental's ``CALite'' low-fare experiment went too far. As losses mounted, the airline retrenched and its top executive stepped down last fall. Late last year the highly touted peanuts fares edged up in price and Continental scaled back to just eight daily flights in Norfolk now.
On Thursday, Houston-based Continental declared CALite dead after losing nearly $120 million in 1994. It was unclear what impact the decision might have on Continental's service at Norfolk International.
Still, the price war that Continental unleashed made for the busiest year ever at the Norfolk airport. The airport experienced a 30 percent increase in passenger traffic in 1994 as more than 3.4 million people flew through it.
Wayne Shank, deputy executive director of the Norfolk Airport Authority, attributes the increase to low fares.
``Continental provided some very competitive fares to some very significant markets, including New York, our biggest market,'' Shank said. ``USAir, our dominant carrier, and other carriers moved to match those fares.''
The result was a rising tide of passengers that boosted most of the airport's airlines. For example, while Continental eroded USAir's market share to 37.8 percent in 1994 from 42.2 percent in 1993, it carried 1.3 million people in 1994, up from 1.1 million in 1993.
Continental's market share surged to 22.6 percent in 1994 from 6.9 percent the year before. It flew 773,103 passengers last year, up from 181,358 in 1993.
Delta and Trans World Airlines also handled more passengers, despite losing market share to Continental. American, United and Northwest Airlines lost market share and passengers.
The tumult caused by Continental may be fading, but more change could be on the horizon.
``There are several what I call low-cost carriers that are looking at Norfolk, so we anticipate some new competition in the near future,'' Shank said.
Shank would not disclose what carriers may be looking to serve the airport. ``Nothing's definite,'' he said. ``No one's signed.''
Low-fare, no-frills carriers such as Southwest Airlines and Atlanta-based ValuJet are expanding quickly.
``Norfolk has proved to be an excellent market for low-fare operators,'' Shank said. ``We've caught the attention of that segment of the industry.''
Last year's record passenger traffic shows that the Norfolk airport's market is highly sensitive to prices, Shank said. ILLUSTRATION: Graphic
NORFOLK INTERNATIONL MARKET SHARE
[For a copy of the graphic, see microfilm for this date.]
ADRIANA LIBRERIS/Staff
SOURCE: Norfolk Airport Authority
by CNB