I'm glad to hear you escaped from Shrewsbury...
I don't think I could bear living THAT close to Wuhstuh.
You mentioned morning business meetings in DC. If a business person is trying to make it to a meeting in DC, and they live in the Boston suburbs, they're still going to have to fight Boston traffic (i.e. Southeast Depressway, Lower Deck, Mass. Pike, Rt. 2, etc. to make it into the city, deal with the parking lot a.k.a. the Central Artery, and then go through the Callahan tunnel). Coming from, say, Attleboro, Franklin, Andover, Salem NH, Acton, Westford, etc., I'd allow at least 1.5 hours to travel to Logan in the morning. Taking the airport bus from Braintree, Woburn, or Framingham might save you some frustration and some time, since they can use the Ted Williams Tunnel. Taking the commuter rail and changing to the subway is no time-saver either - at South Station, you go from train to red line to orange line to blue line to airport bus.
Even when I lived in Cambridge, I allowed at least an hour to get to the airport, since you never know how lucky you're going to be with the two subway line changes. The cross-town bus to and from the airport is a joke. And yes, I've taken it several times. It actually stops about 5 blocks from my apartment. HOWEVER, it sits at the Andrew Square station for 15-25 minutes while the bus driver takes a break. I can walk the 25 minutes from Andrew and make it home faster than if I'd stayed on the bus. At least it's cheap. The subway's going up to a dollar this fall, by the way. Still a "bahgin", tho.
Massport is also promoting the "satellite airport" concept (PVD, MHT, ORH) to take the burden off Logan. They'd promote BED as well if it weren't surrounded by wealthy suburbs.
On the other end in DC... I will agree with you whole-heartedly that DCA is far more convenient than BWI if you're heading into the District or the NoVa suburbs. But if you're going to the Maryland suburbs and all the development on that part of the Beltway, BWI is actually a better choice.
I agree with you completely that there will always be a premium for BOS-DCA flights - not because they cost the airline more, but because they offer better value for SOME people (not all) in the time they save. I took a look at the DOT traffic numbers for 4Q99 by city pair (O&D traffic), and it seemed pretty revealing to me. I'll group PVD and MHT as Boston "alternates." DOT groups DCA and IAD together (WAS).
PVD/MHT-BWI: 3527 passengers/day
BOS-WAS: 4052 passengers/day
Lower fares are stimulating a significant market, even for "less desirable" airports.
And though NYC and WAS are two of the largest markets from Boston, I doubt USAirways wants to become a glorified Trump Shuttle (though I'm sure it would be VERY profitable, Eastern and Pan Am made TONS of money on their shuttles). You can even get $99 roundtrip fares to DC from Boston if you watch for sales and book in advance, but you can get $70 roundtrips on Southwest to BWI (usually internet specials). The exact number of dollars won't make any difference to travelers where price is unimportant, but if you're a small business owner or self-employed consultant, and you're footing the bill, you might inconvenience yourself to save a couple hundred dollars or more on a full-fare ticket.
As to the fuel cost thing, it doesn't seem like you read my example. Yes, fuel cost is important - it's 10% or so of an airline's total costs. But no, you can't accurately compare an airline's *efficiency* quarter-by-quarter if you're basing some of your comparison on the price of a commodity. The comparison is accurate if you keep fuel costs *per gallon* constant. The most accurate comparison would be to factor out the difference in fuel costs per gallon and calculate CASM from that. And most airlines do put a figure for average cost per gallon of fuel in their financial statements. You just have to do the math to get the constant-fuel-price CASM.
FWIW, Southwest isn't marketing PVD-ISP service (here in Boston) as service to NYC, they're marketing it as service to Long Island. There are a lot of wealthy folks out there.
And yes, I did read the Jenkins article. I'm not sure I agree with many of his scenarios, but I do agree that Southwest will be one of the biggest players in 10 years.