Midwest Airlines Midwest Miles - More AirTran competition coming to MKE

MKE-DFW starts 2x/day in April.

Skywest 50-seat CRJ will replace 717s and 737s to IND, PIT, and STL, plus add new service to Des Moines, Akron, and Omaha. Each will have 3x/day.

Also, DCA will get a 3rd flight starting in April.

The return of the CRJ is an interesting development to the FL* system and the competitive landscape in Milwaukee.

Interesting for MKE but nonetheless idiotic for AirTran financially. I'd sure like to know how they plan on making money with regional jets given their cost and fare structure. Given how much AirTran has discounted fares in markets like STL and IND already I really don't know how they intend to make this work.

It was a financial train wreck with AirWisconsin and the same will be true here. Although it will be interesting to see the AirTran fans state how the CRJ additions are good but Midwest having them is bad.

AirTran and Skywest are going to share revenue?

http://www.jsonline.com/business/69090752.html

Doesn't sound like there is much risk for AirTran.

Not surprised at the addition of Dallas flights. You would think Southwest would have considered adding direct service to Dallas.

AirTran and Skywest are going to share revenue?

http://www.jsonline.com/business/69090752.html

It appears as if Skywest is assuming most, if not all, the risks with these flights. If that's the case, then these will be a financial disaster for Skywest.

Do they seriously think they'll even make a penny flying these routes at AirTran's fare structure?

This just proves there is a RJ glut.

FL press release:

http://pressroom.airtran.com/phoenix.zhtml?c=201565&p=irol-newsArticle_print&ID=1350983&highlight=

AirTran and Skywest are going to share revenue?

http://www.jsonline.com/business/69090752.html

I think I have this straight in my head now. FL's cut will the booking fee plus any connections made at MKE. Skywest will get the rest, minus any connecting cost in MKE. So most of the risk is on Skywest for these routes and all the planes will be branded Skywest.

It appears as if Skywest is assuming most, if not all, the risks with these flights. If that's the case, then these will be a financial disaster for Skywest.

Do they seriously think they'll even make a penny flying these routes at AirTran's fare structure?

This just proves there is a RJ glut.

And Joe Leonard called Midwest "schizophrenic" for flying MD80's. ;)

MKE-IND obviously has not been producing strong loads for FL...not enough to justify 717 or 737 on the route; they must be losing on it.

MKE-IND obviously has not been producing strong loads for FL...not enough to justify 717 or 737 on the route; they must be losing on it.

Based on some of the passenger loads reported I'm not sure routes like IND, PIT, or STL would even justify a CRJ.

I wonder if these additions would make Republic bring the Q400s to MKE. The plane is much cheaper to operate but would only add unneeded capacity and perhaps drive yields down even more. It's somewhat interesting that MKE added Q400 parking lines as several gates. It could mean nothing, but then again...

Itheir cost and fare structure. Given how much AirTran has discounted fares in markets like STL and IND already I really don't know how they intend to make this work.


Ah, Air Tran is learning well from the likes of Delta/Midwest/Republic, grasshopper.

A wise man said, do not seek meaning, where there is none. He says, if you look at the surface, you miss what is underneath. :D

Also, consider the parable of the lame Southern airline: There once was an unprofitable airline company from the South that said. " Holy Cr*P, I have to compete against an LCC on routes with weak margins, what do I do"?

The lame Southern airline said " hmmmm maybe I'll put some CRJs on this route. At best I'll make a thin profit, at worst I'll bleed the other guys yields."

Thus the regional jet as a competitive strategy was born. @:-)

To come: Zombie banks, Zombie car companies, Zombie airlines

At best I'll make a thin profit, at worst I'll bleed the other guys yields."



The yields are going to be bleeding badly for every airline that serves MKE. It won't matter how low each airline's costs are.

I'm curious as to what, if any, response Republic will have. Perhaps they won't have to do much at all as these SkyWest flights will flop.

Not surprised at the addition of Dallas flights. You would think Southwest would have considered adding direct service to Dallas.

I thought the Wright Amendment prohibits this, given that WN would be doing this out of DAL.

I thought the Wright Amendment prohibits this, given that WN would be doing this out of DAL.

It's interesting that FL added mainline MKE service to Dallas, the city that serves as WN's "hometown."

Also interesting is that WN has added routes from MKE to a YX focus city (MCI) and an FL focus city (BWI).

Also interesting is that WN has added routes from MKE to a YX focus city (MCI) and an FL focus city (BWI).

MCI and BWI are both big Southwest cities.

Having MCI allows Southwest to offer good connections to places like Dallas. I suspect that is one reason why MCI was added instead of STL.

Not too shocking of news from AirTran, they needed drum up some attention some how in the Milwaukee market.
I was happy when Republic started the CHQ E135 service to a few cities, they are much more comfortable than the CRJ 200. AirTran can have those puppys all day long, my neck is still sore from all the times I've had to tilt it to take a peak out the window. (I had to show my displeasure of the CRJ 200).

MKE-IND obviously has not been producing strong loads for FL...not enough to justify 717 or 737 on the route; they must be losing on it.

I've been to IND twice in the past month on Midwest, all four of my flights (different times of the day) have been completely booked and one was over booked. It says nothing about yields but they have been able to maximize their bookings with the 135.


I'm curious as to what, if any, response Republic will have. Perhaps they won't have to do much at all as these SkyWest flights will flop.

My guess is that they will announce the additions of jobs in Milwaukee by moving maintenance to the Midwest hanger. Bedford said he wanted to make a decision, in regards to maintenance, before the end of October, maybe he knew he should keep it tucked away a little longer.

It will be interesting to see how Skywest does, afterall they have at least $4 million of Republics money to burn through, which won't take too long given the price of fuel is increasing.

I'm curious as to what, if any, response Republic will have. Perhaps they won't have to do much at all as these SkyWest flights will flop.

After seeing Republic's 3Q earnings, I would guess that Republic won't have a response. RJET has other issues like profitablity to worry about.

After seeing Republic's 3Q earnings, I would guess that Republic won't have a response. RJET has other issues like profitablity to worry about.

As compared to FL, who has only posted profits every quarter this year?

FL has made some move moves in Milwaukee that have caused me to question their strategy. I did not like the fact that they added service to IND, STL and MSP. How long will airtran last in MKE?

FL has made some move moves in Milwaukee that have caused me to question their strategy. I did not like the fact that they added service to IND, STL and MSP. How long will airtran last in MKE?

I have to agree with you. Its not good to make decisions based on emotions, which, to me, this is what AirTran is doing. They are going away from a business model that works for them. Even with a limited risk associated with the Skywest agreement they have tried regional service before and decided that it was more profitable for the flying to be done on their own metal.

How long did the Air Wisconsin agreement last? That may tell us how long they will try this out.

I have to agree with you. Its not good to make decisions based on emotions, which, to me, this is what AirTran is doing. They are going away from a business model that works for them. Even with a limited risk associated with the Skywest agreement they have tried regional service before and decided that it was more profitable for the flying to be done on their own metal.

How long did the Air Wisconsin agreement last? That may tell us how long they will try this out.

Blue or Knope would be better equipped to answer this question but I think that FL has been most successful in their leisure markets. Maybe that is where they should focus. They should not try to be another midwest. I am not sure that the MKE market is big enough for that. What I liked about Southwest is that they stick to what they are good at. Their additions in MKE complement their route structure.

As compared to FL, who has only posted profits every quarter this year?

That is true. In my previous posts I was a little harsh on FL. As a former resident of Milwaukee I think that their focus on my hometown is fantastic and I do wish them luck. It is not easy to be profitable in the airline industry but they seem to do a good job of it. I also with Midwest the best of luck.

I'll post more detailed information in the AirTran forum, hopefully tomororw, but a few comments on how things are shaping up so far.

MKE-IND is 3x/day, but the first MKE departure is noon. Not exactly designed for Milwakuee-based travelers.

MKE-PIT is 3x/day, and the schedule is better for Milwaukee-origination traffic. Connections at MKE, however are generally not very good, with no flight dovetailing with the big east-west bank.

MKE-STL is fairly similar to the schedule Midwest is planning to operate.

DSM and OMA are both relative good schedules for MKE-based traffic and for connections.

MKE-CAK is set up best for Milwaukee-originating business traffic and has largely dismal connecting opportunities in Milwaukee. My only guess is that they are gunning to draw traffic away from MKE-CLE, a market Continental dominates.

Finally, regarding AirTran versus Republic in Q3, Republic had a better operating margin but AirTran had the better net margin. At Republic, branded operations, which include Mokulele Airways (which they are bailing out of) and August/September results for Midwest, lost $15.9m in the quarter. Perhaps on tomorrow's conference call they'll havemore detailed information.


3rd quarter margins

Operating profit

6.2% AirTran
10.2% Republic

Net profit

1.7% AirTran
0.9% Republic

I have to agree with you. Its not good to make decisions based on emotions, which, to me, this is what AirTran is doing. They are going away from a business model that works for them. Even with a limited risk associated with the Skywest agreement they have tried regional service before and decided that it was more profitable for the flying to be done on their own metal.

How long did the Air Wisconsin agreement last? That may tell us how long they will try this out.

Every business has to take a risk to try to get ahead. It probably won't work out, but you never know unless you try. This is different than the regional service they did through Air Wisconsin. FL has almost no risk with this arrangement. SkyWest is taking the gamble here.

If these flights are enough to generate some decent feed for the rest of the FL routes out of Milwaukee, it's not a bad thing. At least for the short term, the flying public wins. Nothing wrong with that.

If they don't work out, no harm done from AirTran's perspective.

MKE-IND is 3x/day, but the first MKE departure is noon. Not exactly designed for Milwakuee-based travelers.


For MKE-IND I see the first departure at 730 in the morning for January and February before it changes to noon. I wonder if they will end up keeping the morning time as I don't think a noon flight should be the first of the day either. Overall I think the SkyWest schedule is decent but definitely not perfect.

... At Republic, branded operations, which include Mokulele Airways (which they are bailing out of) and August/September results for Midwest, lost $15.9m in the quarter. Perhaps on tomorrow's conference call they'll havemore detailed information.


Reading more this AM, Republic's 3Q earnings were a pretty significant earnings miss. 2008 3Q RJET earned $ .50 /share versus $.09 share for 3Q 2009. Many analysts were expecting earnings of $.29. for 3Q 2009.

It will be interesting to see how RJET spins this.

FL has made some move moves in Milwaukee that have caused me to question their strategy. I did not like the fact that they added service to IND, STL and MSP. How long will airtran last in MKE?

Tim-

The more I think about this, it's a brilliant strategy. From the Chinese 36 Strategems "Defeat the enemy with a borrowed knife"

Attack using the strength of another (in a situation where using one's own strength is not favourable).

Usage
The idea here is to cause damage to the enemy by getting a 3rd party to do the deed.

Tim-

The more I think about this, it's a brilliant strategy. From the Chinese 36 Strategems "Defeat the enemy with a borrowed knife"

Attack using the strength of another (in a situation where using one's own strength is not favourable).

Usage
The idea here is to cause damage to the enemy by getting a 3rd party to do the deed.

I agree. This could be a brilliant move. I wish them the best

Blue or Knope would be better equipped to answer this question but I think that FL has been most successful in their leisure markets.

AirTran has done a great job of filling seats in most of the leisure markets from MKE, especially during peak travel periods. However, the more traditional business routes have not done well at all.

It was obvious that STL, PIT, and IND in particular were very weak performers from the get go and would have been cut if this deal with SkyWest hadn't been announced.

During the Q3 earning call, AirTran executives stated that they would give MKE another year to see how things develop. I suspect that in addition to pulling the SkyWest flights AirTran will also trim MSP/BOS/LGA/DCA/DFW after next summer.

Also of interest, AirTran's pilots are not happy at all about this new outsourcing. Here's their press release:

http://finance.yahoo.com/news/AirTran-Pilots-Outsourcing-bw-2972123343.html?x=0&.v=1

As compared to FL, who has only posted profits every quarter this year?

As compared to making more profit if not for the dog MKE operation.

As compared to making more profit if not for the dog MKE operation.

If MKE was such a dog they wouldn't be trying to expand at all. FL said MKE was profitable this summer which isn't surprising but it definitely means MKE is not a dog.

If MKE was such a dog they wouldn't be trying to expand at all. FL said MKE was profitable this summer which isn't surprising but it definitely means MKE is not a dog.

The pie isn't growing that much. The new status quo is 3 dogs and some other assorted wieners fighting over the same pie. 30-40% over-capacity at MKE now.

Woof-woof ;)

Based on some of the passenger loads reported I'm not sure routes like IND, PIT, or STL would even justify a CRJ.

I wonder if these additions would make Republic bring the Q400s to MKE. The plane is much cheaper to operate but would only add unneeded capacity and perhaps drive yields down even more. It's somewhat interesting that MKE added Q400 parking lines as several gates. It could mean nothing, but then again...

In today's conference call they said 5 CRJs coming from Continental will be placed at YX. However, he also said it is RJET's plan to de-emphasize smaller jets in favor of Ejets and to stabilize in 2010 with growth in 2011.

Bad news for Republic in Milwaukee. If they are having a hard time of it riding the coat tails of Midwest's reputation with child labor, it isn't going to get better for them. No one is going to pay a premium to fly on a regional jet once the bait and switch is realized. Republic will go the way of other regionals pretending to be a mainline operator, out of business. I am just surprised how fast it is happening.

<<<Accidentally posted in the wrong thread>>>

During the Q3 earning call, AirTran executives stated that they would give MKE another year to see how things develop.


If things were going so well at MKE would they even make such a comment? To me that sounds like things aren't really going as well as they say but will give it one more year to see if things improve.

There are the profitability claims with MKE. That comment by the executives casts doubts on it. Could they be profitable only because of route incentives? What happens when those incentives expire? I believe most places only offer 1 or 2 year incentives. That means most will have expired and the real test of profitability will begin. That could possibly explain the comments by the executive. It is much easier to be profitable when you have landing fees waived or possibly reduced rent for the first year or two. What happens when you pay full price like everyone else?

This of course is speculation based on the recent announcement by SAN which outlined their incentive program which was designed to match programs offered by other airports.

There are a couple newly painted Skywest CRJ's still flying for YX. I believe these are the ones making their way over to FL. The new paint scheme is similar to the older Skywest House colors, blue tail and all white body. I will try and upload some pictures.