What if....the M80s were parked (speculation only)
The dire nature of high fuel prices is leading several airlines to significantly cut back on their schedules and/or park aircraft. With Midwest, we have already seen the parking of high-cost Skyway aircraft and the pullback of some 717 and CRJ markets. We also…at least so far…have not seen the type of AirTran retaliation in long-haul M80 markets that I personally expected. Things would be different at $50/bbl oil I suspect.
The desire to replace the M80 has been around for a few years now, but it’s not going to happen in time to mitigate the current high fuel prices. That leads me to wonder this: What would happen if Midwest deemed it necessary to pull the M80’s out of scheduled service? Obviously it would mean no nonstop MKE-west coast. But just how much would Midwest have to scale back if the M80’s were parked?
To find out, I took the flying from the April schedule (24 lines of 717 flying and 20 lines of CRJ flying) and reworked it to see what a new summer schedule might look like. Given the already-announced cuts coming in MCI-Florida flying, schedule slack built in with hopes of winning DCA slots, and pre-existing MCI schedule slack, it wasn’t as draconian as I thought it might be.
Here are the changes I came up with…everything not mentioned could be unchanged:
Market reductions of 1x each (new frequency in parenthesis)
MKE to MCO (2) LAS (3) MCI (7) DFW (4) PIT (3 CRJ)
MCI to BOS (2) MKE (7) SAN (1)
Market increases of 1x each (new frequency in parenthesis)
MCI to SFO (2) and SEA (2)
Downgrades from 717 to CRJ
MSP goes to 5x CRJ (currently 1x 717 + 4x CRJ)
PHL goes to 1x 717 + 4x CRJ (currently 2x 717 + 3x CRJ)
EWR receives no planned 717 upgrade (remains 5x CRJ)
Other than these changes, the entire remainder of the system could remain intact. Markets where the M80 would be replaced by the 717 (such as MKE-PHX) would of course see fewer seats. But other than the loss of west coast nonstops from Milwaukee, the rest of the reductions are really pretty nominal.
I’m not saying that Midwest *will* park the M80’s, or that they necessarily should. However with all the turmoil and cuts in the industry, I think it’s relevant and interesting to wonder what *might* happen if they did.
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Quote:
Originally Posted by knope2001
The dire nature of high fuel prices is leading several airlines to significantly cut back on their schedules and/or park aircraft. With Midwest, we have already seen the parking of high-cost Skyway aircraft and the pullback of some 717 and CRJ markets. We also…at least so far…have not seen the type of AirTran retaliation in long-haul M80 markets that I personally expected. Things would be different at $50/bbl oil I suspect.
The desire to replace the M80 has been around for a few years now, but it’s not going to happen in time to mitigate the current high fuel prices. That leads me to wonder this: What would happen if Midwest deemed it necessary to pull the M80’s out of scheduled service? Obviously it would mean no nonstop MKE-west coast. But just how much would Midwest have to scale back if the M80’s were parked?
To find out, I took the flying from the April schedule (24 lines of 717 flying and 20 lines of CRJ flying) and reworked it to see what a new summer schedule might look like. Given the already-announced cuts coming in MCI-Florida flying, schedule slack built in with hopes of winning DCA slots, and pre-existing MCI schedule slack, it wasn’t as draconian as I thought it might be.
Here are the changes I came up with…everything not mentioned could be unchanged:
Market reductions of 1x each (new frequency in parenthesis)
MKE to MCO (2) LAS (3) MCI (7) DFW (4) PIT (3 CRJ)
MCI to BOS (2) MKE (7) SAN (1)
Market increases of 1x each (new frequency in parenthesis)
MCI to SFO (2) and SEA (2)
Downgrades from 717 to CRJ
MSP goes to 5x CRJ (currently 1x 717 + 4x CRJ)
PHL goes to 1x 717 + 4x CRJ (currently 2x 717 + 3x CRJ)
EWR receives no planned 717 upgrade (remains 5x CRJ)
Other than these changes, the entire remainder of the system could remain intact. Markets where the M80 would be replaced by the 717 (such as MKE-PHX) would of course see fewer seats. But other than the loss of west coast nonstops from Milwaukee, the rest of the reductions are really pretty nominal.
I’m not saying that Midwest *will* park the M80’s, or that they necessarily should. However with all the turmoil and cuts in the industry, I think it’s relevant and interesting to wonder what *might* happen if they did.
Let's hope that this does not occur. If this did happen your "favorite" airline would have a party. I guess it depends on Midwest's ability to meet money. Are they even profitable?
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Quote:
Originally Posted by Tim34
Let's hope that this does not occur. If this did happen your "favorite" airline would have a party. I guess it depends on Midwest's ability to make money. Are they even profitable?
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I've actually been thinking about this scenario as well. Up until a month or so ago there were rumblings from internal sources that some connecting-of-the-dots would occur between existing Midwest destinations and increased frequency in existing markets. However, given the huge spike in oil prices recently and the softening economy, it makes perfect sense to cut-back capacity, especially in lower yield markets.
Despite the MD80s being fuel hogs, I wonder if Midwest has any hedges in place for 2008. They actually did a fairly decent job of managing fuel prices during 2007. Without the disclosures and management comments that happened when Midwest was a publicly traded company, it's very difficult to know how bad things really are. Even if they do have fuel hedges or collars in place, there's no doubt Midwest is feeling some pain.
Assuming that the MD80s are parked, I think Midwest still has an issue on their hands. Obviously the 717s are much more fuel efficient. However, the reconfiguration of these planes scheduled to take place later this year is still problematic. Yes, the aircraft will have more seats and therefore lower fare buckets available for purchase. Yet, a significant portion of the cabin will still be geared towards higher fare business/premium passengers. That works out fine in traditional business markets like LGA, DCA, or DFW. But what about stations like MCO, RSW, or PHX? Are the fare levels and traffic composition sufficient enough to warrant that kind of service?
Some other things to think about:
a) Midwest has publicly stated that the 737 or A320 are simply too expensive for the company at the present time. With airlines going belly-up or cutting back of service significantly, could an opportunity exist for Midwest to get some gently used planes on the property to replace the MD80s?
b) What if Northwest re-instated non-stop flights to MKE-SEA/SFO/LAX/LAS/PHX and had a full code share with Midwest? The two carriers could even work together closely in MKE to help transfer connecting passengers, baggage, etc. Passengers would fly non-stop from MKE or connect in MCI on Midwest metal. This would Northwest to retain market share at Mitchell and benefit regular passengers of both carriers.
This is all speculation of course, but not that far fetched either.
__________________ If you don't know where you are going, you might end up someplace else.
Certainly this is all speculative, and I hope things don't get to the point where parking the M80's is the only option. However the airline industry news is growing increasinly dire, and one wonders what belt-tightening might become necessary.
The M80's are definitely less fuel efficient than more modern aircraft, although Midwest's costs are perhaps not as reputed to be. These are stats for M80's in the 12 months ended September 2007. I believe they came from Aviation Daily
Certainly Midwest's longer stage lengths help push Midwest's CASM down, and fuel is higher now than in that period. However Midwest's M80 costs are not as bloated as conventional wisdom might hold.
Yet it's not a shock that the higher fuel burn difference is magnified as fuel gets more costly. Among other advantages of the TPG/NWA deal was the possibility to get fuel and insurnace at lower rates than Midwest alone could get. That may help keep the M80 in the air. And as Blue mentioned, Midwest benefitted from successful fuel hedge programs in recent years, and this *may* help keep the M80 a viable aircraft in the near term as well.
The possibility of either acquring some used 737 or A320 based on a looming glut of parked aircraft is interesting. This is where the availability of internal capital (TPG) may be key. (Thought at first blush somewhat appealing at the time, I hate to think what condition Midwest would be in now had they found a way to take the company private with a hyper-leveraged buyout.) As for the possibility of NW doing MKE-west coast flying as YX*, I suppose it is possible as a stopgap measure. From a PR perspective they'd be better doing a wet lease (aircraft and crew) from anybody *except* NW as it would lead to further belief that NW has taken over YX.
As I've stated before, I do hope that it does not become necessary to park the M80's, not until Midwest has aircraft to replace them. But with so many other airlines showing severe signs of fuel stress, I wonder what Midwest faces.
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Quote:
Originally Posted by knope2001
As for the possibility of NW doing MKE-west coast flying as YX*, I suppose it is possible as a stopgap measure. From a PR perspective they'd be better doing a wet lease (aircraft and crew) from anybody *except* NW as it would lead to further belief that NW has taken over YX.
Honestly, I don't think this will happen. However, with each day getting increasingly desperate for the airlines drastic action like this would not surprise me. The reason I suggested a further Midwest/Northwest partnership is that a complete pull-out from the MKE-West Coast non-stop market could create a dramatic shift in the competitive landscape at Mitchell. There would be too many displaced passengers to places like PHX, LAS, and LAX.
Assuming that the MD80s aren't profitable (and we don't know if this is actually the case) it may make sense from a competitive stand-point to keep the planes in service in hopes of driving AirTran from the long-haul West Coast markets.
Besides the MD80s, I still think there is some fat Midwest could chop from the route network. You mentioned STL in your original post. I have to ask why that route is still around? It's really not set-up for connecting traffic. The schedule is not friendly to the business traveler. Two flights a day probably keeps some of the higher fare loyal Midwest passengers on the plane, but is that enough in today's environment? What does STL contribute to the overall route network? YYZ is another station I question. Again, the yields are higher but I've heard numerous stories about how light the loads are.
I want to stress that this is all pure speculation. Who knows what will happen. The environment is not good for any airline right now.
__________________ If you don't know where you are going, you might end up someplace else.
Bottom feeding airlines like Midwest should be looking for opportunities when other airlines are going bankrupt.... Midwest should not be sitting on the decision for two years on what aircraft to buy to replace the MD80. In this industry it literally is "if you snooze you lose" big time. Other bottom feeders like AirTran and Southwest will beat Midwest to the punch without even thinking about it. To me it is frustrating and I think Timothy Hoeksema is part of the problem, not the solution. I only hope TPG sees opportunity and is able to right the Midwest ship. Midwest is a good niche airline and I think that is what TPG is going to try banking on. So grounding the MD80 IMHO is a big mistake and I hope it doesn't come down to that.
Midwest is generally the most expensive airline from the midwest to LAS and they consistently fill their aircraft. Given this, they are surely making money on Mad Dog flights to LAS.
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Quote:
Originally Posted by Mrp Alert
Midwest is generally the most expensive airline from the midwest to LAS and they consistently fill their aircraft. Given this, they are surely making money on Mad Dog flights to LAS.
Full planes, don't always mean big profits.
As someone posted above, YX should be looking to aquire some 737's from Aloha...
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Quote:
Originally Posted by MKEbound
Full planes, don't always mean big profits.
As someone posted above, YX should be looking to acquire some 737's from Aloha...
I am not sure if they can afford that? If they do get the 737 how do they differentiate their product from other airlines? I just don't know how much they can do with a two class cabin in terms of leg room and seat size?
I am not sure if they can afford that? If they do get the 737 how do they differentiate their product from other airlines? I just don't know how much they can do with a two class cabin in terms of leg room and seat size?
I think they should just stop thinking about the B737 or A320 and focus on the Next Gen CRJ or Embraer Aircraft. Both are very fuel effecient and have the range that YX would need to fly from the middle of the country to both coasts. With the right type of aircraft from either company they can preserve most of their 2 by 2 seating and protect the Midwest Brand. But we all know new aircraft is off the radar scope for at least another year. Just my two cents.
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Quote:
Originally Posted by flyYX
I think they should just stop thinking about the B737 or A320 and focus on the Next Gen CRJ or Embraer Aircraft. Both are very fuel effecient and have the range that YX would need to fly from the middle of the country to both coasts. With the right type of aircraft from either company they can preserve most of their 2 by 2 seating and protect the Midwest Brand. But we all know new aircraft is off the radar scope for at least another year. Just my two cents.
The same problem will exist with the new CRJs or Embraer aircraft. These planes are now in favor with airlines world wide and as a result there is a big back log in orders. However, with airlines slashing capacity and deferring/cancelling aircraft orders there may be some opportunities for Midwest to pick-up some planes in the near term. With hindsight being 20/20, the E190 would have been a great plane for Midwest. Unfortunately, it wasn't an option when Midwest placed the 717 order.
The MD80s operate mainly in high density leisure markets. The 737 or A320 would be the most ideal replacement aircraft.
__________________ If you don't know where you are going, you might end up someplace else.
The same problem will exist with the new CRJs or Embraer aircraft. These planes are now in favor with airlines world wide and as a result there is a big back log in orders. However, with airlines slashing capacity and deferring/cancelling aircraft orders there may be some opportunities for Midwest to pick-up some planes in the near term. With hindsight being 20/20, the E190 would have been a great plane for Midwest. Unfortunately, it wasn't an option when Midwest placed the 717 order.
The MD80s operate mainly in high density leisure markets. The 737 or A320 would be the most ideal replacement aircraft.
Yeah... Ever since Midwest has fallen into financial problems, they seem to always be a day late and a dollar short.
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Quote:
Originally Posted by flyYX
Yeah... Ever since Midwest has fallen into financial problems, they seem to always be a day late and a dollar short.
It can take a painfully long time to make big decisions at Midwest. The culture of the company plays a big role in that. There are some signs that this process is changing with the new ownership, which is a very good thing IMO.
The decision making process has always been slow at Midwest, even before they fell on hard times.
__________________ If you don't know where you are going, you might end up someplace else.
I guess it depends on Midwest's ability to meet money. Are they even profitable?
