It should be an interesting day tomorrow. Supposedly, dropped YX markets to be announced and maybe update on labor negotiations.
I heard on WTMJ TV News that only certain employees will know the new schedule tomorrow. WTMJ expects the news to leak out tomorrow, but it won't be confirmed or denied by Midwest Airlines until next week sometime.
I heard on WTMJ TV News that only certain employees will know the new schedule tomorrow. WTMJ expects the news to leak out tomorrow, but it won't be confirmed or denied by Midwest Airlines until next week sometime.
And so anyone looking to book a flight on Midwest sits and waits and looks at other options. How stupid are they? I can't see many future flights being booked right now.
A common misconception about Midwest's fare premium is that people think it is due to travelers paying a higher fare on Midwest for the wide seats, for better service, etc. And it follows, then, that as the economy tightens and some of Midwest's luxuries decrease, people won't pay more for Midwest anymore. Midwest's fares are higher, and people won't pay higher fares, so the thinking goes.
The Midwest fare premium is primarily not due to Midwest charging higher fares, but to Midwest carrying a more business-heavy mix of travelers. Less leisure inventory, less need to fill seats with leisure passengers.
To help illustrate how inventory difference can affect average fare, I put together an illustration. These numbers are just for illustration, and they ignore the issue of connecting traffic for simplicity sake.
In this illustration there is a special sale fare bucket of $69 which Midwest does not match, but every other fare level is exactly the same. Someone going to purchase MKE-ATL on a specific day might find that the cheaper Midwest inventory was sold out and so AirTran was cheaper, but the fare levels are identical.
69 passengers / 88 seats.....78.4% load factor
$9702 total revenue
$140.61 average fare
In this illustration:
Both airlines have a load factor of about 78.5%
Midwest's average fare is 34.9% higher
Total revenue for flying the 717 from MKE to ATL is actually slightly *higher* for Midwest despite the reduced seating and having fares no higher than AirTran.
Remember again that this is a simplified illustration...exact inventory in fare buckets is proprietary information. And it ignores connecting traffic. But it does show how Midwest can get a significant fare premium and even obtain higher total revenue per trip in spite of fewer seats.
Now why would Midwest be the more common choice for business passengers paying the higher $212 and $299 fare buckets? The intense focus on serving the needs of MKE and MCI based business travelers.
If conditions improve and Midwest returns to profitability, I could see the following markets being opened from MKE:
1) Washington Dulles
2) Miami
3) Houston
4) San Diego
5) San Antonio
The first four have been flown by Midwest non-stop from MKE in the past. With the exception of Houston, these are the biggest markets not served non-stop (SAN is debatable because we don't know if AirTran will be back in that market next year). Some of these routes could be flown with the CRJ.
I'm putting the cart before the horse here. Before any of the above would happen, Midwest has to get its house in order. Given the turmoil in the industry at the moment, I don't see much, if any, expansion on the horizon.
Yeah, I would be nice to see some of these places return. I'd guess Houston as first, but who knows.
In the mean time I'm more concerned that hopefully not too many existing stations will close. It wouldn't surprise me to see some Florida stations to go, and hopefully the west coast stations will all stay with Kansas City service. As for the CRJ markets, I'm paricularly worried about MKG, SAT, SDF, STL, CWA, RDU and CLE. So much depends on fare, however, that it's hard to know.
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Knope, NW has DC 9's from the old Hughes Airwest, with tail numbers in the N9333X series. They were built in the late '60's. Anyway, you and I will never agree on this one, because you don't think that knowledge of the principals, and an understanding of how equity people think, is useful. I will step back, and watch this unfold, but in my business, you learn to look for anomalies. People who depart from predictable patterns. When that happens, it's your signal that the wheels are about to come off. Airlines don't make "passive investments" in other carriers, especially when they, themselves, have just emerged from bankruptcy, having flushed employee pensions, shareholders, and lenders. NW is sorely in need of more new planes. What are they doing with a quarter billion in cash, in a passive investment in a company with 37 mainline aircraft? Ditto, TPG. Equity firms live on their outsize returns on funds invested. Such returns grow proportionately to debt used. There is none here. Equity guys just don't do that. It doesn't pass the smelll test ,but you have to be in that game to understand that. We'll see.
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Quote:
Originally Posted by knope2001
As for the CRJ markets, I'm paricularly worried about MKG, SAT, SDF, STL, CWA, RDU and CLE. So much depends on fare, however, that it's hard to know.
It's interesting that you mention SAT.
During 2002-2003 when Midwest was slashing service left and right from MCI, SAT was one of the few markets that remained. This was in despite of loads in the high 30% to mid 40% range some months. The market must have some importance to Midwest.
Perhaps there is more to SAT than meets the eye.
__________________ If you don't know where you are going, you might end up someplace else.
I think FLL and RSW should be seasonal and not cut completely. Sadly LAS and PHX from MKE will probably be gone for awhile. If oil truly is a bubble ready to burst, Midwest can't afford to be sitting on their hands if the price of oil tumbles. I also have to wonder if Midwest should give up gates at MKE to save money too? Or are they under a long term lease agreement? They certainly don't need all of D Concourse if all these cuts were to take place.
Last edited by flyYX; Jul 18, 08 at 8:49 am.
Reason: spelling
I think FLL and RSW should be seasonal and not cut completely. Sadly LAS and PHX from MKE will probably be gone for awhile. If oil truly is a bubble ready to burst, Midwest can't afford to be sitting on their hands if the price of oil tumbles. I also have to wonder if Midwest should give up gates at MKE to save money too? Or are the under a long term lease agreement? They certainly don't need all of D Concourse if all these cuts were to take place.
FLL and RSW just might be seasonal only. Sorensen is just speculating. We will have to wait and see how accurate his predictions are.
He thought he was really enlightening the public when he predicted the West Coast would no longer be served nonstop from Milwaukee.
I also have to wonder if Midwest should give up gates at MKE to save money too? Or are the under a long term lease agreement? They certainly don't need all of D Concourse if all these cuts were to take place.
Maybe Air Tran would be interested in moving into the D concourse.
And so anyone looking to book a flight on Midwest sits and waits and looks at other options. How stupid are they? I can't see many future flights being booked right now.
In an industry not known for management "brillance" MidWests is taking the title of "worst" away from USScare in a HURRY!
Maybe Air Tran would be interested in moving into the D concourse.
AirTran is in a good location at MKE. I think there is still two open gates next to the 4 they lease now. AirTran is in a way better position to sprint into action if oil prices decline. They could quickly ramp up service at MKE if the climate is right.
