RAH is number two in Denver where, while UA seems the least favorite carrier, they don't have the FF incentives or route network (Star Alliance/international service) offered by UA. Expansion by WN in DEN would seemingly hurt RAH more than UA as RAH and WN are more directly in competition for the low-fare domestic traveler.
Several aviation consulting firms have done studies on the situation in Denver and it is United that has suffered the most damage. They have experienced significant market share and yield erosion in what was once their most profitable hub. These same analyses show that Southwest's DEN operations are gushing red ink.
We haven't seen any specific figures since they were purchased by Republic, but we do know that Frontier was profitable in Denver last year (even if you exclude bankruptcy related charges).
Southwest continues to keep the pressure on by adding more flights. Yet, Bedford stated recently that the revenue environment for Frontier has stabilized in Denver with a slight up-tick noted in March.
As for having no frequent flier hook-up, I can assure you that Republic is actively working on this and hopes to make an announcement in the not too distant future. It involves one of the big alliances but if that should fall through there are other options on the table. Frontier customers will have access to a global route network soon enough.
Bedford said it himself: MKE cannot sustain three hub operations. RAH will have to score a tremendous marketing victory if they expect to draw traffic away from FL, who has not only established itself as MKE's new hometown airline, but has competitive fares and is seemingly more healthy in terms of fuel and wages.
Milwaukee does not have three hub operations. Frontier has a large hub in Milwaukee. AirTran has a mini-hub currently but may add more flights in the future if conditions warrant the increase. Who's the third carrier hubbing at Mitchell? If you're going to say Southwest, a 12 flight operation with few, if any, connecting opportunities hardly constitutes a hub. Besides, Southwest has already blinked and will be cutting two flights from its MKE schedule later this summer.
If you take a close look at the traffic statistics released by the DOT, it shows that Frontier and AirTran serve somewhat different traffic patterns in MKE. Frontier tends to have a lot more O&D traffic on many of its routes. This tends to result in higher yields. AirTran, on the other hand, routes significant amounts of connecting traffic through the airport at much higher levels that Midwest ever had.
Of course, this can and probably will change somewhat as time goes on. We'll just have to wait and see how things play out.
Bedford is still predicting that the branded operations will be profitable by Q3 2010. They lost several million dollars last quarter, but I believe that was all attributable to Midwest. As the restructuring of the Milwaukee operations is completed, I suspect that Frontier will find itself in a pretty good position to compete with the likes of AirTran and Southwest.
As for fuel, I believe that Republic started to hedge last year but I'll have to go back to the last earnings call to get the specific details.
Frontier will keep some routes in MKE, but I think the possibility of enhanced operations in DEN, especially to the east coast, means Bedford attempts to shift MKE-LGA, MKE-DCA to DEN.
LGA and DCA are two core routes from Frontier's Milwaukee hub. They won't be going anywhere anytime soon. Frequency and capacity may be adjusted slightly, but Frontier will still offer could coverage.
You act like Frontier is hemorrhaging passengers and AirTran is cleaning-up. That's not the case.
Market share percentages have changes, but the airport is also seeing a huge increase in passenger volumes. While Frontier's market share has fallen, they are flying a lot more passengers year-over-year as well.
If Republic can make the MKE hub profitable (which they still project) than Frontier will be fine.
It may just be that Frontier and AirTran will find a way to co-exist together in Milwaukee.