Originally Posted by
Tim34
Yeah, but how long will the 717's last. The 320 will not be signiture service either. Signiture service will disapeer. Look at MKE. Half of the mainline destinations (including Denver and flights to MCI) are saver service and Midwest has the range to fly the 717 to those destinations.
Midwest my be profitable now but they are not making huge gains. Thus, they cannot be considered competitive when compared to other airlines. Airtran, Jetblue, Frontier, Alaska are all considered major carriers because their profits exceed 1 billion dollars. The question becomes how long can Midwest stay Midwest in this type of enviornment without change. Midwest plan for staying competitive relies on no competition at Mitchell, fuel costs low and southwest not adding flights like crazy in MCI. Midwest Air does not have enough planes to scare off other airlines from MKE for too long. Midwest can either grow rapidly like SW, Frontier and Airtran or they are putting the their future in the of events that our outside of their control which is not smart.
One more thing: Midwest is not consistantly profitable either.
The 717s will be around for a long time. Midwest took delivery of the last one less than a year ago, so those planes have a lot of life left in them. The 717s do not have the range to fly routes like MKE-SEA, MKE-SFO, MKE-LAX, etc. There's no need to start speculating about potential 717 replacements because that time is a ways off.
As for Saver Service on select routes, there are several reasons for this. Midwest operates 1 MKE-MCI flight with Saver Service (out of a total of 8 daily flights) because that plane continues on to SFO. During the summer months, MKE-DEN carries very heavy loads. By making this route all MD80s, Midwest can add extra capacity without having to use additional aircraft. I don't like the switching back-and-forth anymore than you do, but DEN has never been a high yielding route from MKE. The 717s will return on the route this fall when traffic falls off.
Regarding Midwest's business plan and no competition, that's not accurate. First, they have 90% of their estimated fuel consumption locked-in for 2007, so any huge spikes in the price of oil will only have a marginal impact on their bottom line. Second, Midwest competes against Southwest in MCI quite well (Southwest threw extra capacity at Midwest on MCI-SAN, MCI-MCO, and MCI-TPA and Midwest did just fine). Southwest and JetBlue can come to Milwaukee and start flights and Midwest will compete aggressively with them.
From 1987 until 2000, Midwest WAS consistently profitable. The only other airline to have a streak like that was Southwest. For the last three quarters, Midwest has been profitable.
Growing very rapidly has caused major problems for other airlines. New routes can take a very long time to start generating profits. If an airline doesn't have a profitable core to begin with, they're asking for trouble with massive expansion.
I think you keep forgetting that Midwest doesn't want to be a major carrier, either.