FlyerTalk Forums - View Single Post - Midwest Air complies with antitrust request
Old Dec 26, 2007, 11:22 am
  #14  
Tim34
 
Join Date: Jan 2007
Location: Bay Area, CA
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Cool

Originally Posted by flyYX
Posted on JSOnline 12/25/2007

A new study raises that old concern about the role of Northwest Airlines in a deal to sell Milwaukee's hometown airline. But that sale is still the better option.
From the Journal Sentinel
Posted: Dec. 25, 2007
A new study finds that the proposed sale of Midwest Air Group to a private equity firm and competitor Northwest Airlines could reduce competition between the two airlines and make it difficult for low-cost carriers to begin flying out of Mitchell International Airport.

The study raises the specter of a Northwest takeover of Midwest, which is a distinct possibility. Northwest has an option to buy out TPG Capital, the firm that is taking the lead in this dance. TPG, based in Fort Worth, Texas, would own 53% of Midwest; Northwest would own the other 47%. Federal antitrust regulators are considering the $451.8 million deal.

Northwest's involvement was always a concern for travelers because of its spotty service and on-again, off-again interest in the Milwaukee market. But it's unlikely that the Department of Justice will nix the deal, and that's probably for the best. The alternative was a sale to AirTran Holdings, which would have meant the end of Midwest's unique culture and service. By selling to TPG/Northwest, Midwest preserves for now what makes the airline special.

But there are concerns. If Northwest eventually took control, it would have a huge share of the business at Mitchell, which is one motivation for the airline's interest. Another is playing defense. Northwest, with hubs in Minneapolis and Detroit, had a strategic interest in defending its Midwest dominance against AirTran.

Diana Moss, author of the report by the American Antitrust Institute, a nonprofit group that favors stronger enforcement of antitrust laws, told the Journal Sentinel's Tom Daykin that regulators will focus on the Northwest stake in this deal and that buyout option (www.jsonline.com/698246).

But it's not clear that a Northwest and Midwest combination, if it comes, would restrain competition at Mitchell. There is still plenty of room for growth at the airport. Since the deal was announced, AirTran has said it would expand service and the new discount carrier, Skybus, has begun flying.

We share the concerns of many travelers over Northwest's record and hope the airline has gotten the message that it has to clean up its act. The Department of Justice must ensure that travelers won't be pinched down the road by a deal that opens the door to less competition at Mitchell. If the deparment believes that will happen, it should insist on changes. Wisconsin travelers should be a priority.

But remember, Midwest had two choices once AirTran began pursuing it: capitulate or find another buyer. This deal gives Midwest a chance, at least, to preserve its culture and legacy of service for a while longer.

Should the Department of Justice approve the sale of Midwest Air Group to TPG Capital? Why or why not? Send a letter to: Journal Sentinel editorial department. To read the report, go to www.antitrustinstitute.org
Very interesting flyXY, thanks for the article^. I do not see the justice dept nixing this deal or doing anything about the buyout option for NWA. If the justice dept tried to modify the buyout option NWA would most likely pull out of the deal but I do not see that happening. Skybus and Airtran operate a very small number of flights in MKE and I do not see either one of them being in any position to mount a credible challenge to Midwest Air in Milwaukee. I did not think that Airtran should have requested those additional gates in Milwaukee. They should have focused on other cities i.e. San Jose, San Diego, Miami, Boston or Philly, which they would have had a better opportunity to make money. I wonder when TPG will announce a new aircraft order for Midwest? The MD-80s are getting old and need to be replaced. 20 A319s would be nice. It would be great for MKE travelers to get non-stop flights to Mexico and the Caribbean, maybe even more flights to the west coast (lol; then again maybe not).

I want to know what TPG/Northwest’s plan for Midwest is? Does anyone have any thoughts as to what they will do with Midwest air?

Last edited by Tim34; Dec 26, 2007 at 11:31 am
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