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Generic Confusion

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Thursday, December 21, 2006

Now Flying: Odd Couple Airways?

Here was a surprising announcement: the airline formerly known as ValuJet offered to purchase Milwaukee-based Midwest Airlines. According to AirTran, they want to "acquire Midwest Airlines with the intent of merging the two airlines, combining operations and building one of the strongest and most diverse low cost airline networks."

There's just one problem: Midwest Airlines has never been a low cost airline. They haven't even been an airline focused on matching the large airlines' ticket prices. The selling point of Midwest Airlines has always been first-class style service with competitive prices. This airline offered two-across leather seating, full meals served on china and linen, complimentary wine, and fresh-baked chocolate-chip cookies.

It's very clear, as seen in the airline's press releases:

Catering primarily to business travelers and discerning leisure travelers, the airline earned its reputation as "The best care in the air" by providing passengers with impeccable service and onboard amenities at competitive fares.
I highly recommend Midwest Airlines. I last flew Midwest in 2000, since I'm now within driving distance of Milwaukee, and I understand the meals are gone, and probably the wine, but the airline's business model (and cookies) remains, and it just does not fit in with that of a low-cost airline.

I think this Midwest Airlines press release sums it up nicely:

"During their comprehensive review, those advisors considered the offer in light of Midwest's business and strategic plans," explained Hoeksema. "Under our strategic plan, we are projecting annual capacity growth of more than 10% over the next three years including a 50-seat regional jet program, along with significantly greater growth in profitability. Additionally, we view AirTran's offer at only about $5 per share, because it includes approximately $6 per share in cash that already belongs to our shareholders." As previously announced, the Midwest board determined that pursuing a merger with AirTran would not be in the best interests of the company, its shareholders and other stakeholders - including customers, employees and the communities the airline serves.

"While it is the fiduciary obligation of the board of directors to review credible offers, the board unanimously concluded that Midwest's business plan as a stand-alone company would support a considerably better return to our shareholders than AirTran's offer," Hoeksema said. "We are successful because we provide customers with an exceptional travel experience. Our product and service are unique, and are not readily compatible with a merger with another carrier."

AirTran is losing my faith with its misleading December 20th press release, citing the air traffic in similar-sized cities to show that Milwaukee is underserved. News flash: those three cities with much higher levels of air service are hubs for three of the largest airlines. US Airway's Charlotte hub, Delta's Cincinnati hub, and Northwest's Memphis hub are not an appropriate comparison for a spoke airport like General Mitchell International Airport.

And look: AirTran can't even get the proposed route network right. It lists Indianapolis as AirTran-only, though I can fly Skyway (Midwest Connect) to Milwaukee.

I'm grateful that AirTran helps keeps down the cost of an airplane ticket to Atlanta, but I don't want them taking over Midwest Airlines.

Midwest Airlines, AirTran


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