DAYflyer
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RE: AirTran Reaches For Midwest - All The Specifics

Thu Jul 19, 2007 9:46 pm

Quoting TWFirst (Reply 3):
But if FL can adopt the best of YX... and YX gets the financial benefits and economies of FL... then it's win-win. I don't believe YX's business model is sustainable long-term.

This is exactly the position I have taken with the proposed merger.

Quoting AirTran737 (Reply 46):
And you are forgetting that Milwaukee is a blue collar, working class town where people are cheap and and like to save every penny that they can. FL will thrive in MKE, there is no doubt about it. People can say that they will never fly FL, but when it comes to saving a couple hundred bucks on the family vacation they will forget how big bad AirTran came and buried Midwest. You people need to stop whining and accept the fact that YX's days are numbered, and that the merger may not be that bad.

Well said. This is exactly why you don't see any "all first class or business class only" airlines operating there.
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RJNUT
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RE: AirTran Reaches For Midwest - All The Specifics

Thu Jul 19, 2007 10:46 pm

i actually think the biz plan for YX is sustainable, longterm.,..The cheap fare haulers will run out of gas..literally and figuratively and the biz travelers will pay a bit of a premium to avoid hubs and the Ohare's of the world !
'
this summer reflects how broken the system is and FL's plan is just more of the same idea of flooding the market with too many seats, potential delays / customer service failures!

Midwest is basically adding P2P service from MKE and MCI. with right size A/C...not really going after the connecting traffic, considering any they do get as gravy! FL is banking heavily for connections..
Example..The proposal adds MCI-DEN, currently served by UA, F9, WN....how are they goint to make a dent?, by hoping the guy in DEN wants to connect on to LGA,.,,Its not needed...!!!

I am surprised how many people here have jumped on the FL band wagon when its apparent how superflous there plan is!
 
airtran717
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RE: AirTran Reaches For Midwest - All The Specifics

Thu Jul 19, 2007 10:56 pm

These FL/YX threads seem to be wearing thin. It's comforting to see so much interest from so many, airline background or not. But these threads beg my next question...

Do all the comments that start with, "I think", or "I believe" come from personal opinion or actual experience or education on these issues? I mean folks, have you gone to school and gotten a degree to analyze all these angles and facts? Or... are all these opinions just disjointed thoughts from Armchair CEO's? The people who come up with all the facts, flow charts, projections and research actually went to school to do that. I would take the word of any analyst for EITHER airline before I take anyone's word on this board. I'm not interested in the opinions of the dentist down the street, or anyone who just reads the morning paper and THINKS they are informed or actually know what they are talking about. I want to hear it from the appropriate sources representing each company.

It's one thing to add speculation and conjecture... but these threads go on and on and on.
 
quickmover
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RE: AirTran Reaches For Midwest - All The Specifics

Thu Jul 19, 2007 11:02 pm

The press releases trashing each other have really dropped off. Nothing like before the board election. Like this deal or not, my guess is that they are finally talking behind the scenes. We should know something soon.
 
airtran737
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RE: AirTran Reaches For Midwest - All The Specifics

Thu Jul 19, 2007 11:13 pm

Quoting RJNUT (Reply 52):
Midwest is basically adding P2P service from MKE and MCI.

If it is out of your hub then it is not point to point.
Nice Trip Report!!! Great Pics, thanks for posting!!!! B747Forever
 
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northwestEWR
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RE: AirTran Reaches For Midwest - All The Specifics

Thu Jul 19, 2007 11:21 pm

Other than the regional routes, I've been wondering one other thing. YX right now attracts people from non-stop routes out of their home city, let's say Boston to Los Angeles because of their outstanding product.... FL takes over and now they're just another carrier without the fantastic service that got people away from the non-stop in the first place.

They now have the choice between connecting on FL through MKE or taking the non-stop.

FL doesn't stand a chance with connections when there are so many better options even if you don't have a non-stop option.
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Mikey711MN
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RE: AirTran Reaches For Midwest - All The Specifics

Thu Jul 19, 2007 11:22 pm

Quoting AirTran717 (Reply 53):
Do all the comments that start with, "I think", or "I believe" come from personal opinion or actual experience or education on these issues? I mean folks, have you gone to school and gotten a degree to analyze all these angles and facts? Or... are all these opinions just disjointed thoughts from Armchair CEO's? The people who come up with all the facts, flow charts, projections and research actually went to school to do that. I would take the word of any analyst for EITHER airline before I take anyone's word on this board. I'm not interested in the opinions of the dentist down the street, or anyone who just reads the morning paper and THINKS they are informed or actually know what they are talking about. I want to hear it from the appropriate sources representing each company.

With all due respect, why bother even posting or even so much reading a.net or any other aviation forum for that matter?

In these repeating YX-FL threads, you'll find the occasional emotionally-charged banter from a few, I admit, but then you'll get remarkably good insight from "outsiders" like Knope2001 (whom I routinely disagree with but is on my RU list by virtue of the thorough analysis that he provides that challenges me and others to digest what he "believes" or "thinks") and others in addition to those who work in the airline industry who, in fact, do know what they're talking about.

That's the beauty of these threads: if you can filter out some of the noise, there are some very lucid, tactful, logical comments made that are pretty enlightening, even the ones that begin with "I believe" or "I think".

Given that, what I'd be very interested to see is a formal rebuttal by YX to this presentation...not that they'll prepare one per se, but some of the things pointed out in this very thread are pretty interesting fodder for a rebuttal. I think.  Wink

-Mike
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mijoatlanta
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RE: AirTran Reaches For Midwest - All The Specifics

Thu Jul 19, 2007 11:53 pm

Putting my AirTran bias aside, I have to ask the critics (who do raise good points about population stats, connections dependency, etc.) why would AirTran make a bogus case for this tranaction if it is doomed to fail? If FL is knowingly using numbers that will not pan out in reality, why make the investment. Are critics saying that FL knows the numbers are wrong, the demand wont be there, and the deal will ruin the airline but still want to do the deal. We know it's not about the planes. So why would FL go after this deal if they know their own numbers are wrong and that it is a sure thing that it will fail? I just don't see the evidence that FL has no knowledge of the industry or no ability to execute an expansion plan and no reason to purposely doom the airline.
 
RJNUT
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 12:09 am

its the assumption on the part of FL management tha portrays (with tremendous arrgogance) that YX has no earthly idea what it is doing,,


If the two had sat down and jointly wanted to merge , that would be one thing, but this is badgering and fearmongering at its worst...The presentation is not that impressievie..Montreal to Milwaukee,,Please! YUL was one of FL's 1st dropped cities as Valujet !..If YUL-ATL doesnt work, MKE-YUL wont,,,YUL is more connected to Europe , socially and economically than the US!
 
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deltadawg
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 12:12 am

Quoting AirTran737 (Reply 46):
And you are forgetting that Milwaukee is a blue collar, working class town where people are cheap and and like to save every penny that they can. FL will thrive in MKE, there is no doubt about it. People can say that they will never fly FL, but when it comes to saving a couple hundred bucks on the family vacation they will forget how big bad AirTran came and buried Midwest.

Amen, no one today looking at moving into MKE could match FL's cost structure for moving families into MCO & the House of Mouse. Not only MCO but LAX, PHX, etc. The more they grow the more this will be relevant for places like CUN, MSY, SAN & FLL.

If MKE is so YX loyal then why is their a large NW elite customer base and even a NW lounge?

Quoting Cubsrule (Reply 40):
Let's review the facts on NW in MKE...

-Most elites of any legacy carrier

-Only legacy with a lounge

-Most seats of a legacy carrier

-Only carrier to fly exclusively mainline aircraft (several fly no mainline)

-Only carrier to fly an aircraft larger than 150 seats in scheduled service

-Only carrier to participate in a marketing relationship with YX (recently expanded)

They don't have much brand loyalty? The failure of the focus city has nothing to do with brand loyalty. Try getting an upgrade ex-MKE some time...

Almost sound like your talking about ATL - wait, all these items are just about like DL and wait - FL is thriving in ATL against DL and wait, they are thriving in BWI against US & WN and a strong DL presence also. There is no reason why FL cannot survive and thrive in MKE. They offer both affordable coach service and a Business Class for business travelers that will suffice for most in the MKE area.

The only question I have that was not mentioned or questioned is the integration of YX MIdwest Miles & FL A+ Rewards service! Merging miles and points = ? What does this mean to the consumer. This is the biggest ? in keeping business travelers in the MKE & MCI area in my opinion. FL needs to get rid of the 12 mos. window on their point system if they want to keep the majority of the business travelers in MKE.
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airtran717
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 12:27 am

Quoting Mikey711MN (Reply 57):
Given that, what I'd be very interested to see is a formal rebuttal by YX to this presentation...not that they'll prepare one per se, but some of the things pointed out in this very thread are pretty interesting fodder for a rebuttal. I think.

Now THAT is something I do agree with. You see FL taking the time to actually put together presentations and press conferences and the like. Meanwhile YX just issues a statement here or there and never actually fervently responds to very much of anything. What gives? For a company who gives the appearance of rejecting a merger, the only ones really saying anything is the public.
 
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 12:30 am

Quoting Mijoatlanta (Reply 58):
Putting my AirTran bias aside, I have to ask the critics (who do raise good points about population stats, connections dependency, etc.) why would AirTran make a bogus case for this tranaction if it is doomed to fail? If FL is knowingly using numbers that will not pan out in reality, why make the investment. Are critics saying that FL knows the numbers are wrong, the demand wont be there, and the deal will ruin the airline but still want to do the deal. We know it's not about the planes. So why would FL go after this deal if they know their own numbers are wrong and that it is a sure thing that it will fail? I just don't see the evidence that FL has no knowledge of the industry or no ability to execute an expansion plan and no reason to purposely doom the airline.


This post is the whole point to me previous post. Do all the critics really think FL has not done their homework here? If they actually made a deal they knew they could not meet... that'd shut both companies down. Where's the logic in that?
 
airtran717
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 12:43 am

Quoting DeltaDAWG (Reply 60):
Amen, no one today looking at moving into MKE could match FL's cost structure f

Say what you will about FL, but I agree with this post. FL's business model is pretty much unmatched... people need to look at the whole picture, from the company's beginnings, all the way until today... instead of nit picking statistcs and numbers for a very narrow time frame... I remember one thread on this subject where a fellow name a 3% drop in profit from June of last year compared to June of this year. You are going to name just one stat for one month and call that the basis for an entire argument of their financial wearwithall? That's a weak argument when the company has been around in one form or another since 1993. Some pick on a small fact that they were not profitable for a given quarter here and there... when, as someone else pointed out in the prequel thread to this one... they have been profitable for 8 consecutive years. During the post-9/11 period, we were profitable, along with a select few while virtually every other carrier lost money. FL didn't take or need any of the govt's subsidy. Granted, we didn't make as much money as we could have if 9/11 never happened, but being able to flourish to some small degree enabled us to really expand later on.
 
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 12:51 am

Quoting AirTran737 (Reply 46):
And you are forgetting that Milwaukee is a blue collar, working class town where people are cheap and and like to save every penny that they can. FL will thrive in MKE, there is no doubt about it

How many people in MKE area arent flying but might if FL comes to town?
 
Mikey711MN
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 1:11 am

Quoting RJNUT (Reply 59):
If the two had sat down and jointly wanted to merge , that would be one thing, but this is badgering and fearmongering at its worst.

Business can not--and should not--be compared to, say, courtship, where fairness and consent are part of the equation. Even still, in the hypothetical situation where two companies would somehow consensually merge, somebody has to make that first call. In this case, it was FL.

Quoting EXAAUADL (Reply 64):
How many people in MKE area arent flying but might if FL comes to town?

I'm sure FL has run the numbers. I, for one, have family/friends in MKE whom I fly up to visit 3 or 4 times a year. Flying from AUS to MKE is often cost-prohibitive, and I, as recently as this past weekend, have used ORD (and rented a car) for cheaper than what I can fly there for.

-Mike
I plan on living forever. So far, so good...
 
citrus1
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 1:41 am

Some make good points others are just plain silly, like this is a game of CEO, that you could put in the box after you get tired of playing. I know this is a discussion board, but i was looking for more thought out post.
 
We're Nuts
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 3:17 am

I can think of another airline that tried to stack eastern hubs on top of each other, and they racked up debt faster than a teenager with a credit card. AirTran only wants Midwest because of our 717's. If they would think outside the box, they might consider looking at Frontier. A Denver/Atlanta hub mix would put two weak legacy airlines in an uncomfortable corner.
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airtran717
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 3:55 am

Quoting We're Nuts (Reply 66):
AirTran only wants Midwest because of our 717's.

Not been keeping up? It's not the planes they're after folks. If all they wanted was the planes, they would have kept their options. Since they have close to 90 of the 717's and 50 737's already on property, with more 737's on the way... rationalize that one a bit more.
 
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 3:59 am

Quoting DeltaDAWG (Reply 59):
If MKE is so YX loyal then why is their a large NW elite customer base and even a NW lounge?

Because for many, many, many years NW and North Central/Republic were the dominant carriers at MKE. That loyalty is still there today. In fact, the whole concourse where NW is located was built expressly for North Central.

But, let's face it. If FL comes in with cheap fares to many cities, they will get the loyalty.
 
We're Nuts
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 4:05 am

Quoting AirTran717 (Reply 67):
It's not the planes they're after folks.

Well it's not Milwaukee. They don't need to buy a high cost carrier with a fiercely loyal customer base just to get a few gates at MKE. And they certainly aren't doing it to save us from bankruptcy. So why? Is it because Joe can't find a place to park all those 737's he's got coming? Is the Moline-Las Vegas route saturated already?
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quickmover
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 4:16 am

Quoting We're Nuts (Reply 69):
Is it because Joe can't find a place to park all those 737's he's got coming?

Well it can't be both ways. One minute you guys say they are after the 717s and the next minute, they don't have a place to park all of their 737s.
 
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knope2001
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 4:17 am

Reasonings along the lines of....

"They've run the numbers, and I'm sure they must be good or they wouldn't proceed"

"They're the experts, and so I don't question their judgement"

"They went to school for this stuff and they know what they're doing"

"This is about money, and if they couldn't make money they'd turn tail and walk away"

...just don't cut it if you test them by looking to the past rather than applying them to the future with fingers crossed. Experts made bad decisions, supported by statistics, and blessed by the best minds they have.


I'm sure American "ran the numbers" when though bought Reno Air. I'm sure it wasn't amateurs who determined that AirTran should add MDW-EWR. And business decisions of all kinds and in all industries are made with the goal of making money. And every day in all kinds of businesess, decisions are made which turn out to be flat-out wrong.

How does this happen? Well at least in theory, business decisions are made using the best information available, made by the best minds, using the best available means. But in the real world, there are breakdowns and pitfalls from every direction that can lead to bad outcomes.

I have (had) acquaintances at Continental back in the days of Continental Lite when their best minds had them set up a hub in Greensboro and add such winning 737 markets as Greenville-New Orleans with multiple daily 737's. They "ran the numbes" and used market stimulation numbers from Southwest as proof that their operation would do as well. It failed completely, and some markets in particular were embarassingly glaring failures. But they were all winners when Continental rolled out their plans for Continental Lite.

A key factor that sometimes leads organizations to make serious miscues is a tendancy to draw conclusions first and then find supporting data. Those who have worked with stats a lot know that it is often relatively easy to manipulate numbers to draw the conclusion one wants to find, even in the most rigerous, highly-trained professional arenas. (Think of some of the drug study scandles that have come to light recently.) Companies with strong personalities at the top sometimes have the biggest blind spots as there is a tendancy for big personalities to surround themselves with yes-people, and to discount or ignore things which conflict with their own internal perception.

This is hardly a rare thing, and I believe Midwst in 1998-2002 would be a good case study in this very thing. But I fear all the too-good-to-be-true promises and stats out of AirTran's courting may well be seriously misguided by just this issue.

Now does this mean that the armchair CEO's are *right* and the experts are not? No, of course not. At least not by virtue of being amateurs with limited access to information. On broad average, experts undoubtedly make better decisions than amateurs more of the time. But the broad averages cannot be applied to specific instances, and I see this as an instance where the experts at AirTran are supporting a conclusion by seeking supporting facts, no mattter how selective or massaged they are.

And on a final note, as for the "they went to school for this stuff" line of thinking, well, I have an MS in Transportation Geography with a semester independent study in the development and evoultion of upstart airlines, and a masters thesis analysing regional airilne networks. I don't think I have mentioned that on chat boards before because I would prefer my arguements to stand for themselves rather than trying to cloak them in degrees and studies.

And FYI, at one time I very much wanted to work in the industry but my life took a very different turn, and so other than being a very consuming hobby, my only link to the industry is knowing people and traveling a lot for work.
 
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deltadawg
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 4:20 am

Quoting We're Nuts (Reply 66):
I can think of another airline that tried to stack eastern hubs on top of each other, and they racked up debt faster than a teenager with a credit card. AirTran only wants Midwest because of our 717's. If they would think outside the box, they might consider looking at Frontier. A Denver/Atlanta hub mix would put two weak legacy airlines in an uncomfortable corner.

I still wouldn't consider that out of the question - at least after the YX deal is done. I can see FL getting cozier with F9 over the next several years with FL using F9 as a partner more and more. Especially if F9 moves more beyond Denver and continues its CA-Mexico and West Coast North-South buildup.
GO Dawgs, Sic' em, woof woof woof
 
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mariner
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 4:31 am

Quoting DeltaDAWG (Reply 72):
I can see FL getting cozier with F9 over the next several years with FL using F9 as a partner more and more.

I have always assumed that is the way it will go.

There have been strong rumors on the finance boards for some time that the Airtran/Frontier FF alliance will expand to full code share within a year.

It may not happen - but it seems like a sensible idea. Frontier now has rights MKE-CUN, for example.

mariner
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knope2001
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 4:33 am

Some post asked why Midwest doesn't have the similar presentations to counter what AirTran puts out. Well they do, but they don't seem to get passed around like AirTran's do. Perhaps it is because the MKE media largely seems to be well-played by AirTran. The other morning one station simply played 90 seconds of Joe Leonard's presentation with little more than a small intro...and no corresponding viewpoint from Midwest.

Midwest has prepared presentations primarily for stockholders, the investment community, and local leaders. I've seen at least two but can only find a link for one on the web right now.

http://www.marketwatch.com/tools/quo...8&symb=MEH&guid=4916993&type=10003

Scroll down a bit and you come to the slides of this particular presentation.
 
airtran717
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 5:01 am

Quoting Mariner (Reply 73):
There have been strong rumors on the finance boards for some time that the Airtran/Frontier FF alliance will expand to full code share within a year.

I believe I've seen a press release somewhere to that effect. It's more than a rumor. The plans are already in the works.

Quoting Knope2001 (Reply 74):
Some post asked why Midwest doesn't have the similar presentations to counter what AirTran puts out. Well they do, but they don't seem to get passed around like AirTran's do.

Why would that be? If they wanted to spread the word to their "fiercely loyal" customer base, you'd think they'd play their own local media as well as DL and FL do here in ATL, and at least as well as FL does in MKE. And if you can only find one reference to any of their proposals or presentations, that's proof of the pudding.

We could keep this up and keep passing the baton back and forth, but it leads us back to the same place. It's a stalemate. We can't convince you and you can't convince us... I'm out for the day...
 
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mariner
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 5:06 am

Quoting AirTran717 (Reply 75):
I believe I've seen a press release somewhere to that effect. It's more than a rumor. The plans are already in the works.

I haven't seen a press release - and I think I see most Frontier stuff.  Smile

But - yes, there was a reference to it in one of Frontier's SEC filings, which is what sparked the chat on the finance boards.

The only puzzle is MEM.

mariner
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knope2001
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 5:42 am

Quoting TVNWZ (Reply 68):
Because for many, many, many years NW and North Central/Republic were the dominant carriers at MKE. That loyalty is still there today. In fact, the whole concourse where NW is located was built expressly for North Central.

But, let's face it. If FL comes in with cheap fares to many cities, they will get the loyalty.

Milwaukee is a little diffrent in many places because it has high loyalty to the main carrier here (Midwest) but also high loyalty to Northwest, a definite also-ran. It is not simply a matter of the old North Central days, either. Large, large numbers of Midwest Executive Level frequent flyers are also Northwest Silver Elite or higher here. Why would this be? Because there are many destinations, including everything international besides YYZ, that Midwest doesn't serve. For many travelers here they use Midwest if it is available, but NW is their fall back carrier if Midwest doesn't go there.

That's a key reason Norhtwest keeps trying here to set up a focus city and keeps pulling out. The pool of NW elite frequent flyers here is unrivaled for a city our size (outside the hubs), but they largely take Midwest if they can. (One of those "when you run the numbers" situations that says NW should clean up here.

So won't AirTran then be the carrier of choice, and NW be the fall-back carrier? Well, there are a number of reasons why I suspect that won't happen as much as they'd hope


(1) Frequent Flyer Program
AirTran's frequent flyer program is viewed as inferior -- even uncompetitive -- by many because of aggressive expirations and comparatively few partners, earnings options and rewards options.

(2) Lack of International Options
For travelers with even occasional trips overseas, the ability to roll those 12,000-20,000 miles per trip into the same pot as my domestic earnings is huge. With program links that has been possible for years with Midwest. Not with AirTran, and it will discourage those travelers from seeking out AirTran at MKE for their frequent domestic travel.

(3) Corporate Travel Agreements
This is not AirTran's forte, and even if they do try to keep Midwest's deals, you can bet the comptition will come in aggressively sensing an opportunity. I found it a little amusing that AirTran boasted of having what, six corporate sales offices? If iI recall correctly Midwest (a much smaller airline, as they like to point out) has several more than that. Midwest's corporate sales department was ranked #1, #2 or #3 across the board in a survey of corporate travel department heads last year. And that's of all domestic airlines large and small. So what does this corporate travel agreement issue really amount to? Well, just to use my own company (a fortune 500 company) as an example, our corporate travel plan directs us to book with a "preferred" carrier for domestic trips even if the fare is as much as $200 higher than a non-preferred competitor. Midwest is on the preferred list, and AirTran is not. If AirTran does not maintain that preferred status with my company, our traveling employees couldn't be loyal to AirTran no matter how much they might want to.

(4) Likelihood of Fewer Regional Destinations
While AirTran's initial promise was that no destinations would be dropped, in the latest presentation it looks like Escanaba, Marquette, Austin, Colorado Springs, Ironwood, Marquette, Iron Mountain and Muskegon are missing. But beyond that, there's a very reasonable doubt that AirTran will find a way to profitably serve places like Louisville , Rhinelander and Grand Rapids from MIlwaukee. RJ's don't work with the low-fare business model, and the maybe-promised 70-90 seat RJ's (whose ecomics with low-fares are unproven) are just too large to serve many of these markets. Sure, AirTran is pledging to add other destinations, and some of them might even have a chance to succeed (a different point to debate). However markets like MKE-ABQ are primarily leisure travel. Markets like MKE-SDF are primarily business travel because leisure travelers largely drive. Serving MKE-ABQ is not nearly as useful for the average high-frequency business traveler as MKE-SDF. And the fewer nonstop destinations useful for frequent business travelers, the lower the loyalty.

(5) Likelihood of Increase Competitive Incursions
While a lot of the hand-wringing over what MKE will look like (be it YX or FL) when Southwest or JetBlue comes to town, this isn't necessary for a post-merger AirTran to feel serious heat in Milwaukee. A key arguement of AirTran up until a couple months ago was that a re-energized NW was sure to come back to Milwaukee to restablish a focus city, likely using passenger-friendly 76-seat CR9s and E170s. Well, when NW and YX partnered up, that arguement evaporated. But if AirTran wins MKE, now that aurguement comes back into play in a bigger way. Milwaukee will almost certainly be viewed as "in play", and we're likely to see someone like NW come in with more point-to-point flying. AirTran's quick retreat on IAD-BOS and DTW-BWI when JetBlue and Southwest annouced they were entering, has (among other routes) earned AirTran a reputation as an entitty that "blinks". MKE will be seen as "in play", and the more nonstop competitors AirTran has here, the harder it will be to keep Midwest's lingering loyalty.

I think that it's dangerous to count on Midwest's loyalty to transfer over to AirTran. Low fares will buy you only so much loyalty, especially among those frequent travelers for whom fare is not the only factor.
 
SpdBrdConcorde
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 5:44 am

Quoting AirTran717 (Reply 52):
Do all the comments that start with, "I think", or "I believe" come from personal opinion or actual experience or education on these issues? I mean folks, have you gone to school and gotten a degree to analyze all these angles and facts?

Do you? Many of us work in the airline industry and some of us either have degrees in requested fields or are not far from them. I think that qualifies a good bit of us.

Quoting AirTran717 (Reply 62):
FL didn't take or need any of the govt's subsidy.

Neither did most other airlines, with the exception of HP or US, I believe.

Quoting We're Nuts (Reply 66):
AirTran only wants Midwest because of our 717's.

Exactly. I love the presentation, and how its all stacked against YX and in favor of FL. You got to love spin. Not to ask as to why would airtran, apparently wanting to be a much bigger carrier, be trying to expose themselves in an Eastern and Mideastern hub with very little to no reach out west? Its kind of like US's hubs of PHL and PIT. Whats the point? airtran's only focus here is the 717's and elimination of a competitor-thats it! Note how airtran does not even make much mention of the comparison between the two airlines. One is the "best care in the air" and the other is your traditional run of the mill LCC. One has Signature Service with all first class 2x2 seating to major business markets and Saver Service to leisure markets while the other has nothing above Saver Service. One does something no other carrier does, bake fresh cookies inflight, while the other doesn't even have ovens onboard their aircraft and doesn't intend to install them even if the merger is accomplished. airtran already admitted to looking at vendors to possibly provide cookies onboard. There is a big difference between "fresh" and "baked three weeks ago." YX has a large and loyal passenger base in MKE, so maybe FL thinks those passengers will still be loyal to FL after the takeover. They won't. FL's passenger base are people looking for the cheapest possible price, therefore not very loyal at all. FL will be very disappointed when only 10% of YX's customers stay loyal, while the rest defect to NW and another good FF program. Then, MKE will fade down quickly, flights will drop and before long, MKE is still just another spoke in airtran's network with no more "hometown" airline service anymore. It's a guarantee. FL is making PROMISES with smoke and mirrors, but makes NO GUARANTEES on anything.

If this takeover is successful, I would never fly airtran again, and apparently wouldn't be able to fly midwest either. As evidenced, neither will another group of posters already. FL should expect more of the same. Its been made clear that service standards will not rise up to YX standards, as many would be willing to accept IF it were to happen. All that will happen is we will see a great airline fall, another standard LCC getting more planes, and a few shareholders making a few bucks. Is it really worth the risk? FL may take down YX, but it will see its own future falling with the Midwest name.

Save the Cookie!
 
warszawa
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 6:05 am

I just flew YX yesterday and Monday (FNT-LAS-MKE & Return - came back yesterday morning). Great flights and a wonderful airline (especially the employees). Loved MKE airport too (at least concourse D). If anyones curious, FNT-MKE, J328, about 28/32 passengers onboard. MKE-LAS, MD-82, about 95% load. Return, LAS-MKE, Redeye, MD-82, 75% load, MKE-FNT, J328, 11/32 onboard (I actually counted heads).

I've heard a lot about customer loyalty regarding YX floating around here for quite a while. On my flight to LAS (MD-82), we were boarding and I heard someone saying 'We're midwests #1 customer...[laugh], we always fly them'. We were delayed about 20 minutes because we were waiting for passengers from MSN. In the mean time, heard some nearby passengers behind me asking 'so where are you from?', guy responded Appletown, other said Minneanapolis. Nonetheless, sounds to me like they have a lot of connecting passengers (especially from Wisconsin and small cities in Michigan). I was out in the lobby an hour or two before departure and heard some lady commenting on she had another hour to go before her flight to Muskegon (was on a cell phone). I'm 90% sure that if FL tookover YX, kiss all the regional routes (and skyway) goodbye...VCV, Marana, or somewhere would soon be getting some J328's and 1900D's. While I see some expansion out of MKE via FL, their presentation presents an unrealistic expectation in my opinion. While the merger benefits FL, it'd also heavily benefit NW (freeing the small markets operated by CRJ's, S340's, etc. out in Wisconsin & Michigan)...expect skyhigh fares with NW in those markets as they loathe in monopoly money.

Nonetheless, I really hope YX is here to stay.
Flying a plane is no diff. from riding a bicycle. Its just a lot harder to put baseball cards in the spokes. -'Airplane'
 
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TVNWZ
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 7:26 am

Quoting Knope2001 (Reply 77):
Milwaukee is a little diffrent in many places because it has high loyalty to the main carrier here (Midwest) but also high loyalty to Northwest, a definite also-ran. It is not simply a matter of the old North Central days, either. Large, large numbers of Midwest Executive Level frequent flyers are also Northwest Silver Elite or higher here. Why would this be? Because there are many destinations, including everything international besides YYZ, that Midwest doesn't serve. For many travelers here they use Midwest if it is available, but NW is their fall back carrier if Midwest doesn't go there.

And I am one of those, but backwards. I fly NW primarily and am Plat-E. But, I also am Executive on Midwest. I favor NW because I travel on busines to many of the Saver markets (LAS, PHX, TPA, and will take the one stop in First over the 3 X 2. Many of the people in First on my flights feel the same way and we talk about how great it would be for Midwest to have some Signature seats to these makets and we can not wait until those are added later this year.
 
We're Nuts
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 7:28 am

Quoting Quickmover (Reply 70):
Well it can't be both ways. One minute you guys say they are after the 717s and the next minute, they don't have a place to park all of their 737s.

FL needs another hub city out of which to base their new planes. The only reason they've chosen YX and MKE is because we have fleet commonality. But that doesn't mean it's the best option.
Dear moderators: No.
 
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knope2001
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 7:36 am

A previous post pointed about a number of acquisitions which were relatively successful and the customers were for the most part retained by the acquiring airline. That's not always the case.

Republic buying Hughes AirWest
AA buying Reno Air
Midway buying Eastern's PHL hub
US buying PSA
AA buying AirCal
Southwest buying Morris
American buying TWA


In each of those cases the acquiring airline undoubtedly did extensive due diligence on the need to spend a great deal of money to acquire the airline or airline asset. In the first five instances, within a couple years there was virtually nothing left of the acquired entity. Nothing.

The last two emerged as far less than the sum of their parts. Salt Lake lost an aggressive growing airline (and a handful of routes) when WN took over, and then WN sat essentially stagnant for years afterward. And STL was slashed just a couple of years after AA took over TWA.

Every one of those seven acquisitions were key strategic moves viewed as critical to the financial success of the company. Every one of those went through serious study and scrutiny and emerged as the right move. The first five failed outright. The last two may have some bright points in the survivor eliminating a competitor, but they were definitely bad for Salt Lake and St Louis.


This does not mean that an FL acquisition of YX will fail, or succeed for that matter. But I think it's important to recognize that buying an airline does not always mean buying their customer base. Thinking about it, Reno, PSA, AirCal, Hughes Airwest, and Morris all were a little offbeat, had fiercely loyal customers, and went through a real culture change when they were acquired. Not that the situation is identical with Midwest and MKE, but the similarities are interesting.
 
N822ME
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 8:22 am

Quoting AirTran737 (Reply 54):
If it is out of your hub then it is not point to point.

Not necessarily... isn't the point of a hub to feed connecting traffic? When a flight is geared to local traffic, is that not point to point?

Quoting AirTran717 (Reply 61):
This post is the whole point to me previous post. Do all the critics really think FL has not done their homework here? If they actually made a deal they knew they could not meet... that'd shut both companies down. Where's the logic in that?

Do all the critics really think YX has not done their homework? I mean, who is to say that FL knows better than YX or vice-versa? You're reading too much into a management team at YX who has been known to be low key and isn't going to get into a mud-slinging battle in the media, nor violate SEC rules on what you can talk about a la Joe Leonard.

You can't completely discount the other side. And as mentioned previously on this thread, lots of dumb decisions are made by people who think it's smart and that they have all the facts. Both FL and YX have been in that boat before.... and so have better/bigger airlines.
 
FlyPNS1
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 8:38 am

Quoting SpdBrdConcorde (Reply 78):
Not to ask as to why would airtran, apparently wanting to be a much bigger carrier, be trying to expose themselves in an Eastern and Mideastern hub with very little to no reach out west? Its kind of like US's hubs of PHL and PIT. Whats the point?

What? Since when if MKE in the mideast....most people consider Wisconsin the midwest. FL's ATL hub is primarily a north-south hub (with some east-west traffic) whereas the MKE hub would be an east-west hub primarily. Two totally different functions. Nothing like PHL/PIT and not nearly as close together.

Quoting SpdBrdConcorde (Reply 78):
One has Signature Service with all first class 2x2 seating to major business markets and Saver Service to leisure markets while the other has nothing above Saver Service.

Except for the fact that YX is abandoning this model and going to a two-class service....just like FL. Not to mention that YX has now resorted to cramming people onto cramped CRJ's on many of those major business routes.

Quoting SpdBrdConcorde (Reply 78):
YX has a large and loyal passenger base in MKE, so maybe FL thinks those passengers will still be loyal to FL after the takeover. They won't.

When they see the lower fares that FL charges, many of them will stay. Trust me, people won't miss the fresh baked cookies when they can pay hundreds of dollars less for their tickets.

Quoting SpdBrdConcorde (Reply 78):
FL will be very disappointed when only 10% of YX's customers stay loyal, while the rest defect to NW and another good FF program.

Except for the fact that NW does't really have the capacity too take up all of these new customers and neither do most of the other legacies.

Quoting SpdBrdConcorde (Reply 78):
FL is making PROMISES with smoke and mirrors, but makes NO GUARANTEES on anything.

You're right, there are no guarantees. There's also no guarantee that YX will survive in the long run. YX is struggling to define itself and keep its head above water.

Quoting SpdBrdConcorde (Reply 78):
Its been made clear that service standards will not rise up to YX standards, as many would be willing to accept IF it were to happen.

Except for the fact that YX is rapidly bringing its product down to FL's level. Pretty soon, the only thing that will differentiate YX is the warm cookie.

Quoting SpdBrdConcorde (Reply 78):
Is it really worth the risk? FL may take down YX, but it will see its own future falling with the Midwest name.

You're right, it is a big risk for FL. It is certainly possible that this merger could blow up in their face and take the whole carrier down. However, I think that FL's management believes it is a risk they have to take in order to expand and diversify their network. YX has largely been stagnant over most of the past 6 years and it is now costing them dearly. Their network is relatively weak, they have a weak fleet and a product fewer and fewer people are willing to pay a premium for. It is exactly because of YX's small-minded management that the company has become a vulnerable takeover target.
 
srbmod
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 9:18 am

Quoting Quickmover (Reply 33):
$400 mil to take over someone elses lease payments?

Midwest doesn't own their 717s.

AirTran doesn't own all of their a/c either. The bulk of their 717s are leased (FL did numerous sale and leaseback deals for some liquidity), and IIRC, the 73Gs as originally ordered were half leased and half owned.
 
deltadude8
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 9:19 am

I just laugh at the proposed expansion out of MCI...It just shows what a joke FL's plan is: (lets look at the proposed routes)

MCI-LAS (I think SWA has that one covered with up to 7 Daily Non-stop 737's on that route) Not to mention the numerous UAL, DAL, AWE, and F9 connection opportunities.


MCI-DEN (hmm...SWA has 4 Daily Non-stop 737s, F9 has 6X Airbus Jets, and UAL has 6X mix of 757/737 and Airbus Jets) CAN YOU SAY SATURATED!!!

MCI-PHX (SWA has up to 5 Daily Non-stop 737s, AWE has 3 Daily flights) SATURATED!!!

MCI-Dallas (I had a chuckle at this one...hmm AA offers 10 daily flights to the dallas area and SWA offers 6 Daily's) SATURATED!!!

MCI-MSY (Honestly...a legitamate route...but ExpressJet just started serving with ERJs) Maybe a realistic route but can't see a huge amount of service being thrown on this route....

MCI-CUN (F9 serves already with 1 Airbus jet during the Season...which as a KC resident I can say is enough)

Finally
MCI-MSP (NW serves this route with 8 Daily Non-stop flights with A319-DC9s and 2 RJs)

Now You look that FL says they plan on pushing KC to 63 Daily flights...I say BULL POOP...MCI won't support these routes and FL isn't going to steal much if any customers from the airlines already in place...Just look at how VANGUARD impacted DL, AA, UA, SWA, and others when they expanded in their markets with cheap fares...

anyway...I think FL is full of hot air and I support YX's great service and awesome product...I will pay and extra $50-$105 to fly YX over any other US Airline.
 
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JBo
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 9:29 am

Quoting FlyPNS1 (Reply 84):

Except for the fact that YX is abandoning this model and going to a two-class service....just like FL. Not to mention that YX has now resorted to cramming people onto cramped CRJ's on many of those major business routes.

Really? Airtran has 40 business class seats in the 717? That's news to me.

As far as the CRJs ... the only routes that have been downgraded to the CRJ are SAT, EWR (soon), MSP (roughly half/half) and PHL (same as MSP).

It was only a couple years ago that MSP didn't even have 717s ... they were all FRJ. I'd say the CRJ is still an improvement over the FRJ in terms of capacity. (Comfort is another story, but that's all subjective).

Besides ... why would you send a 717 out on a route only half-full when you could make the same amount, if not more, running a CRJ on that route, freeing up the 717 to be used elsewhere where it might make more money?

I'm not saying I agree with every CRJ move YX has made, but if the demand isn't there to support a 717 on every flight, there's no point in sending it just because it's more comfortable.
I'd take the awe of understanding over the awe of ignorance any day.
 
SpdBrdConcorde
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 9:33 am

Quoting FlyPNS1 (Reply 84):
Since when if MKE in the mideast....

Midwest. My mistake. Got caught in the geographical lingo while typing "Eastern and Mid-Western."

Quoting FlyPNS1 (Reply 84):
Except for the fact that YX is abandoning this model and going to a two-class service....just like FL.

Except for the fact that an aircraft layout doesn't determine an airline. There is much more to YX than seating. And YX's service is far superior to airtran. I've travelled both and can speak clearly between the difference of the two.

Quoting FlyPNS1 (Reply 84):
When they see the lower fares that FL charges, many of them will stay.

See the Lincoln/Focus discussion above.

Quoting FlyPNS1 (Reply 84):
Trust me, people won't miss the fresh baked cookies when they can pay hundreds of dollars less for their tickets.

Will they? You haven't seen Northwest's attempts with fire-sales in the MKE market and still doesn't garner enough traffic away from YX's premium product for lower fares. YX's fares aren't always the cheapest, nor the most expensive, but it is one thing...worth it. FL can't say the same.

Quoting FlyPNS1 (Reply 84):
Except for the fact that NW does't really have the capacity too take up all of these new customers and neither do most of the other legacies.

Except for the fact that, like most acquisitions, if this thing does indeed happen and FL dropping the capacity FROM the market(such as regional routes and anything not a cashcow), both NW and other majors will be increasing capacity in MKE to take up some of that market.

Quoting FlyPNS1 (Reply 84):
You're right, there are no guarantees. There's also no guarantee that YX will survive in the long run. YX is struggling to define itself and keep its head above water.

But it has so far. Your comparing something that has already happened(YX's survival in a cut throat industry) to something that no one has any idea what will happen and is very overstated by FL management(FL taking over).

Quoting FlyPNS1 (Reply 84):
Except for the fact that YX is rapidly bringing its product down to FL's level. Pretty soon, the only thing that will differentiate YX is the warm cookie.

Except for the fact that, again, there is more to YX than just cookies and aircraft seating. If that is how you think, you've never flown YX. You will see the difference like night and day between the two. airtran isn't horrible, but compared to YX, it can't be compared and airtran knows it, which is why they focus on anything BUT service.

Quoting FlyPNS1 (Reply 84):
However, I think that FL's management believes it is a risk they have to take in order to expand and diversify their network.

They HAVE to take? FL has done well on its own in ATL, MCO, and BWI without anyone's help. Why would taking over a competitor be a risk they HAVE to take? With all the 737's coming in, why not just flood the MKE market and slowly kill off Midwest and get it for next to nothing? There isn't anything they HAVE to do.

Quoting FlyPNS1 (Reply 84):
YX has largely been stagnant over most of the past 6 years and it is now costing them dearly.

Stagnant or cautious. Unlike FL, YX doesn't jump into markets at the drop of a hat. Like WN, they ensure that a market will or will not be worth it before starting service. Why jump into markets that you may have to drop in a year or two?

Quoting FlyPNS1 (Reply 84):
Their network is relatively weak, they have a weak fleet and a product fewer and fewer people are willing to pay a premium for.

Apparently, it is still working. And if their network is weak, their fleet is week, and fewer and fewer people are willing to fly them, then answer me on question: Why does airtran want them so bad? confused 
 
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knope2001
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 9:49 am

There are a lot of things to comment on from AirTran's presentation, and I doubt I'll get to all of the ones I'd like to address. But one which is key in my mind is AirTran's rebuttal to Midwest's assertion that 22 of the proposed markets from the AirTran MKE hub are smaller than AirTran's smallest market from ATL.

AirTran's rebuttal points out huge growth in four tiny markets that exploded when AirTran entered:

ATL-Flint grew from 8 to 165 passengers per day
ATL-Akron grew from 16 to 200 passengers per day
ATL-Newport News grew from 8 to 255 passengers per day
ATL-Bloomington grew from 5 to 92 passengers per day

It's quite peculiar that they compare 2006 all the way back to 1993, and air travel volume grew massively in general with our without AirTran. Perhaps they did this to make the growth look even more dramatic? To make the pre-AirTran markets look as tiny as some proposed ones like MKE-CAK and MKE-BUF? You do have to look closely at the slide to see the comparison goes back to 1993 and I'm sure many assumed it was a more up to date comparison.

But that point aside, I'm sure AirTran's entry into these markets did indeed cause traffic in these small city pairs to grow exponentially. They are obviously implying that naysayers who see hundreds of daily seats in markets like MKE-CAK are underestimating the AirTran Effect.

There are a couple of key reasons why i do not believe we'll see anywhere near the results in markets like MKE-CAK that the saw in ATL-CAK. There are two big reasons.

(1) Atlanta's traffic generating potential is far, far greater than Milwaukee. Atlanta belongs in a tier below only NYC, LA and Chicago, rivaling Washington, Dallas, San Francisco and a few other metro areas as regional magnates. MKE is two full tiers lower. Atlanta and the southeast is a significant tourist destination with a lot more draw than MKE (as much as I love the place). The pent-up demand and traffic-generating potential of Mlwaukee is a small shadow of Atlanta. And lest anyone think that MKE will widely serve the Chicago market, it's a good bet that United and American will match fares if they see traffic being siphoned off, just as they match MDW fares. (That whole issue is another big topic to address elsewhere).

(2) The key, often forgotten point behind many such stories of exponential growth is that they were not so much a result of stimulating a market but of stealing traffic from an adjacent, much larger *high fare* metro areas....

FNT for Detroit
CAK for Cleveland and Pittsburgh
PHF for Norfolk and Richmond
BMI for Peoria, Champaign, Decatur, and Springfield

When it comes to AirTran's MKE markets that apprear to be most overserved, they include Flint, Akron, Buffalo, Richmond and White Plains. Those are airports with potential to draw regionally and blossom in the way that CAK-ATL did, albeit probably much less than ATL since MKE is so much smaller. The problems is that AirTran proposes to serve the adjacent big markets too with huge capacity increases as well. They plan to serve Flint but DTW too, Buffalo but also ROC and YYZ too, White Plains but also BDL, EWR and LGA too, Richmond but also IAD, DCA and BWI too, Akron but also PIT an CLE too,

If there's any doubt that airports like Flint, Akron and Newport News, note how traffic stagnates when the bigger airport gets more low-fare service. Akron's traffic was flat last year and off over 5% for 2007 through April Newport News traffic is flat as Norfolk and Richmond gain low-fare service. And Flint peaked back in 2004, with fewer passengers each year since then as Detoit saw more competitive fares and more low-fare serive (including none other than AirTran)

Flint traffic year-over-year comparison
2005 -7.2% lower than 2004
2006 -2.7% lower than 2005
2007 -7.1% lower than 2006 (through June)


The magic of routes like CAK-ATL are pulling traffic from much larger, high-fare markets like Cleveland and Pittsburgh. The odds are zilch that CAK-MKE will similarly blossom with stolen traffic from adjacent markets. They will also serve MKE-CLE and MKE-PIT. And before someone jumps in that Chicago passengers will come to the rescue, note that there's plentify cheap nonstop service from CLE and PIT to Chcago.

AirTran's rebuttal that they will grow traffic to fill mssive overcapacity in several proposed MKE markets is wishful thinking and not supported by market reality.
 
freshlove1
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 10:14 am

I can't believe this possibly may happen. YX is a great airline and FL is garbage. I have flown both and there is no comparison. It would be a shame to see the fine product that YX has be changed into what FL offers. Good bye cookies, good bye top notch service, good bye to an airline where the employees actually go the extra mile for their passengers.
 
rocANDtpa
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 10:20 am

Airtran is my favorite airline. However, if Midwest doesn't want to merge with Airtran then they shouldn't be forced to do so. Are there empty gates in MKE? If so they should be able to create a hubmfrom scatch. Most of the legacies have a very small present MKE.
 
exFATboy
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RE: AirTran Reaches For Midwest - All The Specific

Fri Jul 20, 2007 10:41 am

Quoting AirTran717 (Reply 52):
I would take the word of any analyst for EITHER airline before I take anyone's word on this board.

Analysts can be just as biased as anyone else. There are some good analysts out there (I have high regard for Julius Maltidus - he's an independent consultant now, but used to be an analyst for CIBC, and before that Salomon Bros., and for Susan Donofrio) and some...well, not so good analysts. If you'd listened to the retail analyst for the firm I used to work for, you'd have invested in three highly recommended retailers - and lost all your money when they went bankrupt within 2 years.

Quoting We're Nuts (Reply 66):
AirTran only wants Midwest because of our 717's. If they would think outside the box, they might consider looking at Frontier. A Denver/Atlanta hub mix would put two weak legacy airlines in an uncomfortable corner.

DL has emerged from Chapter 11 as a significantly revitalized company, and while UA does not appear to have changed as much as DL, it's now also a stronger competitor. FL has proven it can co-exist with DL at ATL, but the jury is still out on F9 at DEN, especially with WN coming in. I suspect part of the reason FL wants YX is that their analysis shows MKE would be easier to expand and defend than DEN.
 
We're Nuts
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 11:15 am

Quoting FlyPNS1 (Reply 84):
Their network is relatively weak, they have a weak fleet and a product fewer and fewer people are willing to pay a premium for.

My god, why didn't anyone tell me that our flights were empty? Later guys, I'm finally going to get on that plane to Orlando!
Dear moderators: No.
 
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knope2001
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RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 11:18 am

One of the simplest ways to make stats look best for your own needs is to play with an arbitrary variable like the study period. (There's a standard term for this, but at the moment it escapes me). Now of course every study or other similar representation needs SOME sample size, or study preriod, etc. And selecting it is always somewhat subjective. But questions should arise on if the information portrait is really representative of what it claims to be showing.

An amusing one pointed out in an earlier posting is AirTran going back to 1993 to show how much traffic has grown in their markets by 2006. I suspect the facts in the table shown in their presentation are true not incorrect, but they are suggesting something which is not true...that AirTran is responsible for the growth between 1993 and 2006. ATL-LAS grew 108% in that period, but how much of that is due to the explosive growth in both metro areas in that 13 year period/ AirTran is only in ATL-LAS the last couple of years.

This is hardly the only place where AirTran has factually correct information which is used in misleading ways.

A repeated slam against Midwest is that they are unreasonably vulnerable to competition because too much of their revenue is concentrated in their top 20 markets. They say that 59% of Midwest's revenue is in their top 20 markets, where AirTran has only 29% in their top 20 markets.

The issue here...what is so special about 20? It's an arbitrary number. And here's how it matters. Midwest has about 30 nonstop mainline city pairs. Of course 20 is going to count toward a high percentage of their revenue. AirTran has more like 130 nonstop city pairs (it varies depending on if/how you count seasonal and less-than-daily pairs). Assuming the stats in AirTran's presentation are correct, for AirTran to have 29% of their revenue in the top 20 city pairs make AirTran MORE reliant on a comparably small percentage of their network. AirTran is in fact trying to turn something based on an essentially DUH fact...that a smaller airline has fewer city pairs...and reveals that in fact they are in fact more guilty of the sin they are blasting Midwest for...relying too heavily on a small percentage of your network for a disproportionately large portion of revenue.

Had they chosen the top 5 markets or the top 30 markets to compare, the comparison might look a great deal different.


Another nice little trick they used was in the map suggesting that huge numbes of Milwaukee-area passengers are using Madison, O'Hare or Midway, with the obvious suggestion (which does not necessarily follow) that AirTran will bring all those passengers back to MKE. Well there are a few things that raise questions about thsi information:

(a) They claim that only 64% of travelers in the Milwaukee MSA use Mitchell does not match the accompanying map. The Milwaukee MSA is Milwaukee, Waukesha, Ozaukee and Washington Counties. With small exceptions, almost all of the four-county area, particularly the most densly populated parts, are in the range of ranges in the 80's and 90's. It is impossible for nearly all areas to map out in the 80's and 90's yet the average be 64%.

(b) No definition of "use other area airports" is given. I have used O'Hare exactly twice in the past five years, both for oddball one-way trips. Every other trip has been MKE. Would I count as an O'Hare passenger?

(c) No indication of any correlation between survey participants and trips traveled. A co-worker of mine travels once every few years to visit family in Fayetteville AR and flies out of O'Hare to get a nonstop. Does her every-other-year trip count againse MKE?

(d) Nothing AirTran does will keep international travelers in MKE rather than driving to O'Hare.

(e) More people report using Madison (8%) than using Midway (6%), the true low-fare draw according to past AirTran statements.

(f) It defies logic that two areas in Mlwaukee County with lowest reported usage of Mitchell -- 40-50% are (a) the wealthy north short suburbs of River Hills, Fox Point and Bayside, and (b) Oak Creek, the home of Midwest and adjacent to MKE itself. These results are very suspect.

All those concners and questions are not "tricks"...they are solid doubts about the vailidity of the data. The "tricks" are these.

--Making the map far larger than the area in question (the Milwauke MSA) so there are large, more rural areas far from MKE that look bad. (Mapping by area always over-represents thinly populated rural areas anyway.)

--Using misleading data gradiants in their map. This one is my favorite. They used 10 values to break down usage of Mitchell between 0 and 100%. One might think that 10 percentage points per color grade would make sense. Here's what they actually did:

(1) 98-100%
(2) 95-98%
(3) 90-95%
(4) 85-90%
(5) 80-84%
(6) 70-80%
(7) 60-70%
(8) 40-60%
(9) 20-40%
(10) 0-20%

This scale is wieghted heavily at the top, and so areas where the huge majority of respondants say MKE still appear as so, so, middling values. This kind of data skewing would have earned an F in my cartography classes, and it's downright misleading. It's not too easy to see the numbers on the map key viewing the presentation on a laptop. Show as slides before a rotary club, this map is downright dishonest if factually true.

There are several other half-truths and misleading statitics and statements in the presentation, some of which I'll dive into if I have time. AirTran737 noted that this debate is getting tiresome, and I don't disagree. However it irks me quite bit to see so much of this unchallenged, and particular so when I see people post who seem swayed by it. And while I know the decision makers in this deal likely to not put a great deal of weight into what's said on a message board, I do know that more than a few journalists follow the boards. And getting some counter information into their hands is worth the effort in my opinion.

Plus, it makes me feel like I am doing something even if it does not ultimately have an effect.  Smile
 
FlyPNS1
Posts: 5483
Joined: Wed Dec 01, 1999 7:12 am

RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 11:37 am

Quoting SpdBrdConcorde (Reply 88):
See the Lincoln/Focus discussion above.


The analogy doesn't work. The way consumers purchase air travel is radically different from the way they purchase cars. Cars are generally a long-term investment and critical for people's day to day lives....air service is not in most cases. Market segmentation does exist in the airline industry, but it is the segmentation is far less defined.

Quoting SpdBrdConcorde (Reply 88):
You haven't seen Northwest's attempts with fire-sales in the MKE market and still doesn't garner enough traffic away from YX's premium product for lower fares.

Not at all. NW has been able to garner the traffic with low-fares, the problem is that NW can't make money on those low-fares.

Quoting SpdBrdConcorde (Reply 88):
Except for the fact that, like most acquisitions, if this thing does indeed happen and FL dropping the capacity FROM the market(such as regional routes and anything not a cashcow), both NW and other majors will be increasing capacity in MKE to take up some of that market.

Except that most of the markets that will get dropped are very small and don't need a lot of extra capacity. If anything, the majors will be happy to have less system capacity and higher fares. DL has cut service heavily in the Midwest, but you don't see anyone rushing in to fill most of those seats losses. The legacies want less domestic capacity, so they can get higher fares.

Quoting SpdBrdConcorde (Reply 88):
FL has done well on its own in ATL, MCO, and BWI without anyone's help. Why would taking over a competitor be a risk they HAVE to take?

Because staying a one-hub carrier is dangerous to FL's long-term health. Let's say during the next downturn, that much of DL's international flying fails and they have to pull it down. The first thing you'll see DL do is take that extra capacity and flood it onto FL markets.

Quoting SpdBrdConcorde (Reply 88):
With all the 737's coming in, why not just flood the MKE market and slowly kill off Midwest and get it for next to nothing? There isn't anything they HAVE to do.

They could do that, but it might take years and substantial losses on Airtran's part to takeover. It's much easier to merge with YX.

Quoting SpdBrdConcorde (Reply 88):
If that is how you think, you've never flown YX. You will see the difference like night and day between the two. airtran isn't horrible, but compared to YX, it can't be compared and airtran knows it, which is why they focus on anything BUT service.

I've flown YX and they are good, but nothing that great. I think some on this board are letting emotions speak more than the actual service. And as I said before, YX's service is declining and will probably continue to slide. How great of service do you think consumers are getting crammed onto a CRJ for 2hours with a contracted flight attendant who could probably care less about YX's "service"?

Quoting Knope2001 (Reply 89):
If there's any doubt that airports like Flint, Akron and Newport News, note how traffic stagnates when the bigger airport gets more low-fare service. Akron's traffic was flat last year and off over 5% for 2007 through April Newport News traffic is flat as Norfolk and Richmond gain low-fare service. And Flint peaked back in 2004, with fewer passengers each year since then as Detoit saw more competitive fares and more low-fare serive (including none other than AirTran)

I think your analysis here is a little off. The reason traffic is stagnating in places like FNT isn't because of low-fare service in nearby big cities, it's because the majors that serve these markets have slashed service. Carriers like NW have chopped a lot of capacity away from these small markets.

With that said, I agree with your overall premise that MKE may be too small for the kind of hub that FL envisions. I think FL is taking a considerable risk trying to build a hub in such a small market. In fact, I would argue this really is the biggest potential problem facing FL in their plan to merge with YX.
 
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knope2001
Posts: 2971
Joined: Wed Jun 01, 2005 5:54 am

RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 11:47 am

Quoting Deltadude8 (Reply 86):
I just laugh at the proposed expansion out of MCI...It just shows what a joke FL's plan is: (lets look at the proposed routes)

Yeah, those are -- to say the least -- surprising developments from AirTran. They are forgetting something big about Kansas City. Unlike MKE, which they of course claim is low-hanging fruit just ready to burst with low fares, Kansas City is dominated heavily by Southwest, the airline that wrote the book on market stimulation. To think that they are going to have the same explosive impact in MCI as they claim they will in MKE makes zero logical sense.

While we're on the subject, their claim of $1b economic impact in MKE and $500m economic impact in MCI doesn't pass the "smell test" either. Their growth, their efforts, their expansion, their market stimulation, etc, in Milwaukee is to be far more than simply double what they plan for MCI. How is it than that MKE will see 2x the economic benefit of MCI? Kind sounds to me like they are making stuff up.

And a final entry form the "making stuff up" division of AirTran's offer for Midwest PR department is the claim that Milwaukee will see an extra 3.7 million visitors based on AirTran's magic. Today MKE doesn't t quite even board 3.7 million passengers in an entire year...that's ALL passengers including connections. And they're going to bring in 3.7 million more visitors? If every visitor on average stays 3 nights and stays 2 to a hotel room, that's over 15,000 more hotel stays ever day of the year. That new 8 story Crown Plaza going up in Wauwatosa near the new GE Medical campus? We'll need to build 75 more of those to handle the 3.7 million additional visitors. Better start digging!
 
We're Nuts
Posts: 4723
Joined: Sun Jun 04, 2000 6:12 am

RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 11:48 am

Quoting FlyPNS1 (Reply 95):
How great of service do you think consumers are getting crammed onto a CRJ for 2hours with a contracted flight attendant who could probably care less about YX's "service"?

Did SkyWest fire you or something?
Dear moderators: No.
 
mijoatlanta
Posts: 48
Joined: Sun Jan 01, 2006 12:19 pm

RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 11:51 am

Quoting Knope2001 (Reply 89):
If there's any doubt that airports like Flint, Akron and Newport News, note how traffic stagnates when the bigger airport gets more low-fare service. Akron's traffic was flat last year and off over 5% for 2007 through April Newport News traffic is flat as Norfolk and Richmond gain low-fare service. And Flint peaked back in 2004, with fewer passengers each year since then as Detoit saw more competitive fares and more low-fare serive (including none other than AirTran)

You're right about PHF being flat recently. But you have to put it in the perspective of the capacity additions. When FL started ATL-PHF flights, Newport News went from 0 ATL flights to around 4. Additionally, FL's service eventually encouraged Delta to enter the market. So, yes, the percentage increases in growth are smaller now, but the market is huge from a historical perspective. I remember PHF back in the 80s. Check out the new terminal parking decks and growth out of PHF. Yes, the percentage growth has slowed, but FL is singlehandedly responsible for doubling PHF"s numbers and putting PHF on the map. Saying that passenger counts are growing less exponentially now ignores the fact of the huge market they built and continue to service. So what if they build up smaller markets and maintain the service, albeit at a slower growth rate. Is the Southwest effect (or AirTran effect) supposed to continue forever. What about building up a good market share (they own PHF) and conservatively growing it?
 
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knope2001
Posts: 2971
Joined: Wed Jun 01, 2005 5:54 am

RE: AirTran Reaches For Midwest - All The Specifics

Fri Jul 20, 2007 12:02 pm

Quoting FlyPNS1 (Reply 95):
I think your analysis here is a little off. The reason traffic is stagnating in places like FNT isn't because of low-fare service in nearby big cities, it's because the majors that serve these markets have slashed service. Carriers like NW have chopped a lot of capacity away from these small markets.

Flint is the easiest to examine because they are more open and transparent with their data than Akron and Newport News who tend to issue press releases in up months and issue no information in slower months.

Northwest's traffic in Flint was down 8.22% in 2006, and AirTran's was down 7.6% over the prior year.

http://www.bishopairport.org/pdfs/stats-year-end-2006.pdf

So far in 2007 Northwest is down over 30% but AirTran is up only a bit over 3% and still lower than 2005.

As for your concern about AirTran's biggest potential problem being their plan to merge with YX, I agree with you. Were I a disinterested party in Midwest (rather than the big YX homer I am) I would still be concerned that AirTran is falling victim to the same fever that killed Midway when they bet the farm on Philadelphia. Of course take that for what's it worth beccause I am obviously biased against the merger. But overcapacity and overexpansion have brought some pretty big airlines to their knees.

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