Battle Brewing In Milwaukee
By Andrew Compart
Southwest will begin service to Milwaukee, Wis., this November, providing a challenge to struggling hometown carrier Midwest, Delta subsidiary Northwest — and fellow low-cost carrier AirTran, which considers Milwaukee a big growth market.
Southwest Chairman, President and CEO Gary Kelly announced the addition of Milwaukee to the airline’s expanding domestic network at the airline’s annual shareholder meeting May 20. It will be the fourth destination added by the airline this year — the others being Minneapolis-St. Paul, New York LaGuardia and Boston Logan. That’s the most new airports added to its network since 1996, when it started service to Tampa Bay, Fort Lauderdale, Orlando and Providence.
This time, however, Southwest is expanding its network without expanding its fleet, noted Bill Owen, lead planner in the airline’s schedule planning department. Instead, it’s been trimming unpopular flights from existing markets and redeploying the aircraft to the new destinations.
The Milwaukee addition is particularly intriguing. Hometown carrier Midwest has scaled back its operations there significantly and altered the nature of its service, having ditched 16 of its 25 Boeing 717 aircraft in favor of smaller regional jets as part of a financing deal with Republic Airways Holdings. The amount of service it offers in Milwaukee also has declined dramatically because of its financial struggles.
Kelly acknowledged that reductions in service in Milwaukee and changes in the “competitive landscape” contributed to the airline’s decision to enter the market now, although he added the city has been on the airline’s list for quite some time.
“My hope is we’ll be able to grow Milwaukee into a very substantial market for us,” he said. As with other recent additions to its network, however, Southwest plans to start small. Although the carrier is not identifying routes yet, Kelly noted the airline has started or will be starting service in Minneapolis-St. Paul, New York LaGuardia and Boston with eight to 10 daily departures, which he said would be a “reasonable range” for Milwaukee.
Kelly also implied that at least some of those markets will follow the same strategy and pattern as for those other new markets: flying to one of Southwest’s big markets where travelers have plenty of opportunities for connections.
“We have a number of nonstop destinations we can consider that provide one-stop service to a host of destinations,” he said. “What Southwest brings to Milwaukee is legendary service, low-fare leadership and, in addition to that, we’ve got a route system in the United States that’s unmatched.”
Midwest did not immediately respond to requests for comment. Financial filings with the U.S. Transportation Dept. show it ended 2008 with $9.7 million in cash, and questions are still being raised about the future of its remaining 717 fleet. Republic revealed this month that Midwest recently deferred $3.3 million in payments to the regional carrier under its fixed-fee flying contract.
Midwest is also facing a growing challenge from AirTran, which decided to make a big effort in Milwaukee after its failed effort to acquire Midwest. AirTran will offer 34 peak-day flights there this summer, up 57% from last year. Kevin Healey, AirTran’s senior VP-marketing and planning, said May 20 that the airline may yet announce a “couple” more new Milwaukee routes this year. Also on May 20, AirTran announced a deal to expand to six gates at the Milwaukee airport.
Healey proclaimed AirTran is not worried about Southwest’s imminent arrival, noting AirTran already competes with the carrier in markets such as Baltimore/Washington Airport, where they are the two largest carriers, as well as in Chicago and Orlando.
Healey referred to differences from the Southwest product, such as AirTran’s business class, assigned seating, satellite radio and — soon — Wi-Fi on every flight.
“We never really viewed it that we’d be in a position where we wouldn’t have competition,” he said. “We built our business model to have the lowest cost and the best product.”
Photo: Boeing
