Is Midwest Trying to be the First to Convert to a Virtual Airline?

Anyone been paying attention to Midwest Airlines lately? It’s certainly understandable if you haven’t. They’ve spent the last few years shrinking into oblivion, but there actually have been some changes recently that are worth noting. It now seems quite likely that Midwest will stop flying any airplanes of its own, and that, I believe, would make them the first to actually convert from an operating carrier to simply a marketing carrier. Now the question is . . . what’s the point of their existence?

The plan rolled out last year had Midwest operating only 9 717s on its own alongside 12 Republic-operated Embraer 170s and 12 SkyWest-operated CRJs, all under the Midwest brand. Scrap that. Time for a new plan.

Now, SkyWest is out and Republic is expanding. SkyWest will pull its 12 airplanes and receive $400,000 each time an aircraft leaves the operation. In exchange, SkyWest will cancel a $9.3m unsecured note. So SkyWest will walk away, free to pursue a life of religious fulfillment, while Republic flexes it muscles.

Republic will begin operating 12 Embraers with 37 to 50 seats. Yep, it’s a one-for-one replacement for SkyWest, though some of these aircraft will have fewer seats. But wait, there’s more. Republic and TPG will each loan Midwest another $6m to keep them flying. I wonder if Republic feels like it has a deadbeat brother who is always asking for money? Then again, they are getting good at this since they’ve put money into Mokulele, US Airways, and I believe Frontier already.

But that’s only part of it. Republic also recently announced that it would start flying two Embraer 190 AR aircraft for Midwest. What the heck are those? They’re long range planes that can once again allow Midwest to fly from Milwaukee to the West Coast. Those routes had to be dropped last year when Midwest ditched their MD-80s.

So let’s get this straight. Midwest now will have 26 airplanes from Republic and 9 measly airplanes of their own. And how long will those last? They still claim that they have no plans to ditch the 717s, but I find that incredibly hard to believe.

Boeing has made a deal with Mexicana to lease 25 717s for its low cost Click division. They admit that 16 of those are ones that Midwest had returned last year, but according to Boeing, they don’t know where the remaining nine are coming from yet. Uh huh.

Mexicana, on the other hand, says all 25 are coming from Midwest. That means Midwest will be left with nothing but Republic-operated aircraft. And in that case, why even bother?

Sure, the Midwest name used to be beloved in Milwaukee, but does anyone really care anymore? The long, slow descent of the airline has really stripped much of the brand equity, as far as I can tell. Delta might as well just operate it under their name and throw in some fresh-baked cookies as a reminder of the days of old.


15 Responses to Is Midwest Trying to be the First to Convert to a Virtual Airline?

  1. A says:

    I like the route network idea behind Midwest (and Frontier). Inexpensive flights connecting through a centrally located hub. Then again, the slow decline of Midwest might again prove that a hub city needs to have local traffic. Milwaukee just isn’t a “major” air traffic generating city. It probably doesn’t help having ORD just down the road with global services that are arguably second to no other airport in the country. Over the years I’ve always tried to consider Midwest (I wanted the cookie) but the non-stop or better schedule always won out. Quite frankly, the only time I do fly “niche” airlines is on leisure travel, i.e. Sun Country. Maybe Midwest should’ve stuck with that business plan instead of competing with the big boys.

  2. Cap'n Bill says:

    Midwest had some real brand loyalty when they were focused on an upscale niche based on providing meals and superior service. Once they started adding seats and trying to be “just like the other guys” they lost their advantage. It is a shame to see them shrink away to nothing, but they seem to have lost their purpose.

  3. David SFeastbay says:

    We used to have so many smaller airlines in this country and it used to be fun to see them at different airports during a time when air travel used to be fun, simple, and stress free. Now the old larger carriers swallow them up trying to be bigger which doesn’t mean better.

    Sounds like Midwest is just trying to stay alive by not having to maintain their own company planes. One day their name will disappear just like so many others have in the past. Seems you can’t be a small guy in the airline business anymore. You have to be swallowed up whole or put someone elses code in front of you flight number and be the ‘operated by’ part of the big boys.

    That’s really a shame.

  4. Greg says:

    It’s too bad to see Midwest do this to their employees. This can be seen as a novel new way of doing business as a marketing entity. Or it can be seen as bean-counters in charge trying to do an end-run around their employees and going to the low bidder. More outsourcing of what were once descent jobs.

  5. I bet all of Milwaukee wishes Midwest had merged into Airtran…

  6. Neil S says:

    And let’s be honest. Those cookies are NOT that good.

  7. Steve says:

    As a Milwaukee resident, we are VERY glad that Midwest did not merge with Air Tran. Yes, it is a sad fact that they will become the world’s first virtual airline. But here is the good news. ERJs (ALL versions) are FANTASTIC airplanes!!

    GOOD RIDDANCE to SKYWEST and its awful CRJs. While Republic needs to DRASTICALLY improve their ontime operation, at least they have decent comfortable airplanes.

    It is good to see the “two class” service go away. The Signature seats were just a weak attempt for more money. They denied it was two classes, but let them eat cake.

    And PS .. its a GOOD thing to be north of ORD. That is airport is SO delayed and has such major operational issues that MKE is a dream and work more money.. believe me. Now that MKE has a train airport stop many people from Glenview and those that can get to Glenview are using MKE.

    What I am surprised about is that Midwest hasn’t merged with Delta. In MSP for example, Midwest has moved from the Humphrey terminal to the Lindbergh Terminal (yes Brett.. the one with the Larry Craig Memorial Toilet). I thought they did this to be “near” Delta/Northwest.

    SO.. in MKE.. life is good. I never ate the cookies anyway.

  8. Ben says:

    The people of Milwaukee may be thrilled, but something tells me the employees of Midwest wish they would have merged with Air Tran. They fought hard to save their airline only to have management push them under the bus and hand over their jobs to a regional carrier. At least with Air Tran, they would still have jobs. And if you’re raving about Midwest’s service, you sure don’t want what’s left of them to merge with Delta/Northworst

  9. bill says:

    Can we now put , failure to merge with airtran as one of the top 10 regrettable moves by an airline. I mean looking back now, that was a horrible, awful decision. they saved the cookie and lost their jobs. They could have created a amazing national low cost airline. By the way Airtran is doing great. Really, really, bad idea.

  10. SAN Greg says:

    YX won the battles, but lost the war. Taps will be playing soon I’m afraid.

  11. David says:

    Heh, kinda like JetAmerica, but with actual flights :)

    David Brown
    http://www.theairlineblog.com

  12. David SFeastbay says:

    Well wonder no more, it’s been announced by Reuters and Business Wire that Republic is buying Midwest. Reuters also is saying it’s a day after Republic announced it is also buying Frontier.

    Looks like things should turn interesting in the domestic U.S. market.

  13. Wow, So a really important question, where is Republic getting all this cash? I know they’re only putting up $6 million for Midwest. They gave Frontier a $40 million loan, and they’re forking over almost $30 million in cash to Frontier’s creditors…..

  14. CF says:

    That’s the million dollar question, Nicholas. (Literally.) It still remains to be seen how their balance sheet will look when the dust settles.

  15. David SFeastbay says:

    Nicholas/Cranky that question is easy to answer, it’s all the money they are making leasing those E170 jets to Mokulele Airlines in Hawaii…..hahaha……not!

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