Frontier and Other Airlines Stand to Gain From the Southwest/AirTran Deal

I’ve seen countless articles/posts/interviews talking about how the Southwest/AirTran merger is going to be terrible for every other airline out there. The newly-created behemoth will dominate and crush everyone around. Seriously? Don’t believe conventional wisdom here. This merger is actually good news for most airlines. And one of the biggest winners might be Frontier.

For Frontier, there are a couple of things that should help relieve some pressure in both its hubs. We can start with the most obvious place for gains to be made, Milwaukee. Frontier, Southwest, and AirTran have been in a royal rumble in Milwaukee for awhile now. There isn’t enough room for the three of them, but nobody wants to blink first. Now, there will only be two airlines and rationalization of the network can’t be far behind. Here’s a fancy-pants Venn diagram showing where things stand today:

Milwaukee Service Overlap Venn Diagram

Southwest and AirTran only overlap on four routes out of Milwaukee (three of which Frontier flies as well), but on those, capacity will likely come down and that can only help the situation. But that’s only part of it. There are another five or six cities that AirTran and Frontier both serve from Milwaukee that I expect will only be served by Frontier in the future.

Right now, AirTran has a deal with SkyWest to fly regional flights in Milwaukee. There is no way that deal is surviving the merger, so my guess is service to those cities will quietly disappear. Maybe we’ll see one or two stay on with larger aircraft (St Louis?), but the rest will probably go away.

Lastly, there’s DFW. Southwest will not serve DFW when the merger is complete, so the current flight from Milwaukee will go away. Maybe it will eventually be served from Dallas/Love, but that won’t be legal until 2014.

So in Milwaukee, things should start to look better. And then there’s Denver.

Frontier and Southwest are competing in Denver, but AirTran has only a token presence. Why is that a good thing? Distraction. Much of Southwest’s growth has been focused on Denver, and now Southwest will be busy bringing AirTran into the fold. I don’t expect we’ll see nearly the focus on Denver as we’ve seen before.

That’s bound to be good for Frontier. (And yes, United’s distraction from its Continental merger will help there as well.) But Frontier isn’t the only beneficiary. Sure, distraction can help everyone except for Delta, which will be the focus of the distraction at its Atlanta home base. But what’s the chance that Southwest continues to serve all those smaller cities from Atlanta that AirTran serves today? Delta might end up with more frequency to compete against on big routes but competition might disappear completely on smaller routes. And that’s where legacy carriers enjoy the highest fares.

Oh, and what’s the chance that AirTran’s challenge to Allegiant in Orlando with sub-daily flights sticks around? I’d be surprised to see Southwest stick with that strategy. Spirit will probably be happy as well assuming that Southwest’s higher costs make it easier to Spirit to compete in the Caribbean. In other words, there are potential opportunities for just about everyone here, even Delta.

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30 Comments on "Frontier and Other Airlines Stand to Gain From the Southwest/AirTran Deal"

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Graham
Guest

Good Morning Brett.

I believe you meant to write that Airtran has an agreement with SkyWest. And I agree that thing is deader than Jimmy Hoffa.

AB
Guest
I have always loved Venn diagrams. :) Great post, Cranky. Off-topic question for you and other posters: what do you think will happen to AirTran’s service in FNT (serving ATL, TPA, MCO, RSW)? I hope Southwest doesn’t pull out, thereby allowing the legacies to jack up fares. I saw a report from FNT’s local ABC station saying that AirTran consistently makes money on its FNT flights, so the airport director doesn’t expect major changes. In fact, he predicts the possibility of FNT-MDW. I just don’t know if Southwest can fill 737s eight times a day. Thanks for your input!
East Coast Wing
Guest
I think FNT could possibly survive and even prosper in the combined entity. FNT would be similar to WN’s business model of bracketing metropolitan areas (BOS, NYC, LA)…and AirTran has served both FNT and DTW for a while now. FNT is a lot more convenient for residents of Northern Oakland County which includes some communities with residents with more disposable income and traveling out to DTW is such a pain. I remember in the ’80s it was a quick 25 minute drive up I-75 to FNT while it was an hour door-to-door to get to Metro (DTW) and that didn’t… Read more »
Sanjeev M
Guest

One thing going against Frontier is that they have virtually no name recognition on the East Coast or in the Southeast. Airtran/Southwest have loyalty in so many different markets (e.g. BWI).

Also, I think some who wouldn’t fly Airtran cause of the Valujet crash (I’m too young to know) will now be comfortable with Southwest.

tharanga
Guest

The latter is me – I avoided Airtran for years because of the Valujet crash. But I have no doubt they’ve cleaned up their operations a long time ago. I have entirely different reasons to avoid Southwest, so whatever those guys do, I’m still not getting on board if I can help it.

Sanjeev M
Guest

Also, Cranky, doesn’t Airtran serve San Diego from MKE? The Venn Diagram has only Frontier serving it.

Dale
Guest
All three airlines have a varying degree of seaonality in some of their cities, so the Venn Diagram shows some things which may be accurate on day X but not on day Y. SAN was served seasonally by FL and F9, but in 2010 F9 served it longer. FLL and RSW both have seasonal service on F9. Right now TPA could be put into the AirTran-only category since both F9 and WN pulled it for the fall. (And F9 is moving it to PIE if you want to be technical about it.) While there are some oddities in the diagram… Read more »
Don
Guest

JetBlue is now as good as dead. The Carribbean and BOS and more into NYC. SWA will kill them in less than 2 years. Just watch Jetblue will start to downsize big time.

Bill from DC
Guest

who cares about all of this? i just want DCA-MDW to start ASAP!!!!!!!!!!!!

David SF eastbay
Member
Just because WN mergers with AirTran doesn’t mean all of AirTran will survive. WN will need to pay for all of this somehow and dropping all the AirTran small cities and Caribbean will be a start in saving money to pay the bills, or at least to fill the wallet back up. People still refer to WN as a low cost carrier, but you can’t stay a low cost carrier forever. WN has been around for decades and keeps growing and it costs keep rising. You know have employees there 5-10-20+ years and their salary goes up as well as… Read more »
JJG
Guest

I’ll bet you a dollar that Southwest has no intention of dropping the Caribbean. They’ve nearly run out of domestic expansion opportunities and stealing market share is an expensive and difficult challenge. Opening near-international market opportunities where none existed before is probably second on their list to Atlanta in terms of why this deal is attractive. I fully expect an expansion of the Caribbean footprint over time. Third on the list is what this means for them in Milwaukee as they now effectively bracket O’Hare with 2 airports.

Steve
Guest
If those small cities are making money, why would they get rid of them. It hasn’t been pointed out here, but AirTran was one of the only other airlines making money previous to this year. If I’m not mistaking, they had higher profits last year than SW did. Also, there will be some cuts, but the smaller cities that AirTran does serve will be connected to other cities besides ATL, BWI and MKE like they are now. I’d look for non-stop flights to MDW, DEN, LAS and even PHX in most of those smaller markets. I see DEN being expanded… Read more »
Allen
Guest

@Cranky,

You seem dead set on that for the most part this isn’t a marriage where some good things from both partners are embraced. It sounds like other than the Carribean routes, it’s SWA’s way or the highway. I’m curious as why you believe that’s the case.

Is management at SWA really that pig headed that they’re not looking to learn some new tricks? I can’t imagine why they’d buy Air Tran if they were not looking to do so.

Nick Barnard
Member

Well SWA has pretty much stated in their website etc, that they’ll be adopting their model fleet wide. The airline cost increases are more or less a given, given how their labor costs will change.

David SF eastbay
Member

Doesn’t it make you wonder who at WN has the job of following all the major blogs like CF to see what the masses are saying about the WN/FL hook up. They are either laughing at the ideas of what will happen are, or saying wow some of those people have it nailed on what we will do. I would sure hate to think they are reading all the major blogs for ‘ideas’ on what they will do…..LOL

JJG
Guest

I think the commentary on here is always top notch with some very well informed folks. I admit to being a bit of an airline dork although I never collected flight schedules like Brett did. My mom did, however, take me out to Billy Mitchell Field (MKE) to watch the planes when I was a young boy. North Central was the biggie out there at the time. Cool looking mallard duck on the tail!

And reading CF would be Brian Lusk’s job at LUV. (Can’t believe I know that.) I double dog dare him to comment!

vin2basketball
Member

Here’s your 9 cities to drop…

DFW
SNA
SEA
Sarasota
OMA
DSM
CAK
LGA
DCA

The last two because they aren’t going to waste a quarter of their holdings at each airport on flights to MKE

Nick Barnard
Member

Seattle? LaGuardia? Washington DC? Seriously these are huge markets that I have no doubt that Southwest will continue to stay in.

Bill from DC
Guest

I agree, they won’t drop those three cities but they can certainly “right-size” the number of flights. i think SRQ might stay too because of their emphasis to/from florida (both WN and FL).

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[…] a great job looking at this merger from a number of different angels: – First look at the merger – Frontier and other airlines will benefit from this merger – 6 Reasons why this merger is a good idea – 4 Reasons why this merger is a bad […]

robert
Guest

What does this mean for Cleveland?
I think it is good news, SWA will probably pull out of Akron and fortify CLE to push the new United out the door faster.

Rob Garren
Guest
First off, I don’t see this merger as good for Frontier in any way. The big rumor at Southwest is still that Denver will be a crew base in 2011. The current plan is to run Southwest and AirTran as separate, independent airlines for at least a year and in that year Southwest will continue to focus on Denver. As far as routes are concerned, I’m sure that once the merger is complete Southwest will plug all the new cities into the computer and decide what new routes to fly based only on revenue and aircraft positioning. Yes, the new… Read more »
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[…] a great job looking at this merger from a number of different angels: – First look at the merger – Frontier and other airlines will benefit from this merger – 6 Reasons why this merger is a good idea – 4 Reasons why this merger is a bad […]

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