AirTran’s long-awaited assault on Milwaukee is now in full force. Just this week, they announced twice daily flights to LAX and Boston as well as once daily flights to Seattle, San Diego, and San Francisco. Lastly, they’ll add a second daily nonstop to Vegas. How nice of them to announce this just as the Northwest/TPG acquisition of Midwest gets approved. These new flights all start in May. For more details, read the press release.

Now the fun begins. After AirTran was spurned by Midwest in favor of a Northwest/TPG combo, everyone was waiting for them to enter the market on their own. They’ve slowly built up service there, but this will be the biggest increase yet.

Will Midwest fight back? Will newfound-uncle Northwest step in to fight for them? Does AirTran have any chance of making this work? I’d say it’s definitely unclear, but you know there’s some response in the making.

What we do know is that this will mean looooow fares for Milwaukee until it all gets sorted out. If you live in Northern Illinois (or Eastern Iowa, as I often like to call my friend’s place in McHenry), you might want to look north for some good deals. Enjoy it while you can.

Remember how I said there was no reason AirTran couldn’t try to build up Milwaukee on its own even after failing to take over Midwest?

Here it comes.

This morning, the airline announced that they will begin deploying troops, er, bumping up Milwaukee flights just in time for the winter season on December 20. All those snowbirds will now have the option of flying AirTran to Phoenix once a day. Yes, US Airways and Midwest already fly this route, but maybe AirTran will bring down fares enough to help the Brewers actually get more than a few hundred people at their spring training games this year.

Oh, but that’s not all. That same day they bring back daily seasonal flights to Tampa and Ft Myers. I know they had Tampa daily last year, but I think Ft Myers may not have been as frequent if it flew at all.

And I (mis)quote . . . “Heaven has no rage like love to hatred turned / Nor hell a fury like an airline scorned.”

I got a little geeky yesterday with all the talk of the Midwest takeover, but I didn’t actually bother talking about the impact on customers. Sorry about that. Yesterday afternoon, it got even more interesting as AirTran came back with a bid that’s a quarter higher than the TPG one. So, we have two competing bids. What’s best for you?

The focal point here is clearly Milwaukee. That’s the home of Midwest and their largest base of operations. It is also what appeals to AirTran. If you live in Milwaukee, you’ve been fighting tooth-and-nail to keep Midwest independent so you can have your hometown airline. Now that the airline will likely be bought by someone, you might want to change your stance.

On one side, we have the TPG/Northwest bid. This is best for Northwest since it basically helps eliminate a competitor. Though they say that Northwest won’t have any management control, you can bet that’s a crock. That’s likes saying Richard Branson has no control over Virgin America.

So what’s best for Northwest here? A nice small airline that’s friendly to them and is just big enough to keep competitors out will do the trick. You probably won’t see much growth, and it’s more likely you’ll see it shrink over time. Frills will start to disappear as TPG tries to get its money out of the investment. The airline will not be the same. If you live in Milwaukee, the last thing you want is more dominance from Northwest. You want more choice. This is not the best outcome for customers.

If there is any winner in this deal other than Northwest, it’s CEO Tim Hoeksema. He clearly likes this deal because he gets to keep his job, even if it is at the expense of his employees. If the airline does try to get “more efficient” and doesn’t grow, that means layoffs are coming. Apparently that’s ok with Hoeksema as long as he keeps his job.

On the other side, we have the AirTran bid. In this offer, you’re just about guaranteed to get more flights as AirTran continues to try to establish a beachhead in the Midwest. After their bid to buy ATA and establish a Chicago hub failed, they’ve decided the next best thing is to move up the lakefront and go to Milwaukee. So, while the Midwest level of service will undoubtedly go downhill, there will at least be more flights to more places for less money. That seems like a better outcome to me.

And for current Midwest employees, that also means that their jobs would probably be more secure since AirTran will need people to run the growing operation. Well, almost all jobs would be more secure. CEO Hoeksema would lose his, and since he’s already shown he’s willing to screw his employees to save his own job, this will be a tough fight once again.

Of course, if Northwest/TPG succeeds, there’s nothing saying that AirTran won’t try to make a run at Milwaukee on its own anyway. I’d have to think that would not come out well for Midwest in the end. No matter what, it’s unlikely that Midwest will continue in its current form at this point.

I’ve been pretty confused since word came out that TPG and Northwest would be teaming up to offer to buy Midwest. I mean, all the talk had been about AirTran’s offer for the last few months, and now that’s gone. AirTran walked away as this higher bid came rolling in. So what does TPG see in Midwest? So many questions, so little time. I’ll let this handy dandy graphic explain what I know.

As you can tell, not much is clear except that Northwest has their grubby little hands all over this. They still have this whole “we own the heartland” belief, and in their minds, Milwaukee falls into that territory. Midwest has never been much of a threat to them, but AirTran? No way, that’s a tough competitor. Can’t have that.

So they get together with TPG to buy out Midwest and remove AirTran from the equation. Northwest says they’ll be a silent partner, so there won’t be a merger or any sort of management transfer, but it means they don’t have to compete with AirTran and they like that a lot. And let’s not forget that Northwest has a nice cozy codesharing and frequent flier agreement with Midwest that gives them that warm and fuzzy cooperative feeling.

Of course, for something like this to work, they couldn’t do it alone, so they partnered with private equity firm TPG, famous for their previous airline investments. Now, TPG has a bunch of smart guys, but I cannot figure out why they’d want Midwest. This is a struggling airline with limited growth prospects in its current form, so why would they bid so much money for the airline? If they thought they could make some good money, they’d do it, of course. But how can they make money here? I’m sure they have a plan, but I don’t know how it can make this investment pay for itself.

One person who is happy is the CEO of Midwest. He would have lost his job with AirTran but now he gets to keep it. It would make sense if they kept him and guaranteed him a job in exchange for his endorsement of the deal. It was his opposition among others that held up the AirTran deal for so long. Maybe this is the way to get things moving, if he’s willing to play along.

But what will happen to the rest of the employees? I’d be nervous if I were them. Job cuts wouldn’t surprise me at all as TPG tries to get money out of their investment.

Now, AirTran is done here . . . or are they? Even if this deal goes through, there’s no reason they can’t set up shop in Milwaukee on their own. They’ll just have some added competition now, but they could still do it if they wanted. My guess is that instead they’ll look for another airline that might want to merge. (Frontier, anyone?)

There’s lots of speculation here, but I honestly just don’t get it. I know why Northwest likes this. I know why Midwest’s CEO likes this. I just don’t know what TPG sees.

To say that this was a bad week for LAWA (the organization that runs LAX) would be an understatement. I mean, if this were a football game, there would have been a flag for unnecessary roughness. Judge Goodwin absolutely dropped the hammer on them. By the time I got to the end of the 210 page ruling (read at your own risk), I was surprised he hadn’t insulted the airport director’s mother.

But let’s back up for a second. What the heck am I talking about? There have been a few lawsuits flying around between LAX and the airlines lately, so let me try to clarify which one this is. This lawsuit, I believe, has nothing to do with the $10 surcharge that United added to their LAX fares a few weeks back. That one is in protest of the across-the-board rent raise that LAWA instituted on all LAX tenants.

From what I can tell, this lawsuit is about the Maintenance & Operations (M&O) fees which were dramatically increased by LAWA as well as the rent. (If I’m off base here, someone please help me.) These fees, however, only went up for airlines in terminals not tied to a long term lease. That means the airlines in Terminals 1 (T1) and 3 (T3) as well as those in the Bradley International Terminal (TBIT), on a separate lawsuit, had to pay up. Here’s a map:

Not only did LAWA increase the fees, but they made them retroactive all the way back to January 2006, so there was a lot of money in the balance here. The airlines balked and took LAWA to court, the People’s Court. Ok, it was actually the DOT, but close enough. In the end, the judge ruled against LAWA on everything. Now, this isn’t final. The judge’s ruling goes to the Secretary of Transportation who can accept it or override it in the next month. With a ruling this strongly worded, I would be surprised if she didn’t accept it though. Even then, either party can still take this to federal court, so we’re far from done here.

But, this is what we have now . . . so, wait, what exactly DO we have now?

Basically, LAWA’s plan to charge higher M&O fees to those airlines not under long term leases isn’t kosher. Since all the airlines have facilities that are effectively the same (don’t tell that to the airlines in ghetto Terminal 3), they can’t charge dramatically different amounts or use different methods for determining those amounts.

LAWA was also trying to start charging the airlines not under long term leases for the areas they don’t directly use (like the bathrooms or restaurant spaces), but that doesn’t fly either. And, they wanted to start charging based on what the market would bear instead of based on actual costs. That’s another no-no.

So if this ruling stands, the airport has to pay back all the increased fees collected since January 2006 and they have to pay interest on the money for as long as they’ve had it. Ouch.

But that was just the beginning. The judge then went on to discredit pretty much everything LAWA has ever done. He chastised them for using LAWA employees to determine the new rates instead of using an external auditor. He even questioned LAWA (and the Mayor’s) policy of airport “regionalization.” He said it could be against DOT policy, and it should be investigated.

Not enough? The judge said that LAWA was clearly using enough bad math to call every one of their assumptions into question. For example, the increase in fees related to security would mean that T1 and T3 are responsible for 70% of the total increase in security costs at the airport. Uh huh.

Sounds like they’re just trying to get the airlines in T1/T3/TBIT to cover some of the costs they can’t pass on to the other airlines in long term leases. And the judge won’t have any of that.

If the Secretary of Transportation agrees, this will impact LAX flyers. Lower costs for the airlines may make more new service
possible, but it also means that LAX will continue to be a dump. Without additional money, they can’t fix up the airport, and we all know it needs it. LAWA is going to have to find a legal way to collect additional funds, and apparently this isn’t it.

A conversation with a fellow blogger over at Airline Views made me realize that I hadn’t really checked in on AirTran’s hostile takeover bid for Midwest lately. The catfight is in full swing, and it continues to be an interesting news story, so here’s the latest.

AirTran continues to want to buy Midwest and Midwest continues to tell them to go away. Pretty simple, right? Of course not. AirTran’s strategy of late seems to be convincing the people of Milwaukee that this would be good for them. Their filing with the SEC talks about how great they’re going to be for the community. In short, this equation says it all:

More flights + More jobs + Lower fares = Happy Wisconsinites with more money for Miller Lite and cheese curds.

The airline is now saying that they will increase flights by 50% with a mix of more flights to cities already served and new flights to new cities. This map shows their planned route map out of Milwaukee by 2009. Red lines are new routes.

Some of these may very well make sense but others seem unlikely, especially when you look at the planned number of daily flights as shown in the presentation.

How about the 3 daily flights to Bloomington/Normal (Illinois)? Maybe the 5 daily to Detroit? I’m sure Northwest won’t care about that at all. Some of these really don’t pass the sniff test. Right now, Midwest flies from Milwaukee to LAX once a day. AirTran says they’ll be up to 4 daily by 2009 in this plan. Why is that unlikely? Well, they only serve their monster hub in much larger Atlanta three times a day from LAX. I would be surprised if Milwaukee could support more.

That being said, this could actually happen . . . the question is how long would it be before they pull the plug? Everyone knows AirTran isn’t shy in walking away from routes that don’t pan out quickly. The idea that they’d give it a shot at success by 2009 is certainly something that should appeal to those in Milwaukee, but it’s hard to say what the network will look like by 2010.

While this is all going on, what is Midwest saying?

Midwest has put out a press release poking holes in AirTran’s offer saying that they have “been confronted by many false and misleading claims made by AirTran about its offer and Midwest’s business — comments we believe are designed to divert attention from AirTran’s deteriorating performance, lack of planning, and absence of a credible and profitable growth plan for its future. It is time to set the record straight.”

Ouch, that stings.

The airline goes on to detail everything that is wrong with AirTran in a very direct and personal manner. They back up everything with facts except for the part that the AirTran offer will result in less value for shareholders than going it alone. That really can’t be proven - it’s a calculated risk. Midwest is hoping that all these facts will convince their investors to stick with the plan. If they decide not to, AirTran could win this fight.

These guys at Frontier are just gluttons for punishment. Yesterday, the airline asked Memphis to “be their Valentine” by announcing flights to the city from Memphis, Orlando, and Las Vegas. What they really should have done is gotten on their knees and begged Northwest to not lay the smack down.

As you probably know, Memphis is the smallest hub for Northwest Airlines, but Northwest still protects it fiercely. While low cost carriers have flourished in other cities, Northwest hubs have been barren wastelands. Memphis is a great example. It’s a good-sized city that could support low cost flights, but AirTran is the only one that flies there (unless you count US Airways). AirTran only has six daily flights to Atlanta. That’s the extent of low cost carrier competition in Memphis.

How does this happen? Well, Northwest always gives a giant “Northwest Welcome” to any new carrier in its hubs. You’d think Frontier would know this, because last time they entered a Northwest market they got the beat down.

On December 18, 2003, Frontier announced two daily nonstop flights between Minneapolis and Los Angeles beginning April 11. Within a couple of hours, Northwest had already put out a press release announcing two additional daily flights between Minneapolis and Los Angeles as well as two daily flights between Frontier’s home in Denver and Los Angeles. Of course, they matched all fares as well. As you can imagine, that didn’t last very long for Frontier.

So why are they trying this in Memphis now? I have no idea. It’s possible they’re just getting more aggressive in trying to develop flying that doesn’t depend on the Denver hub. It’s becoming increasingly important for them to prove they can do that, and this might be their best option right now. No matter what, you can be sure that Northwest is planning a big ole’ welcome party, so keep your eyes open.

If that’s not enough, AirTran is also not happy about this. They’ve decided to start nonstops between Memphis and Orlando as well. Giddyup!

AirTran has a lot going on these days. First and foremost, they continue to beg and plead Midwest to let them buy the airline. But that doesn’t mean that everything else is standing still. Nay. In fact, they’ve announced some route expansion in the last couple of days. And once again they’re under attack by JetBlue. Never a dull moment for TAFKAV (That would be, The Airline Formerly Known as Valujet.)

So how is that merger attempt going? Not so well. Apparently Wisconsin laws are pretty strict when it comes to hostile takeovers. Since Midwest doesn’t want to marry AirTran, those laws are coming in handy right now. The latest is that Midwest won’t hand over its shareholder list to AirTran and AirTran is suing them under a New York statute requiring they do so. Wisconsin laws, however, may prevent Midwest from having to comply. In short, this merger is going nowhere fast right now. Midwest continues to move forward with its plan to stay independent, and the airline just announced new Seattle flights yesterday.

And what about AirTran’s new flights? Well, first of all they’re going to begin summer seasonal daily flights between Atlanta and San Diego on May 24. Not quite sure why that’s seasonal. You’d think San Diego would be big enough for year round service, but maybe they need those planes elsewhere during the winter.

Meanwhile, in their ongoing quest to find another minihub, they’ve decided to push in St Louis. Now there’s an airport with a lot of room. Ever since American gobbled up TWA, there has been plenty of open terminal space. AirTran moves in on May 8 with four daily flights to Atlanta. Beginning June 7, they’ll have a daily nonstop to Orlando as well. I imagine that if these flights do well, there will be a lot more coming. Then again, AirTran has a habit of starting and stopping flights at the drop of a hat, so this could go the other way as well.

And lastly, in yet another example of when copying is not considered to be the sincerest form of flattery, JetBlue announced they’ll start flying from White Plains (New York) on March 28. What does this have to do with AirTran? Well once again, JetBlue has entered markets right after AirTran starts them. These guys can’t get a break.

JetBlue will have two daily flights to Orlando, one to Ft Lauderdale, and one to West Palm Beach. Not surprisingly, AirTran has an identical schedule in those markets though the flights are at different times. JetBlue is making a habit of this, and I’m sure AirTran is not happy.

Just another week in the life of AirTran.

All this talk about the launch of Air Asia X, the new long haul low cost carrier got me thinking. With the proliferation of low cost carriers (LCCs) in the last few years, you probably could get around the world flying only LCCs these days.

With that idea, I decided to see what I could come up with. I used our site at PriceGrabber Travel as well as individual airline sites to do the planning. As I went, I realized it could definitely be done but I created some rules to make it a little tougher:

• All fares must be one way fares
• Connections are allowed as long as the LCC allows it (ie AirTran sells connections but easyJet does not)
• Each airline can only be used once (a connection counts as one as long as it’s one fare)
• You must start and end at your home airport (any airport in your area is ok but you can’t start from one and land at the other)
• The entire trip cannot take more than one week
• The total fare must be US$2,000 or less

As you can imagine, with all these restrictions, it made it tougher. But, I was able to put this together from my home airport of LAX.

25MAY AirTran 60 Lv LAX 940p Arr Atlanta 445a 737-700
26MAY AirTran 279 Lv Atlanta 920a Arr Boston 1150a 717-200
One Way Fare US$183.80

26MAY flyglobespan 736 Lv Boston 630p Arr Glasgow 630a 757-200 (?)
One Way Fare US$259

27MAY easyJet 686 Lv Glasgow 840a Arr London/Gatwick 1010a A319
One Way Fare GBP24.99 (US$48.22)

27MAY OasisHK 707 Lv London/Gatwick 810p Arr Hong Kong 230p 747-400
One Way Fare GBP179.52 (US$346.40)

28MAY Jetstar Asia 692 Lv Hong Kong 815p Arr Singapore 1150p A320
One Way Fare HK$806 (US$103.44)

30MAY Tiger Air 702 Lv Singapore 820p Arr Darwin 235a A320
One Way Fare SG$185.23 (US$120.50)

01JUN Virgin Blue 442 Lv Darwin 140a Arr Brisbane 550a 737-700
01JUN Virgin Blue 306 Lv Brisbane 715a Arr Melbourne 940a 737-700
One Way Fare AU$199 (US$155.18)

01JUN Jetstar 1 Lv Melbourne 515p Arr Honolulu 745a A330-200
One Way Fare AU$598.42 (US$466.64)

01JUN ATA 4754 Lv Honolulu 110p Arr LAX 930p 737-800
One Way Fare US$212.71

There it is, and all for a grand total of US$1,895.89.

I picked random dates in May to start the trip since I figured all the heightened summer schedules would be well in place by then. That flyglobespan trip across the Pond didn’t start until the end of May either, so that was a constraint.

I guess you could call it cheating that I have one segment on Jetstar and one on Jetstar Asia, but they are technically different airlines. I would have preferred another segment on Jetstar from Darwin to Melbourne nonstop, but I had to settle for a connection on Virgin Blue for AU$20 more instead. I also would have liked to have flown nonstop from Long Beach to Boston on JetBlue on the first leg for US$20 less but then I wouldn’t have ended at the same point from which I departed.

It’s amazing that you can fly around the world for under $2,000 and stop in so many places. The next step is to see if someone actually flies it . . .

Of course all of this news would just happen to drop on a very busy day. I’ve been wanting to write about it all morning, but I’m just getting some time now.

So, what news, you ask? Well, I’d argue that it’s not much news at all. The news is more about what people are discussing as opposed to something actually happening in the world. It goes to show that people do loooooove talking about the airlines.

It appears that the long-awaited consolidation in this industry is starting to take shape. No, nobody has bought anyone, but it has been confirmed that talks are taking place on at least three levels.

1) US Airways and Delta - There’s really not much to say about this one. You know the story, and nothing new has happened, but since numbers 2 and 3 are new, this one will undoubtedly be mentioned time and time again in the news. US Airways still wants to buy Delta, and Delta doesn’t like it.

2) United and Continental - The word is out now that Continental and United have had preliminary talks. Oooh, shocker of shockers. Rumors have been swirling on this one for months, so now we just have confirmation. Has anything happened? Nope. They’re just talking right now. Will anything happen? Who knows. But they should be talking now. Everybody should be talking to everyone as far as I’m concerned.

3) AirTran and Midwest - This one sort of came as a surprise to me, but I don’t think we’re going to actually see it happen anyway. AirTran made a bid in October to buy Midwest Airlines outright, and last week, Midwest’s board rejected the offer. So today, AirTran came out with a public appeal saying they still want to do the deal. Midwest came out in that oh-so-friendly Wisconsin way and said, “We think you’re great, but no thanks.” You would think that pretty much ends it here. I’m told that Wisconsin law makes hostile takeovers pretty difficult if not impossible, so this seems to be dead in the water. (Let me know if you have any details on this.)

That means so far we have . . . absolutely nothing! Yes, Qantas was bought today, but that wasn’t by another airline. It’s just a change in ownership and not a consolidation now. So why is everyone talking about this?

Probably because people love speculating about airlines. CNN, for example, has brought out an article saying that mergers will lead to higher fares. Well duh. Airlines want to merge right now so they can help improve their health. Despite what some people will tell you, the industry is not healthy overall. Sure, we’re in a high point right now so everyone is happy, but it won’t always be this way. This is how people sounded in the late 90’s just before the bubble burst.

Well, fewer carriers would probably lead to higher fares, but that would also mean the airlines could hopefully avoid bankruptcy next time around and people would be able to keep their jobs and even their wage levels. I know it’s crazy talk, but it’s really the way it should be. People in this country have had access to fares that have been far too low over the past five years and only now are they at a respectable level. (Notice how that neatly ties with profitability.)