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:
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.
