A BRIEFING FOR JUNE 25 TO JULY 9, 2009
By Joe Brancatelli
· The New Big Name in Small Airlines Is Republic
· Back in Milwaukee, Southwest Makes Its Move
· Lufthansa's Plans to Dominate Europe Advance
· In San Jose, American Flees, Alaska Air Moves In
· American Drops 18 More Flights From St. Louis
· US Airways Adds a Charlotte-Honolulu Nonstop
· The Inventor of Magic Fingers Bed Dies at 92
The New Big Name in Small Airlines Is Republic
Two troubled smaller carriers, Denver-based Frontier Airlines and Milwaukee-based Midwest Airlines (fka Midwest Express), were purchased this week. The rapid-fire moves were made by Republic Airways, the new big name in small airlines. If you don't know Republic, here's the 30-second backgrounder: It owns three regional carriers (Chautauqua, Republic and Shuttle America), flies commuter service for all five of the legacy carriers, recently purchased a controlling interest in Mokulele, the start-up inter-island carrier in Hawaii, and is funded by Wexford Capital, a powerful, under-the-radar investment group. Republic first moved on Frontier, announcing on Monday (June 22) that it had made a $108.75 million bid to purchase the bankrupt carrier, which has reported seven consecutive profitable months. Republic had already supplied the debtor-in-possession funding to Frontier. It announced the Midwest buy on Tuesday, agreeing to pay $31 million to purchase it from the investment group that once controlled both Continental and America West airlines. Although Republic's long-term plans are not known, the company's top executive, Bryan Bedford, says both Frontier and Midwest will continue to operate as separate airlines. One immediate switch, however, will come at Midwest. Midwest will shed its remaining Boeing 717 jets and become an all-regional-jet carrier. (See the Alternate Agenda section of the June 11 edition of Tactical Traveler for the background.) The move to regional-carrier status is a big emotional and physical comedown for Midwest, which once offered flights with all-leather 2x2 seating and lavish, restaurant-quality meals at coach-class prices.
Back in Milwaukee, Southwest Makes Its Move
The long-term issues that Republic Airways may face transforming Midwest Airlines into a regional operation probably pale in comparison to the immediate challenge: fending off the arrival of Southwest Airlines in Milwaukee. Just hours before Republic announced its Midwest buy on Tuesday (June 23), Southwest firmed up its previously announced intention to invade Midwest's hub. Southwest's Milwaukee service will begin on November 1 with three daily flights to both Baltimore/Washington and Kansas City; two daily flights to both Las Vegas and Orlando; and daily flights to both Phoenix and Tampa. Advance-purchase promotional one-way fares start as low as $35, a nod to the fact that Wisconsin is the 35th state on Southwest's route map. All of the destinations chosen by Southwest are already flown by Midwest or AirTran Airways, which has built up its Milwaukee flying since an abortive attempt two years ago to merge with Midwest. Although Republic did not address the Southwest move when it announced its Midwest purchase, chief executive Bryan Bedford promised to restore the breadth of Midwest's route network, which suffered a nearly fatal 40 percent cut last year when oil was selling for $140 a barrel.
Meanwhile, Lufthansa's Plans to Dominate Europe Advance
While U.S. frequent flyers were watching the news of the Frontier and Midwest purchases by Republic Airways, Lufthansa was quietly taking the next steps in an audacious plan to dominate the European continent. (Or, more accurately, the skies above the continent.) European regulators this week approved Lufthansa's bid to gain controlling interest in Brussels Airlines, the carrier created several years ago by the merger of Virgin Express and SN Brussels, which was formed after Belgian flag carrier Sabena folded in 2002. Almost simultaneously, Lufthansa reaffirmed its decision to buy virtually all of bmi (fka British Midland), the second-largest carrier at London's Heathrow Airport. Lufthansa already owns 30 percent of bmi, but was embroiled in a dispute with British Midland founder Sir Michael Bishop over the price of his stake. A Lufthansa subsidiary will now pay about $360 million for Bishop's 50 percent interest in bmi. (SAS owns the remaining 20 percent of bmi and wants to sell it.) Lufthansa has already agreed to purchase control of Austrian Airlines and several years ago it purchased Swiss International, which was founded after Swissair collapsed in 2001. If you're keeping score, that gives Lufthansa hubs in Frankfurt, Munich, London/Heathrow, Zurich, Vienna and Brussels. And it recently launched Lufthansa Italia, based at Malpensa Airport in Milan, Italy's financial and industrial capital.
In San Jose, American Flees and Alaska Air Moves Right In
World dribbled out last week that American Airlines would be dropping its "nerd bird" flights between San Jose and Austin. But that was just one of the flight cuts planned for August 25. Also going from American's rapidly decompressing San Jose hub is the commuter service to San Diego; and two of its seven daily flights to John Wayne/Orange County. Pulldowns don't happen in a vacuum, howevever, and Alaska Airlines is already moving to fill the gap. On September 2, it will launch a San Jose-Austin nonstop to complement the flights to Austin from its Seattle hub, which Alaska Air has scheduled for an August 3 start. The San Jose-Austin nonstop will actually start in Portland, Oregon, allowing for same-plane Portland-San Jose-Austin service. … Elsewhere at American, 18 more flights will be cut from the St. Louis hub. Going on August 25 will be commuter flights to Cedar Rapids, Charlotte, Philadelphia, Tulsa and Springfield, Missouri. On November 19, American will drop service to Las Vegas and San Diego and trim its schedule to several other cities. San Jose was a hub picked up in American's purchase of Reno Air; St. Louis was part of the TWA buy. … At New York/Kennedy, a branch of Bobby Van's steakhouse has opened at Terminal 8.
Business-Travel News You Need to Know
You rarely get good news out of US Airways, but this certainly qualifies. On December 17, US Airways will launch a daily nonstop flight to Honolulu from its Charlotte hub. … John Houghtaling died this week at 92. He invented the Magic Fingers vibrating beds that were staples of the motel industry in the 1960s and early 1970s. … Southwest Airlines is testing in-flight WiFi Internet on four aircraft and has now introduced a series of test prices, too. Access will range from $2 to $12, depending on flight length and whether you tap into the WiFi with a laptop or a mobile phone. … Utah is relaxing its liquor laws. Effective on July 1, you'll no longer be required to join a sham private club to order a drink. … After racing around the Paris Air Show earlier this month promising the two-years-delayed first flight of Boeing 787 Dreamliner would happen "on schedule" by the end of June, Boeing has delayed it again. Best estimate is now November or December, which is cutting it close, since Boeing has promised the first deliveries of the aircraft next May. The Boeing 777 flew in test phase for a year before the first aircraft was delivered. Boeing blamed the latest 787 delay on problems with the composite materials being used to connect the wings to the fuselage.
ABOUT JOE BRANCATELLI Joe Brancatelli is a publication consultant, which means that he helps media companies start, fix and reposition newspapers, magazines and Web sites. He's also the former executive editor of Frequent Flyer and has been a consultant to or columnist for more business-travel and leisure-travel publishing operations than he can remember. He started his career as a business journalist and created JoeSentMe in the dark days after 9/11 while he was stranded in a hotel room in San Francisco. He lives on the Hudson River in the tourist town of Cold Spring.
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This column is Copyright © 2009 by Joe Brancatelli. JoeSentMe.com is Copyright © 2009 by Joe Brancatelli. All rights reserved.