CynicalResAgent
Veteran
Any comments?
Airtran to Add MKE to LAS
- Thread starter CynicalResAgent
- Start date
citrus jock
Advanced
Looks like we've moved to "Phase 2": each rejected offer brings one new non-stop route out of MKE. I'm not sure about the legal ramifications, but if stockholders sense a battle, and Midwest's (or AirTran's) share price falls, can the offer price be legally lowered? If so, and the "snowball" starts rolling downhill, more added routes could cut the current offer substantially. You gotta admit it's a nice "cover job" ("We're not going after Midwest") by tossing in MLI and BMI.
CynicalResAgent
Veteran
personally I'd rather see you guys build a hub here in St Louis. STL to LAS, I think, would be directly competing with WN though. Atleast I was glad when you guys added STL service to ATL.
QA4Jet-A
Veteran
IMO, if there is an underserved market, we will go if profitable.... Hopefully.
citrus jock
Advanced
I don't think there are any "underserved" markets. There are plenty of "overpriced" markets. But when a LCC goes in, ticket prices fall. The question isn't "How many people can we carry out of ____ city?", but "How much money can we make per passenger?". Load factor looks good on paper; yield pays the bills. When we go into someone else's hub, we usually do it with a couple of flts. per day, so as not to arouse suspicion. With AA and DL already flying STL-ATL, and AA and SW flying to other cities from STL, I don't see us going in there any time soon. I think we're going to continue to go after city pairs that are served by only one carrier.
Kev3188
Veteran
I completely agree; which is why I question this route as solely a "business" decision.
The LAS market is a lot of things....High Yield isn't one of them.
citrus jock
Advanced
Our leaders have apparently decided that having MKE as a hub is good for our business. That decision is based on us being the "main player" there, thus the offer of a buyout. With us and Midwest there, we'd be lucky to break even, and that's not why we're in business. Having had multiple offers rebuffed, I think we're changing our approach in order to achieve the same goal. Flying MKE-LAS, in itself, isn't a huge cash cow. However, if doing so (or the addition of more routes, even low-yield ones) pressures Midwest to accept the offer, if it causes the offer to justifiably be lowered and then accepted, or if it leads to other flying that is high-yield and AirTran having a hub in MKE, then the fact that LAS is a low-yield market becomes irrelevant. A case of the ends justifying the means, or one initial, low-yield market being the catalyst for a money-making hub.
As I've stated before, I'm against a buyout/merger. The crap that comes with it (merging seniority lists, years of animosity) is difficult for passengers and employees. But this is most definitly a business decision - the business of positioning ourselves to continue to grow profitably.
This is why DL rebuffed US and a UA / CO merger never came about. The managers at US and UA don't see the big picture. Obviously, they got it at CO and DL. Grow internally, create job, people move up, employees are happy......which make the pax's happy.....which drives the bottom line. if US can't get it together with the US / AW merger they have no business trying to add another carrier to their portfolio. This one had the ghost of FL on it.
Airtran is better off growing on their own, rather than taking on all the heart ache of a merger. They'll do alot better in the long run.
