My friend curbcrusher from FlyerTalk sent me this article from the Indiana Business Journal this past weekend, and while the article has a few errors (i.e. saying that Republic is still flying for Frontier), it brings up an interesting, point, especially:
Republic’s foray into owning major carriers reminds Sorensen [an ex-Midwest executive, now consultant quoted often in the original article] of the unsuccessful attempt by regional carrier Atlantic Coast Airlines to enter the mainline business.
For those of you who don’t remember, ACA flew CRJs for United. ACA didn’t like the deal that United offered them, so they decided to go out on their own and re-brand themselves as Independence Air, with a hub out of Dulles. The airline ended up shutting down in 2006. Is Republic’s situation all that similar? I’m going to say “no.”
Most importantly, ACA was only flying for United, while Republic flies for many carriers, so they will continue to earn revenue from their regional flights. Right now, it appears that Frontier and Midwest will continue operating as separate brands, at least in the short term. (Who knows what Republic’s long-term plan is?) But, assuming Republic uses these purchases to go its own way, it’s still different than Indepdence, and two major differences come to mind.
First, the article seems to suggest that one factor in Independence’s failure is that it was new to the mainline business, but this isn’t the case with Republic’s acquisitions with Frontier and Midwest (assuming that everything goes swimmingly with those purchases, specifically in bankruptcy court in Frontier’s case), Republic is acquiring mainline carriers with experience, not going out on their own with no prior knowledge to work with.
Second, another issue with ACA/Independence was its fleet mix. Initially, the airline was stuck with CRJ-200s, which aren’t exactly the most economical aircraft. Pair that with a fare war with United out of Dulles and you get a pretty bad mix. Meanwhile, Republic just acquired a bunch of Airbus aircraft from Frontier. Independence started using A319s, and from what I remember, those routes were doing pretty well, but it was too late to save the airline once they got going.
So, that’s why I think Republic’s situation is very different.
It is incredible to me how many times I see people compare things to the Independence model when, in fact, nobody has been that stupid. First, there were all the jokers who thought the ExpressJet model was similar to that of Independence. (It wasn’t.) Now, we see them mistakenly saying the same thing about Republic.
You do a good job of laying out many of the reasons why things are different, but there’s one more piece. You talk about how the CRJ was a bad plane for Independence. It certainly was, but the even bigger problem was that they had too many of them. The multiple trips a day to Lansing (for example) should be a clue that they had absolutely no idea what to do with all those planes.
Never has an airline squandered its worth as quickly as Independence did, and for that, the management team belongs in the Hall of Shame. While I have yet to figure out exactly what Republic is thinking, this is definitely not the same type of thing.
I’m with you guys, this isn’t the same thing at all even at a high level. It’ll be interesting to see how things pan out. If we’re at a low point of demand right now they could be very well positioned for a recovery. Frontier’s done a nice job of battling to recover while fighting with both UAL and SWA in Denver. That experience could be handy for Midwest at MKE.