Midwest Airlines is still fending off a
hostile takeover bid by AirTran, which has taken its offer directly
to Midwest shareholders. Travel Weekly Aviation Editor Andrew
Compart talked to Scott Dickson, Midwest's chief marketing officer,
about the bid and Midwest's business strategy.
Q:
Midwest has been complaining about AirTran "misrepresentations."
What's the most egregious example?
A:
The public needs to understand that there could be a loss of a lot
of Milwaukee routes to medium- and small-size communities that our
fleet is able to serve effectively and viably. You must have the
right type of fleet to effectively serve these markets. We do. They
don't.
Q:
AirTran said the merged carrier would increase service in
Milwaukee. Is it lying?
A:
I think they believe what they say, but I don't think they realize
the reality. They don't fully understand the dynamics of the market
here.
Q:
AirTran argues that Midwest relies too much on its top 20 and top
five markets, which provide about 58% and 25% of Midwest's revenue,
respectively. Are those figures accurate?
A:
They're probably correct, but that's true for every airline.
AirTran is massively concentrated in Atlanta and equally exposed in
Florida. I'd rather be in my position. They're heavily exposed to
Southwest, JetBlue and Delta.
Q:
AirTran argues that the success of your standalone plan depends too
much on favorable fuel costs and a benign competitive environment.
What's wrong with that argument?
A:
For one thing, we've locked in our fuel costs for the rest of the
year. We've hedged more than 90% of fuel at very favorable levels.
We're also not naive about the competitive environment. But it's a
bit of the pot calling the kettle black. AirTran is even more
exposed to competition than we are.
Q:
Until recently, Midwest wasn't making money. Why should people
believe that has changed for the long term?
A:
We've repriced the airline so that we can price at competitive
levels, so people know our product more. We've also reduced our
cost per available seat mile 32% over five years.
Q:
What happens if more than 50% of Midwest shareholders want to take
AirTran up on its offer?
A:
We're not overly concerned with that. If a majority accept, it just
means a lot of hedge funds decided they would like to tender shares
on one day and they quite likely will withdraw them the next. It's
really not a binding thing; it's like a straw poll.
Q:
Would you ignore it?
A:
We'll cross that bridge when we have to.
Q:
Midwest built its brand as a high-service airline with its
Signature Service. You have since added Super Saver, a more
economical product. Now you're adding regional jet service. Aren't
you diluting your brand?
A:
Not at all. About 80% of our mainline departures are still on
Signature Service. We're using the regional jets to help us
right-size the airline, but our customers still will have access to
the same product. It's also not just all about seats; it's really
how well our people take care of the customer.
Q:
Have Midwest's baked-onboard chocolate chip cookies been overdone
as a symbol?
A:
I've been here about two years and when I started, the CEO said I
could change anything I wanted to -- I just couldn't touch the
cookie. That's fine, because it has this wonderful cachet. It's a
symbol that represents the warmth, the caring, the feeling of home
that we want our customers to have when they're onboard. It really
achieves that goal.
To
contact reporter Andrew Compart, send e-mail to [email protected].