Save Frontier Airlines

Republic Airways Holdings today announced that it has been declared the winning bidder in the auction to acquire Frontier. The auction was conducted under procedures established in Frontier's Chapter 11 bankruptcy case.

In a speech to a Federal Aviation Administration conference in April, Bill Swelbar with the Airline Data Project at the Massachusetts Institute of Technology found that after stripping out factors such as fuel hedging, Southwest's costs are higher than some of what he calls the midscale carriers such as JetBlue, AirTran and Frontier.

While its cost advantage over the old-line carriers has narrowed, Southwest hasn't been able to use efficiency as a weapon to fend off upstart challengers.

In other words, it's buying Frontier to cut its losses. It can't afford to let Republic or anyone else keep operating Frontier in the Denver market.

The Southwest Effect, the notion that the carrier's low fares encourage additional traffic in markets it enters, hasn't worked in Denver. In fact, if it buys Frontier, fares there could increase.

Once upstart Southwest settles into the status quo [Houston Chronicle]

Two very different visions for the future of Frontier Airlines.

On one hand:

Frontier Employees would be hired into Southwest as needed to support our fleet growth and expanded operations. — Southwest Q&A

And on the other:

"We're looking to strengthen them (Frontier Airlines), in any type of transaction we would be successful in, but like I said, not to reinvent the wheel... They've been doing a good job with their branding, and passengers have obviously responded and recognized that." — Republic Airways Spokesperson Carlo Bertolini

It's clear that the best option for Denver air passengers, Frontier employees and the Colorado economy is Republic.

"our analysis suggests that Southwest is losing a significant amount of money in Denver while Frontier has been profitable year to date. Frontier has made substantial cost progress during its bankruptcy proceedings and currently enjoys a significant revenue advantage to Southwest in Denver markets."

A second take: Is Southwest's Frontier bid 'a sign of failure' in Denver? [USA Today]

Southwest Airlines (LUV), which for 30 years led the charge to change the airline industry, is now playing defense. With its bid to buy the bankrupt Frontier, Southwest is fighting to preserve the status quo, rather than fighting to change it.

The Frontier offer has a lot of people scratching their heads. Southwest has done three mergers or merger-like deals in the past, and none have gone terribly well...

Southwest Airlines Plays Defense with Frontier Bid [Seeking Alpha]

Here's a great article on Southwest's failure to capture Denver's market like they've done in other cities. Denver passengers deserve to have choices.

Southwest's bid to buy out bankrupt Frontier in Denver may be viewed as a sign of its failure in the market.

By nearly every measure, Southwest has underperformed in Denver. Among the big three Denver airlines, which also include hub carrier United, Southwest has been last in load factor, last in average fares and last in available seat mile, in every month, without exception, since it re-entered the market in 2006 after a 20-year absence.

"Southwest is losing money in Denver," says Denver-based aviation consultant Mike Boyd. "Last summer, they put out more red than Sherwin Williams."

Southwest: If You Can't Beat 'Em, Buy 'Em [TheStreet.com]

Local news reports from the rally:

• Supporters for Frontier gather downtown for rally, march [Denver Post]
• Frontier Employees Rally To Keep Carrier In Denver, Southwest Would Fold Frontier Into Dallas-Based Carrier [ABC 7]
• Push To Save Frontier Airlines [CBS 4]
• Frontier Airlines supporters to rally in efforts keep brand alive [Examiner.com]

I've seen various comments and news articles that say Frontier employees should fear a Republic takeover because of what Republic has done to Midwest pilots and flight attendants. There's no comparison for this reason:

Midwest was a shell of an airline before Republic bought it. In fact, Midwest's executives outsourced a majority of its routes to Republic before the purchase. There were very few employees left at Midwest.

Frontier may be in bankruptcy, but they've been turning a profit lately and have a much larger and stronger brand than Midwest and a large workforce needed to expand (Republic's ultimate goal). Furthermore, Republic already has a sizable investment in Frontier.

Just compare the route and fleet size of Frontier and Midwest and you'll see there's no comparison.

This comment left on a Dallas News blog post gives a good history of Southwest's previous acquisitions:

Frontier's employee group is doing the right thing with regard to Southwest.

At first glance, one might think the Southwest bid is a white knight savior for F9. But you must take a look at what Southwest is planning with Frontier. You must look at Southwest's history, their current leadership, and why they are attempting this bid in the first place. Look at history.

In the early 1980's, Southwest purchased an ailing Muse Air which was their only real competitor at Love Field at the time. Muse operated MD-80s and not 737s. Muse pilots were offered a "staple" to the bottom of the seniority list and when they refused, Southwest shuttered the airline, took the assets it needed, and eliminated their prime competitor in the DAL market. If you were a Muse employee, you were on the street.

In the early 1990's, Southwest purchased Morris Air. Why? Because the United Shuttle was suddenly aiming square at LUV, and LUV had to get big fast on the west coast if they had any hope of winning the battle for California. With Morris, LUV needed the capacity, and they needed it quickly. Morris flew only 737s and their non-unionized pilots had no choice but to accept the stapled seniority offer. Absorbing Morris made a lot of sense at the time and the west coast was eventually won.

But now we have Frontier. Why is LUV making a bid for F9? They certainly don't need the capacity at this point (they're deferring 737s and losing money). Frontier doesn't fly any 737s so that's a mess operationally. And the labor laws have recently changed such that a seniority staple is no longer legal, so labor integration would be a can of worms. So does it make any sense to absorb F9 or F9's employees into the Southwest operation as it did for LUV to absorb Morris years ago? Absolutely not, no way, no how!!

Finally, look towards ATA and you'll see the reality ahead for F9 if the bid is accepted. ATA was bought out of bankruptcy by Southwest a few years ago by Southwest's new management team. This is the same team running the airline today.

At the time Southwest claimed their equity interest in ATA was tied only to acquiring the ATA gates at MDW. But soon it became clear that Southwest wanted more. They installed an ex-Southwest executive as ATA's new CEO. Assets, including more gates at MDW were slowly transferred to Southwest, and a lucrative codeshare agreement was signed to the benefit of LUV. Slowly the ATA fleet and remaining assets were sold down and their remaining aircraft were all moved out of MDW, and into Southwest's hubs at places like Houston, Vegas, Phoenix, Oakland, and L.A. to fly Southwest's codeshare passengers. That was it. When the shell of what was once ATA was finally unable to make a go of it flying exclusively for Southwest, the ex-Southwest exec installed to run ATA liquidated the airline and sold the only remaining assets of value (the slots at LGA) to Southwest on the cheap.

In the end, only a handful of ATA employees were ever hired by Southwest. If I were an F9 employee I'd rightfully be scared to death of the Southwest bid. LUV is four letter word in this case. They are not your white night. Your airline and your careers are without a doubt destined for termination if the Southwest bid is accepted.

There's a chance I won't be able to make it to the rally due to work commitments. If you attend, please send reports, pictures, videos to aaron@savefrontier.org or @savefrontier on Twitter. I'll post everything I can.