Consolidation of Airline industry continues with Southwest bid for Frontier

Posted on 31. Jul, 2009 by in Featured

Consolidation of the airline industry continues as Southwest Airline (SWA) enters the fray with a bid for Frontier. SWA just doubled down on their aggressive move into the Denver market. If their bid for Frontier is accepted this will be a much tougher merger than their past acquisitions. The fleets don’t match, the crews cannot be dumped and then there is the question of Frontiers wholly owned subsidiary that operates a fleet of 74 seat Q400 turbo-props.

No doubt the Airbuses will be parked, the question is when. Reading both the Company and Union statements it is clear the timeline has not been settled. What also will have to be settled is the question of the Bombardier Q400 turbo-prop aircraft. The Q400 is the perfect aircraft for a very large percent of Southwest’s city pairs. On any route less than 400 nautical miles the block time (departure-arrival at gate) is virtually the same, with a very significant fuel savings. The recent tentative agreement (TA) for a contract was voted down by SWA pilots. Some sources mistakenly reported the pilots turned it down to help the company. Yea sure; the TA was turned down because of scope issues. Scope, in short is a contractual agreement on who flies an airline’s flights, including code share and Regional partners.

Many of SWA’s pilots were not happy with outsourced flights in Mexico and Canada, as well as a clause to allow Regional feed. A close read of the TA proposal’s contractual language made it clear that the Q400 was not restricted by scope. So now, an agreement must be reached on the Q400. I suspect SWA wants to operate these aircraft long term. Frontier has been one of the only operationally profitable airlines through a very tough period. I assume that was not lost on SWA’s management.

Mergers are about gaining passengers, not hardware or routes. Fleets and flights will go away and that will translate to lost jobs in the transitional period. Pilot Unions understand this; it is why the seniority fights are always ugly. SWA historically has side-stepped the problems by showing acquired pilots the door, or putting them on the bottom of the list, Morris air and ATA for example. However a new Federal Law will prevent that, so expect a fight.

SWA could head off all the blood sweat and tears with one move. Put the Q400 under the mainline contract, flown by SWAPA (union) pilots and announce a new aircraft order that at least covers the 53 Airbuses headed for the auction block. Seems simple, we shall see if they still have the people skills they are known for. It would go a long way toward winning back their pilots and ease the pain of a seniority list merger.

No Responses to “Consolidation of Airline industry continues with Southwest bid for Frontier”

Leave a Reply