Something’s Gotta Give

Friday, August 10, 2007

Now that I have recovered from my family vacation, I can get to a short blurb I saw in the local paper while out of town. It was an Associated Press wire service news item on Airtran’s possible buyout of Midwest Airlines. It’s short enough that I include here the entire piece:

Exec: Keep Midwest culture, not name

The top executive of AirTran Holdings, Inc. said Wednesday the company would try to keep Midwest Airline’s culture – but not is name – after a proposed buyout. AirTran Chairman and Chief Executive Joe Leonard spoke to journalists in Milwaukee a day after Midwest Air Group Inc. announced a committee of its board would start talks with AirTran and other suitors. Airlines that try to straddle two brands after a merger inevitably weaken both brands and leave consumers confused, Leonard said.

From what I know about Midwest and AirTran (having never flown either airline), AirTran’s business model is low-fare while Midwest’s is high service. Here’s how they describe themselves on their respective websites:

Midwest Airlines:

The minute you walk onto one of our aircraft, you know Midwest is different. Wide leather seats, superior service, chocolate chip cookies baked onboard and competitive fares have helped us earn our reputation as "The best care in the air". Add our Midwest Connect regional service and there's something for both business and leisure travelers alike.

AirTran Airways:

AirTran Airways is a low-fare airline designed for business travelers, offering Business class, new planes with XM Satellite Radio and EasyFit Overhead Bins, assigned seats, and our accommodating frequent flier program A+ Rewards. AirTran Airways' mix of low fares and an affordable Business Class with excellent customer service and one of the world's youngest all-Boeing fleets has continued to strike a chord with the public. People said an airline couldn't be all these things. AirTran Airways’ continued success has proven them wrong.

From a business standpoint it makes a lot of sense for AirTran and Midwest to combine. They share similar aircraft and very little of their routes overlap. But how do their business models compare and cultures, given that Mr. Leonard seems to put somewhat of a premium on Midwest’s culture.

Here’s a concrete example of the similarities and differences between the two airlines. Both extensively use Boeing 717’s in their fleets. Midwest’s seat configuration is four across, all coach class, for a total of 88 seats on board. AirTran’s configuration is five across, except in business class which is four across; twelve business class seats, 105 coach class seats for a total of 117 seats on board. This is 30% more capacity than Midwest for the exact same airplane.

So I’m trying to understand Mr. Leonard’s comment that AirTran would try to keep Midwest’s culture after the buyout. Does he mean its definition of customer service? Because if he is referring to a culture of service, that would come with a price tag. Midwest serves freshly baked cookie while you sit in wide leather seats with only one neighbor next to you. This level of service doesn’t come cheap. But I suspect Mr. Leonard wants to keep the friendly, personal service offered by Midwest flight attendants without the added cost of freshly baked cookies and 30% fewer seats on board.

He was quoted in the Milwaukee Journal Sentinel as stating that AirTran would replace most of Midwest’s wide, two-by-two seats with narrower seats, boosting the amount of revenue generated by each flight. I would assume the cozy quarters would be in steerage, I mean coach class, and not business class. Sound business plan but lousy service or culture-booster. I can’t see how Mr. Leonard can keep the Midwest service culture by making it fit into a low-cost, medium service AirTran business model. Something's gotta give. Southwest has done it but they have a very particular definition of service and even they are re-thinking what they offer to stay competitive, such as assigned seating.

So be clear about what you mean by culture, Mr. Leonard, because it may just involve putting on an apron and doing some baking.