Last week, Republic Airways Holdings—which owns Chautauqua Airlines, Republic Airlines, and Shuttle America, and leases planes to major carriers like United and Delta—purchased not one but two airlines.
Assuming no higher bids materialize—and they're not expected to—Republic will become the new owner of Denver-based Frontier, which is in bankruptcy, for $109 million. And for just $31 million, Republic will acquire Milwaukee-based Midwest. (To put that price into context, AirTran had tried to acquire Midwest in a hostile takeover. The final offer, rejected in August 2007, was around $445 million.)
Republic's plan is to have both carriers continue operating separately, retaining their names, identities, and basic operating plans.
What will change is the relationship between Frontier and Midwest, which until now have had no marketing ties of any significance. Once both carriers fall under Republic's ownership, they will codeshare and link frequent flyer programs.
According to Frontier's news release, the codeshare agreement "will allow Frontier Airlines to sell tickets under a Frontier code and expand their networks to additional destinations currently served by Midwest. Frontier customers will now be able to reach more cities by connecting on Midwest through its Milwaukee hub. Midwest customers will also see an expanded network by connecting on Frontier and Lynx Aviation flights in Denver."
The frequent flyer program tie-up will be along industry-standard lines. As described in the news release: "Both airlines' customers will also be able to participate in each other's respective frequent flyer programs—Frontier's EarlyReturns program and Midwest's Midwest Miles program, to earn miles and redeem them for free tickets."
As is normally the case in such arrangements, the smaller airline benefits more than the larger partner. That's simply because Frontier has more routes and flights than Midwest, so adding them to Midwest's program has a greater impact on mileage earning and rewards opportunities than adding Midwest's smaller network to Frontier's program.
The news release is vague on start dates, but the Milwaukee Wisconsin Journal Sentinel reports that codesharing will begin on August 30, and that the frequent flyer links will be in place by the end of September.
While Frontier had been making progress in returning to financial health, Midwest has been teetering on the edge of bankruptcy. With increased competition from AirTran, and Southwest set to launch flights to its Milwaukee hub this fall, Midwest's future was in serious doubt. So Republic's intervention is a definite positive for Midwest customers.
The days of Midwest's cushy seats and baked-onboard chocolate chip cookies may be coming to an end, but the airline has gained something better: a new lease on life.