Midway reopens for business, but without its regional jets

 - May 29, 2008, 8:08 AM

Some $10.1 million in direct government aid allowed Midway Airlines to reopen for business December 19, but its days as a regional/national hybrid operating Bombardier CRJs alongside its mainline jets appear to be over. Morrisville, N.C.-based Midway began flying five Boeing 737-700s to six East Coast cities last month from Raleigh-Durham International Airport, including Boston, New York La Guardia, Newark, N.J., and Orlando, Tampa and Fort Lauderdale, Fla. It has returned all of its remaining fleet of 11 leased CRJs to their owners, and decided to abandon all regional jet flying after concluding that the airplanes’ unit cost would hinder its recovery. Under the new plan, Midway estimates it will cut its unit costs by 30 percent.

Midway CEO Robert Ferguson told AIN that he planned to hire roughly 250 employees for the December 19 startup, then another 50 some time thereafter. He also said he planned to add one more 737 to the fleet by the end of last year, and increase daily departures from 18 to perhaps 26 by March. Midway has renegotiated its contract with the Air Line Pilots Association, which agreed to pay and work-rule concessions with the expectation that many of the revisions would revert to the terms of the original agreement no later than October 1.  

Ferguson declined to offer any projections for 2003, but Midway’s rather conservative plan for this year leaves former code-share partner Corporate Airlines with little hope of reestablishing ties any time soon. The Nashville-based Jetstream 32 operator provided connections to seven destinations for Midway until September 12. It now flies out of St. Louis as American Connection to 10 destinations and from Nashville to St. Louis and Atlanta under its own brand identity.

Nearly a month before completely ceasing operations on September 12, Midway declared Chapter 11 bankruptcy, shed 13 of its 24 Bombardier CRJs and all four of its Fokker 100s, laid off 700 employees and discontinued service to nine destinations. The decision followed a second quarter that saw business travel decline 75 percent in Midway’s markets and a refusal by lenders to continue financing new 737-700s after the airline defaulted on earlier loans. In a statement Midway blamed its bankruptcy on the “calamitous” drop in business traffic, particularly in the technology-rich Raleigh-Durham area, generally lower fare levels and high jet-A prices. It also cited its rapid expansion and consequent dependence on increases in demand.  

While lower fuel costs and improved “efficiencies” related to payroll, airplane leases and other areas will undoubtedly help its cause during this attempt at a recovery, the airline still faces some glaring competitive disadvantages, most notably the loss of its six-year-old frequent-flier partnership with American Airlines and downward yield pressure from the likes of Southwest Airlines.

Southwest, which began flying from Raleigh-Durham in June 1999, now flies direct to 10 cities from North Carolina’s second-largest population center, and offers connecting flights to roughly 40. Under Midway’s new schedule, it will compete directly with Southwest in Tampa and Orlando. Meanwhile, American Eagle flies more than 25 Embraer regional jets from American Airlines’ former hub, most recently increasing service to another of Midway’s destinations, New York La Guardia, to eight round trips a day.