Delta & Midwest Link Frequent Flyer Programs, Pose Risk to AirTran?
Delta announced yesterday a new partnership with Midwest Airlines that will permit frequent flyers to earn or redeem miles through Delta SkyMiles, Midwest Miles and Northwest WorldPerks, due to the acquisition of NWA by Delta last October.
The partnership will benefit Midwest frequent flyers by giving them access to the largest flight network in the world. It will also expand the existing Midwest-Northwest airport club membership agreement to include Delta Sky Clubs.
It will be interesting to see what kind of competitive advantage this will give Midwest over AirTran, the other regional carrier that has been biting at Midwest’s heels since their hostile takeover bid in 2006. AirTran aggressively fought for ownership of Midwest’s Milwukee hub, increasing their bid several times from $78 million to $445 million - only to be rejected each time. Midwest ultimately managed to fend them off by selling to TPG Capital, a private equity fund, for $450 million in August 2007.
It’s been a rocky ride for Midwest since the sale, judging from announcements in September that it would shed most of it’s fleet and cut routes. AirTran has scrambled to fill the void by announcing the expansion of flights into Milwaukee by 40% and new service to Denver, Minneapolis, St. Louis and Branson, Mo. AirTran predicts their entrance will result in a fare drop by as much as 60% on some of the new routes. This will only add to the pain Midwest is already feeling.
However, this new partnership with Delta helps Midwest’s value propostion and may help them rebuild the small airline and secure Milwaukee once and for all. A Midwest spokesperson explained that Delta had a choice as to whether or not they wanted to partner with Midwest. “What makes this unique is that as Delta was acquiring Northwest they had to make new, separate decisions as to whether they wanted to be a partner with Midwest.” He says the carrier’s Milwaukee hub was part of the attraction. “We have a larger customer base here, so, in a way they are expressing optimism about the future success of the airline.”
Perhaps, but not if AirTran has anything to do with it!
