AirTran believes SkyWest deal bolsters competition against Midwest

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AirTran Airways believes its new marketing partnership with SkyWest Airlines allows the carrier to build up its Milwaukee focus city in way that allows for effective competition against Midwest Airlines.

The two carriers detailed a partnership on 4 November that entails SkyWest operating five branded 50-seat CRJ200s under a pro-rate revenue sharing deal with AirTran. SkyWest plans to start service next month and continue adding the aircraft through February of 2010.

Most of the destinations SkyWest is operating are small markets that are not viable for AirTran's larger Boeing 717/737 aircraft. But Midwest serves most of those markets with smaller jets. Milwaukee-based Midwest was purchased by Republic Airways Holdings earlier this year.

In an update to employees AirTran SVP marketing and planning Kevin Healy says: "At this point our Milwaukee focus city isn't big enough to support the level of frequency in some markets that is necessary to compete effectively with Republic Airlines/Midwest."

In an interview today with ATI SkyWest's President Chip Childs says the agreement allows AirTran to right size frequency and demand in some markets, which is what the regional jet has done for the last decade. The deal allows AirTran to expand frequency from Milwaukee to Indianapolis, St. Louis and Pittsburgh, while allowing AirTran to establish a presence in the smaller markets of Des Moines, Omaha and Akron-Canton.

Republic through the rebuilding of the Midwest network, and AirTran's bolstering of Milwaukee as a focus city, is resulting in a significant cpacity expansion in the Milwaukee market.

But SkyWest is not concerned about the potential of the market to absorb that capacity, and is confident of its longevity in Milwaukee. Childs explains when SkyWest did its modelling for the pro-rate deal the carrier took the capacity increases into account. "Considering who we are partnering with," says Childs, SkyWest feels like it has established a good long-term strategy in Milwaukee.

Healy explains the new partnership also allows AirTran to "free up our aircraft for new AirTran service from Milwaukee as well as other routes in our network. Some of which we've already announced, some will be announced in the coming weeks".

Under the new deal SkyWest is responsible for all seat inventory on the CRJ200s and revenue and pricing for routes covered in the AirTran agreement. Childs says unlike some existing pro-rate deals SkyWest has with US major airlines, with these routes SkyWest will be more closely aligned with marketing at the local level.

Healy reiterates to AirTran's employees that the agreement is a "marketing partnership with each company flying under its own livery and inflight product".