In The News
Frontier Airlines debacle exposes how the biggest suckers wear suits
By Dominique Paul Noth
Editor, Milwaukee Labor Press
Posted November 23, 2011
The MMAC -- Metropolitan Milwaukee Association of Commerce – in late 2009 swooned over a CEO come to rescue our town damsel in distress.
Bryan Bedford of Republic Airways Holdings announced he would turn a bankrupt West Coast company, Frontier Airlines, into the new Midwest Airlines - abandoning long-respected Midwest's name, to be sure, in favor of Frontier's more dubious one, but using Milwaukee as a hub, save 800 jobs here and add or transfer 800 more.
Like the toad who wants to be the handsome prince, the lobbying group disguised a business association was seduced by a romantic Ayn Rand streak, visions of sugar plum profits dancing in their Fruit of the Loom at the mere idea of a white knight prancing into view.
Only trouble? Few industry insiders could make that math work. The knowledgeable could find neither the requisite number of employees here to salvage and even fewer mechanics and others elsewhere in the Republic stables willing to move to this Great Place by a Great Lake for the reduced wages and benefits blandished. (I mean, airline workers are hungry, but they ain’t stupid.)
Bedford’s desire to stop feeding bigger airlines as a regional carrier and instead strut among the big boys as a newly diversified Colossus of the skies lacked funding or track record, outside the MMAC circles, which included departing Midwest Airlines execs who pushed the concept. After all, they could unload stuff, steal off with their wealth intact and let Republic take the blame for dumping the most experienced crews and quality models that made Midwest shine in national surveys. It all reminded realists of how the airline industry had always attracted charmers to seduce local communities and investors.
Never one to let facts or doubts get in the way of good media story, city, state and business leaders promoted the myth in fulsome press conferences. MMAC sought Bedford for its board, touted Republic Airways as a salvation, basked as he announced more routes, beamed at renaming the downtown convention center from Midwest to Frontier and dismissed as mere marketing chatter when Bedford publicly derided Milwaukee as a business destination for air travel.
The mayor, the old governor and the new governor of a different party and surprisingly conned officials of both parties all salivated over the Bedford Incident (forgetting that a movie of that name ended in nuclear holocaust).
Investigating the old Midwest and its veteran employees who were vanishing under these buyout strategies, talking to analysts who watch this volatile industry replete with mergers and deal-making, I was hardly alone in questioning the numbers and Republic's actual motives.
It still smelled of what the cynical originally said -- from the start this was a deal to provide golden parachutes to departing Midwest executives, a financial game to acquire more routes, equipment and cheaper personnel to create a favorable low-cost buyout in the future, a series of maneuvers to dump Milwaukee while pretending to love the place.
Bigger media seemed uninterested in what had happened or bought into the pretense. Bedford and Republic sure had a lock on the public relations machinery, with business journalists profiling his family and religious beliefs and CBS' "Undercover Boss" featuring him even as he laid off more workers and cut more routes. And hey, he did clean airline seats for the TV camera.
The rescued Frontier – actually the rebranded Frontier, using less experienced crews to imitate the original Midwest reputation -- chugged along. It was less exceptional but not all that bad as the airline industry survived on low-cost cut-corner survival tactics while the real value of the airline industry lurked beneath and only recently bounced into profits, mergers, and long-term value.
Frontier didn’t build for this future, but tread water with smaller planes, less skilled crews, soggy Internet service and poor imitation chocolate chip cookies. Its animal-laden TV commercials were just weird when not annoying, but they were cheap. The worker layoffs and route cuts quietly continued, but Milwaukee is an optimistic city. So maybe consumers and even some MMAC members kept hoping this was just another business gamble despite the evidence to the contrary.
Did you hear a big thud in November? Did the coin finally drop for the media?
Republic will unload Frontier by 2012 if it can find a buyer. It will remove Milwaukee as a co-hub with Denver, emanate 80% of its capacity from there, cut routes here in half and eliminate 333 Milwaukee jobs at mach speed - 213 in November and the rest in early January.
Rather than seek to preserve its shrinking lion's share at General Mitchell Airport, parent Republic concedes the growth to a variety of better heeled and better operated competitors and fleets, including AirTran now owned by Southwest Airlines.
Well-run Mitchell will endure the ups and downs of the industry. But few expect any buyers for Frontier, just asset sales, and none think its operations will be based in Milwaukee.
The end game sure seems typical of how easily the business community gets suckered and how it responds by blaming the prophetic pragmatists as unshaven socialists out to end (rather than regulate) the free market. It’s sad that workers and unions so eager to help businesses create jobs keep discovering the monied people they’re counting on are serially susceptible to the weakest ideological images in the lobbyists’ repertoire.
Local businesses embraced Bedford and Republic just as Wall Street companies, several now defunct, embraced default swaps and bundled bad mortgages, just as it was prominent investors most quickly sucked in by Bernie Madoff.
Somehow the public quickly forgets all this. It ignores this growing track record of financial stupidity. It sits silent while MMAC pretends its schemes on education and government finances are best, and that citizens should also buy its machinations to lift the city out of the very poverty and stagnant wages that its own attitudes helped create.
You can sell the Brooklyn Bridge to the best-dressed people.