Milwaukee - Northwest Airlines' decision to significantly expand services here is the latest example of airline decision making driven by corporate client feedback. The carrier, which already claims the number-two marketshare in the city and a sizable roster of corporate accounts, on July 1 will expand service to 22 daily departures by adding nonstop flights to Boston, Las Vegas, Los Angeles, New York LaGuardia, Orlando and Reagan Washington National.
Northwest's advance, together with new Milwaukee services planned by Frontier Airlines, further will pressure struggling hometown Midwest Airlines. Midwest in August will partition several markets from its network to create a new low-cost operation.
With Milwaukee revenue last year totaling $100 million—making it the carrier's second-most lucrative among non-hub cities—Northwest in the past year gauged corporate client, travel agency and frequent flyer interest.
"They conveyed their desire to have Northwest again offer nonstop service to the destinations they visit most," said Northwest vice president of marketing Jim Cron.
Area corporate travel managers now must decide between supporting their hometown carrier or shifting business to Northwest, a carrier with a much broader network and stronger survival prospects. Meanwhile, Illinois companies near the Wisconsin border, including many in Chicago's northern suburbs, may send travelers through Milwaukee, rather than Chicago O'Hare.
"Northwest in Milwaukee will not have as deep of an impact on northern Chicago as Chicago Midway Airport has had in southern Chicago, but it is the same type of impact," said John Smith, president of Chicago-area Tower Travel Management. "We have accounts up there that mandate Milwaukee be included in all fare searches."
Should Northwest convince some borderline travelers to migrate away from Chicago O'Hare, it would strengthen the carrier's regional presence.
Northwest's primary hubs in Detroit—which sports a new $1.2 billion international terminal—and Minneapolis already battle against Chicago and market leaders American and United for transcon and international connecting traffic.
There have been numerous examples over the years of corporate enticement translating into specific airline network choices. Financial commitments by local corporate communities, for example, brought JetBlue Airways to upstate New York and AirTran Airways to a handful of cities. American Eagle over the years also initiated services to certain markets on encouragement from local corporate clients.
There also have been a handful of examples on the international front. The most recent of which was in Portland Ore., where corporate interest drew Lufthansa German Airlines to that market
(BTN, Oct. 28, 2002). Ironically, besieged Midwest Airlines originally was spawned in Milwaukee by Kimberly-Clark Corp.
Northwest's push in Milwaukee, along with Frontier's three daily flights to Denver beginning Aug. 31, does not bode well for Midwest, which operates on all six of Northwest's new Milwaukee routes and to Frontier's Denver hub. Midwest's cash position had dwindled to just $23 million at the end of the first quarter and the airline, traditionally known for high-touch service, now is trying to recast part of its operation as a lower-cost carrier.
To that end, Midwest in August will split its brand into Signature Service focused on business destinations and Saver Service, a low-fare operation that ultimately will fly to Denver, Las Vegas, Los Angeles, Orlando and Phoenix. Saver Service will follow the low-fare carrier script, offering only a few one-way fare types, each free of Saturday night stay requirements, and available either through the carrier's Web site or Orbitz.
Despite the segmentation strategy, and previous cost-cutting initiatives that eliminated certain amenities, Midwest Airlines maintained that it will hang on to its traditional business traveler focus.