‘The Best Care’ Back in the Air? Midwest Express Faces Significant Headwinds

The attempt to reboot Milwaukee favorite Midwest Express faces some significant headwinds

A pair of wide leather seats from a Midwest Airlines jet, a nostalgic remnant of a bygone era in local air travel, adorn the Downtown office of Metropolitan Milwaukee Association of Commerce President Tim Sheehy.

Those cushy seats, arranged two-by-two on each side of the aisle of Midwest’s aircraft, were among the amenities upon which the Oak Creek airline built its reputation. Other parts of “The Best Care in the Air” were gourmet meals served on fancy dishes, wine, champagne and, perhaps most memorably, chocolate chip cookies baked on board so their intoxicating aroma wafted through the passenger cabins.

“Those are definitely things of the past,” Sheehy asserts. “That kind of service, I don’t think anybody views as economically viable in today’s airline business.”

[alert type=white ]Editor’s note: In late August, after this story had gone to press, Midwest Airlines announced it would be adding service from Milwaukee to three Midwestern cities by the end of the year – and that it would be bringing back its signature chocolate chip cookies.[/alert]

Marketed as Milwaukee’s hometown airline, Midwest flew high, enjoying a market share of more than 50 percent at Mitchell International Airport in mid-2008. Economic turbulence and massive industry changes led to its demise shortly afterward.

The airline, which operated as Midwest Express for part of its existence, would fight off a hostile takeover attempt by AirTran Airways in 2007, but just three years later the treasured Midwest brand would all but disappear after being absorbed by Denver-based Frontier Airlines as part of a merger orchestrated by the airlines’ corporate parent, Republic Airways Holdings. Less than two years later, the deal turned out to be a lemon, with Frontier going from being one of Mitchell’s dominant carriers to having only a tiny presence in the market.

But for the last two-plus years, a group has been working, against considerable odds, to return the once-beloved Midwest to the air, with a focus on offering flights on underserved business routes.

In August 2018, Midwest Express Airlines Inc. registered with the state of Wisconsin and stepped up fundraising, with a goal of $6 million to $8 million from local investors before the end of summer. In another sign of progress, in April Midwest leased 1,500 square feet for the airline’s corporate headquarters in the MKE Regional Business Park near the airport. “Establishing our office is a significant, formidable step toward fulfilling our commitment to returning Midwest Express Airlines to the sky,” president Greg Aretakis proclaimed at the time.

Aretakis previously served as vice president of planning and revenue management for Midwest, working under CEO Tim Hoeksema, a pilot who led the transformation of Midwest Express into a commercial airline in 1984.

The new Midwest Express has kept details of its operating plan and fleet needs under wraps. A message on its website, where commemorative apparel and drinkware can be purchased, states that its aim is to provide “common sense pricing without those annoying fees, flights that allow you to get a full day’s worth of business in and still get you home in time, and amazing customer service that brings a smile to your face.”

The effort is receiving strong support and encouragement from investors, local businesses, former Midwest Express employees and travelers throughout the region, spokeswoman Holly Haseley says.

“There is room in the industry for different types of carriers,” Haseley explains. “Our product distinction will include many of the elements that made Midwest Express a beloved brand, meeting travelers’ needs and doing so with exceptional customer service.”

Haseley wouldn’t indicate how close Midwest is in its goal of raising as much as $8 million but says talks with potential new investors are ongoing: “There is strong interest locally and from afar.”

A potential first flight remains off the radar. “We have several steps still in front of us,” she adds.

Airport officials have met with Midwest Express leaders about their plans, but to this point the only formal request from Midwest has been for space in the business park, airport spokesman Harold Mester says.

“It will take more than a cookie and fond memories of a favored local brand to shift demand.”

— Kevin Healy, Campbell-Hill Aviation Group

Mitchell, which currently offers nonstop service to more than 40 North American cities, has ample space to accommodate Midwest Express, he says: “We are ready to work with Midwest Express when they are ready to move forward.”

There are several short-haul markets that don’t generate enough demand to fill the bigger planes flown by larger carriers, according to Mester. “These routes could be profitable on smaller aircraft carrying business travelers who need to access these markets and want to return home the same day,” he says.

Starting a new airline, however, is fraught with challenges.

The industry is intensely competitive, requires significant investment, is labor intensive and generates relatively low margins, warns Kevin Healy, president and CEO of Campbell-Hill Aviation Group, a consulting firm in Alexandria, Virginia.

Since the industry was deregulated in 1978, there have been scores of airline bankruptcy filings, with some carriers filing multiple times. The only existing major airline that hasn’t filed for Chapter 11 bankruptcy protection at least once is Southwest Airlines, the current market leader at Mitchell.

Changing times in air travel

Dallas-based Southwest Airlines, which entered the Milwaukee market in 2009, is the current market share leader at Milwaukee Mitchell International Airport. Twelve years earlier, Midwest Airlines’ parent company was the dominant market leader. Midwest was a target of a hostile takeover attempt in 2007 and was swallowed up by Frontier Airlines in 2010.

Source: Mitchell International Airport

Successful new airlines must be well capitalized and focus on an unserved niche, says Healy, who served as a senior vice president at AirTran during its attempt to take over Midwest. 

Failed startup OneJet highlights the challenges. In March 2015, OneJet launched service between Mitchell and Indianapolis. The airline, which used Milwaukee and Pittsburgh as bases, flew small business jets with as few as seven-passenger seats through a contract operator, and it focused on nonstop routes to midsize markets that had been cut by major airlines during a decadelong wave of airline mergers. OneJet ceased operations in August 2018, and investors, including Hoeksema, sued in December, alleging they were misled.

The markets OneJet served from Mitchell have yet to be picked up by another carrier, according to Mester. “These routes are good candidates for new service,” he says.

Midwest isn’t the only proposed airline hoping to take to the skies.

David Neeleman, who helped launch JetBlue and Brazil-based carrier Azul Linhas Aereas, has founded an airline code-named Moxy, which is bolstered by $100 million in initial startup capital and, like Midwest, plans to focus on underserved markets. Moxy has a deal with Airbus for 60 A220-300 aircraft to be delivered starting in 2021.

Midwest leaders aren’t sure how, or if, Moxy’s plans will affect their strategy. “We constantly monitor the airline industry and its news, analysts’ views and trends,” Haseley says. “To this point, Moxy has not yet released significant details regarding its business plans.”

The new Midwest is likely to focus on shorter business routes, such as Milwaukee to Indianapolis, a concept that makes sense, in theory, Sheehy says.

“If you have a five- or six-hour drive for a meeting and then the same drive back, it makes that almost untenable in a day,” he says. “If you can access a market like that with a 40-minute flight, get your business done and get back home, you avoid the lost time and the expense of staying overnight.”

When AirTran targeted Midwest for acquisition more than a decade ago, Mitchell was relatively underserved, fares were too high, and a large segment of Milwaukee-area travelers either opted not to fly at all or used Chicago-area airports, which offered lower fares, Healy explains.

“Midwest had very good employees with tremendous skills in customer service, training and other areas that would have been beneficial to the combination,” Healy recalls.

Among the challenges faced by the new Midwest Express would be establishing a frequent flyer and credit card program, Healy says.

Photo courtesy of Getty Images

“This is a big hurdle,” he says. “Why give up miles and risk your status level and upgrades? You need a compelling reason. You’d be stunned at the convoluted routings people will fly to stay on their preferred carrier. It will take more than a cookie and fond memories of a favored local brand to shift demand.”

Sheehy says Midwest must focus on aspects most important to today’s traveler. “People don’t fly on nostalgia,” he says. “They fly on price and convenience.”

Clearly, Midwest’s leaders have their work cut out. “Starting an airline is a tall task,” Sheehy says. “But if the economics work and Midwest can offer flights to markets that are underserved here and add to the competition at the airport, then it’s all good.”

The Best Care Back in the Air?” appears in the September 2019 issue of Milwaukee Magazine.

Find it on newsstands or buy a copy at milwaukeemag.com/shop.

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Rich Rovito is a freelance writer for Milwaukee Magazine.