Travelers who haven’t visited Midway Airport in a while will find they have fewer choices on how to get where they’re going.
Until recently, the Southwest Side airport was dominated by two discount airlines, each of whom had more than a dozen gates, conducted about the same number of daily flights and carried a similar amount of passengers. If you didn’t like the price or time Southwest Airlines offered for a flight to Orlando, Las Vegas or Seattle, then ATA Airlines also had an array of choices.
Not anymore.
ATA’s bankruptcy filing in October and the subsequent rollback of much of its service have done more than change that airline: It also has changed Midway Airport.
Southwest now controls nearly 60 percent of the gates at Midway. It will be the primary generator of millions of dollars in fuel taxes and landing fees collected by the airport each year.
By nearly every industry measure, Southwest is the most successful carrier flying today. But if it stumbles, Midway will feel some of its pain.
But if an airport is going to be dominated by a single airline, Southwest “may be the best one” to have exerting that influence, said Alan Bender, an airline economist at Embry-Riddle Aeronautical University in Daytona Beach, Fla.
It is on solid financial footing, a rarity in the airline industry, Bender noted. And its growth at Midway mirrors what has happened in other parts of the country, he said.
In Baltimore, Oakland, Houston and Dallas, Southwest has become the dominant carrier at the secondary airport in each metropolitan area.
“Obviously, Southwest would like to dominate Midway,” Bender said. “But Chicago is the premier location. Southwest is just an extremely important player.”
Southwest was able to grow rapidly at Midway because of ATA’s financial woes. After Indianapolis-based ATA sought bankruptcy protection, it sold the rights to six of its 14 Midway gates to Southwest. That gave the Dallas-based carrier control of 25 of the airport’s 43 gates.
Southwest quickly added flights. A year ago, it had 136 daily at Midway. The carrier now has 170, making Midway the third-busiest airport for Southwest, trailing only Phoenix and Las Vegas. By September, the airline expects the number of daily flights to grow to 192, and, ultimately, it has the gate capacity for 250.
The rapid growth in Chicago is “bound to be our fastest expansion for an existing city,” Southwest Chief Executive Gary Kelly said this month when discussing his airline’s financial performance. “It’s very impressive. Our Chicago folks are doing a good job.”
The shift to having one airline with the lion’s share of the gates at Midway hasn’t hurt travelers, said John Roberson, Chicago’s aviation commissioner.
“Why are people coming to Midway? Why are people flying low-cost carriers?” he said. “They’re flying them because they give them the best airfare price.”
Land of discounters
Midway, which has been extensively renovated and expanded in recent years, has become the primary local airport for discount carriers, including Southwest, ATA and AirTran Airways. O’Hare International Airport has some discounters but is mostly home to such larger carriers as United and American and has international access.
“It would be different if, because of their position at Midway, Southwest decided they were going to bump up their prices 50 percent,” Roberson said. “That’s not happening.”
Nor has demand for space at Midway decreased, he said, adding that the airport still fields inquiries about gate availability.
If Southwest did choose to dramatically increase prices, it would run counter to the low-fare business plan that has made it the most financially successful airline in the nation. Last year, it was among the few carriers to post a profit.
In the short term, Midway may benefit from the diminished presence of ATA, said John Hansman, a Massachusetts Institute of Technology professor who studies aviation.
“From an operational standpoint, if a hub is dominated by a single carrier, generally the delays are not that bad, because that carrier schedules to make sure they don’t delay themselves,” he said.
“At a place like O’Hare, where you have a number of carriers, it’s hard for them not to interfere with each other.”
O’Hare offers alternative
Even if Southwest wanted to boost its prices, it would be difficult, given competition from others locally and at O’Hare, Hansman said.
“You have close alternatives,” he said. “If you’re in Minneapolis, and you only have Northwest, your options are fairly limited. If you’re in downtown Chicago, you’ve got options.”
Until Southwest reached its deal with ATA, it appeared another competitor would step in and take over nearly all of ATA’s Chicago operations. Orlando-based AirTran had an offer to assume control of ATA’s gates, a move that would have made it the second-biggest carrier at Midway.
Southwest beat back the AirTran offer by putting up more money, $117 million, in a deal that gave it part ownership of ATA. Southwest also agreed to a cross-travel arrangement known as a code share, the type of partnership it had nearly always avoided in the past. That deal has benefited both airlines.
The code-sharing pact allows each airline to sell seats on the other’s planes, so travelers can fly one airline and transfer to the other to complete a trip. Nearly all those transfers occur at Midway, potentially increasing traffic through the airport.
Southwest’s growth is limited only by the availability of gates and aircraft, said spokesman Ed Stewart. The airline recently celebrated its 20th anniversary at Midway, where it launched service with seven daily flights to St. Louis. It has grown to 3,205 employees at the Chicago airport.
Southwest has been able to stay financially strong, while many of its competitors teeter on bankruptcy, because it has controlled costs and offered consistent service. While many carriers have been hurt by record-high oil prices, Southwest had the cash available to lock in much of its current fuel supply months ago, when prices were much lower.
Even if Southwest has problems in the years ahead, Chicago is attractive enough to lure other carriers, Roberson said.
“Airlines don’t serve airports, they serve markets,” he said. “There may be some airlines that make a decision that maybe Midway and the Chicago market is not a place for me to compete.
“But look, we have Chicago Express, Northwest, AirTran, Delta, American, Frontier, Continental, Express Jet and others who have said they were there before Southwest took over these gates from ATA,” Roberson said.
“Even though Southwest is the big kid on the block, there is a market here for them to remain competitive.”
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mskertic@tribune.com
