Oct. 23--Midwest Airlines announced Monday that it will discontinue all service to Duluth as of Dec. 1 -- nine months after the carrier began offering daily flights to its hub in Milwaukee.
"The route was not generating the type of financial return we had hoped it would, and the outlook going forward was not promising," said Scott Dickson, Midwest's chief marketing officer, of his company's decision to withdraw from Duluth.
The airline pledged to contact Duluth travelers who had booked flights post-Nov. 30 and offer to place them on Northwest Airlines flights.
But Linda Frederick of Duluth, who scheduled a Midwest Christmas holiday flight to Washington, D.C., several weeks ago, fears Northwest seats may be unavailable during prime travel times.
"This will leave us without a choice in Duluth," said Rene Selleck. "I'm disappointed. A little competition is a good thing. It used to sometimes be too expensive to fly out of Duluth before Midwest came."
Before Midwest's arrival in Duluth, Northwest and its affiliates -- Mesaba and Pinnacle airlines -- were the sole providers of regular daily scheduled service. This probably will be the case again come December.
Selleck also gave Midwest high marks for creature comforts.
"Their planes are nicer and they have bigger seats. Plus, their crews are friendly and helpful," she said.
Initially, Midwest offered three daily round-trip flights between Duluth and Milwaukee, but the carrier reduced its schedule to two flights in September, anticipating a seasonal decline in traffic.
Duluth Airport Authority Executive Director Brian Ryks expected Midwest would scale back winter operations in Duluth, but he was shocked that it planned to discontinue service altogether. He recalled talking to Midwest's vice president of planning and revenue management before the September meeting of the Duluth Airport Authority board.
"I was given the indication that we were one of the top five markets in their system, and that things were continuing to move forward," Ryks said.
He said Midwest had posted steady gains in Duluth traffic throughout the spring and summer. In September, the carrier's passenger numbers dropped off, largely because of reduced service.
During June through August, Midwest filled an average of more than 71 percent of its seats. Ryks said the airline earlier had advised him it could break even financially with 65 percent of its seats sold.
But Dickson said Midwest couldn't justify continuing service to Duluth at the traffic levels it saw. He also said the seven-plus months Midwest has spent in Duluth "was more than an adequate period of time in which to assess the market."
Tracey Tellor, owner and manager of Abby Travel in Duluth, said Midwest failed to consistently deliver Duluth travelers good connections to popular destinations, such as Orlando, Fla., in Milwaukee.
"They have great customer service and really good in-flight amenities," she said. "But the flight inventory management they needed for Duluth to work as a spoke to its Milwaukee hub wasn't there."
THIRD PULLOUT
Midwest isn't the first airline to leave Duluth after dipping a toe into the market. American Eagle ceased service to Duluth in 2004, and United Express withdrew in 1997.
"Part of the difficulty is that Northwest has a stranglehold on this market," Ryks said. "It's a strong competitor, and when someone new enters the market, Northwest is able to make strong moves to push that competition out.
"The question is: How do you get beyond that? Is there an airline that can withstand the onslaught from Northwest?"
Shortly after Midwest introduced its daily service to Duluth in March, Northwest undercut its fares to shared destinations, prompting ticket prices to tumble by 25 to 35 percent. Northwest also introduced another daily flight to Detroit.
"More options are good for the public," said Ryks, observing: "When there's competition, it stimulates the market. We see more volume and better fares. It's good for the region and for the economy."
Despite Midwest's pending withdrawal, Ryks said Duluth International probably will handle a record number of passengers in 2007.
Ryks said he hopes Northwest will expand, not scale back its service to Duluth in Midwest's absence. The Eagan, Minn.-based airline offers seven round-trip flights from Duluth to the Twin Cities and two flights to Detroit, all on a daily basis.
Ryks noted that non-traditional, low-cost carriers have fared a little better against Northwest.
Allegiant Air offers two round-trip flights each week between Duluth and Las Vegas. Citing the popularity of the route and anticipated growth in winter demand, the airline recently announced it will boost the frequency of its service to three flights weekly on March 5.
Dickson said that the pending sale of Midwest Airlines to TPG Capital had no bearing on his company's decision to quit Duluth. Northwest is a minority investor in the private equity firm, which is prepared to pay $450 million for Midwest if federal anti-trust regulators give the deal their blessing.
"That had no influence," Dickson said. "This was a poorly performing route, regardless of any ownership considerations."
Dean Breest, a spokesman for Northwest Airlines, said that his company, as a passive investor in TPG, will not be involved in running Midwest.
"TPG and Northwest formed a limited liability company (LLC) which acquired the stock of Midwest Air Group Inc, the parent of Midwest Airlines. TPG will be the sole managing member of the LLC and Northwest will be a non-managing and non-voting member," he said. "Northwest has no right to designate any members of Midwest's board of directors and has no involvement or decision-making authority in the management of Midwest."
When asked if Northwest's role as an investor could have influenced Midwest to leave Duluth, Ryks shrugged off the question.
"I don't know that I'll ever know the answer to that," he said.
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