Republic Beats Southwest in Bid for Frontier

Writing late yesterday for the Dallas Morning News‘ Airline Biz Blog, Terry Maxon had this to say about Southwest’s failed bid for Frontier Airlines: “Many of us in the media and airline-watching world saw Southwest’s bid for Frontier and immediately came to the conclusion that the Dallas-based carrier was going to get what it wanted.” But, he goes on, “Very few of us understood the intricacies of the bids for Frontier.”

Well, count me in. What seemed like a slam dunk for Southwest, which outbid Republic Airways by more than $60 million, turned into a quagmire of union negotiations that ultimately nullified Southwest’s bid and awarded the auction to Republic.

What happened is this: Southwest’s bid required an agreement on how its unions would work together with Frontier’s, and the Southwest Pilot Union (SWAPA) and Frontier Pilot Union (FAPA) were unable to reach a compromise.

But while that explanation sounds simple enough, there may be more brewing beneath the surface. On Thursday, Maxon reported that FAPA was using this contingency as a leverage in negotiations. Southwest’s plan, you see, was to place all FAPA pilots at the bottom of Southwest’s seniority list, thus negating years of seniority for FAPA pilots and the increased salary levels they’d reached. Republic, on the other hand, plans on running Frontier independently, which presumably means FAPA pilots’ seniority will not be affected.

For customers, it seems the status quo will reign for the time being, as Frontier said operations will continue unabated. The airline also claimed the deal “is expected to preserve the jobs of most Frontier employees.”

For Southwest, it’s a another miscalculation in what’s becoming an uncharacteristically rocky year. Clearly the airline overestimated its ability to push through an agreement between the unions, and the airline is left looking cocky and overmatched. Frontier is popular in Denver, and Southwest has not likely done itself any favors in that market.