Many people have commented that with Republic’s acquisitions of Midwest and Frontier will lead to many if not all of their network partners, for who they provide regional flight services, to cancel or not renew their contracts.
This is absurd. Network carriers will only cancel or not renew their contracts if Republic provides a poor service or if they can get better prices elsewhere. They don’t care if the company which owns their regional partner also owns an airline which competes with them as long as their regional partner is saving them money.
For example, my dad’s company both sells concrete and cement (the main ingredient in concrete). The cement is sold to it’s concrete company and is also sold to other concrete companies which compete with it. And they have no problem because they are getting the best valued product.
To use a recent airline example, take JetBlue, American, and Lufthansa. American and JetBlue came into an agreement in which JetBlue and American will interline on non-competing routes and are swapping slots at JFK and DCA. Lufthansa owns 19% of JetBlue, has two seats on the board, and codeshares with JetBlue. American and JetBlue are leading partners in the competing oneworld and Star alliances. But Lufthansa does not mind because JetBlue is still providing value to them.
Don’t get me wrong, network carriers may use this as a negotiation tool when negotiating the next deals, and one may even leave for another airline once the contract is up. But we will see no contract cancellations.
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Spot on. In a price driven market, airlines are looking for the best deal they can get, and regional service is no exception.