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  • "Virtual" Airlines
    Posted by Andrew Compart 7:20 PM on May 29, 2009

    I'm not saying this will happen, but I am saying it is now a possibility: What if Midwest does not operate any of its own aircraft, but instead contracts out all of its flying to regional carriers? Will it still be an airline?

    I raise this point because, as I reported in more depth here (Aviation Daily subscriber only), Midwest just amended its deal with Republic Airways to add two 100-seat Embraer E-190s to its fleet. Midwest already is contracting out most of its flying to Republic and SkyWest, with only nine Boeing 717s remaining in its own fleet, and there's rampant speculation that those 717s won't be around for long. Even Midwest's pilots believe its only a matter of time before the airline ditches those aircraft, in part because Mexicana

    Mexicana signed a deal with Boeing Capital in March for 25 717s for its low-cost Click unit — 16 of which were to come from the returned Midwest aircraft and nine from an undetermined source which many people believe will turn out to be Midwest. Midwest's 717 aircraft are configured for 99 seats, which you'll note is one less than the Embraer E-190, and Midwest said in its press release on the new deal with Republic that the two aircraft are just an "initial order."

    Midwest is negotiating with its pilots and flight attendants for steep pay cuts and other concessions it says it needs in order to bring them back to fly and service the Embraer E-175 aircraft it now contracts Republic to provide and fly. Its certainly possible the airline and unions eventually will agree to deals--although the pilots' anger at the airline's leadership seems to run deep--but what if they don't?

    I asked the U.S. Transportation Department this week what would happen if Midwest no longer operated any of its own aircraft. I was told that's never happened with an airline that already was operating--but if an airline did that, it probably would be considered an indirect air carrier and fall under the department's rules for public charters.

    This is an interesting subject right now because Skybus founder John Weikle is launching an airline service called JetAmerica that will be contracting with Miami Air International for all of its aircraft and crews, at least initially.

    In doing so, JetAmerica avoids the need to finance aircraft or clear the regulatory hurdles necessary to start service with its own fleet. JetAmerica will be operating (drum roll, please) as a Part 380 Indirect Air Carrier under DOT regulations. Its public charter service will be indistiguishable from scheduled service commercial carriers in some respects--but will require maintaining an escrow account to hold customer payments until the charter flights are completed. It also will require filing a periodic prospectus (Adobe Acrobat file) with the DOT showing the proposed flight schedule and security and depositary agreements covering that schedule.

    Tags: tw99, Midwest, JetAmerica

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