Midway Airlines Begins Its L.A. Service Today : Named for Chicago’s 2nd Airport, Firm One of Few of New Breed to Survive
A species of bird that’s new to the West Coast will descend from the skies today. It probably won’t be recognizable to most Angelenos because the normal habitat for this species is Chicago.
Its name is Midway--Midway Airlines, that is--and it’s beginning three-times-a-day service between Chicago and Los Angeles.
Midway, named for Chicago’s second airport, from which it operates its hub-and-spoke system, is indeed a rare bird. Out of about 200 new carriers started following deregulation in 1978, only two sizable airlines still are flying. Midway is one; the other is Phoenix-based America West Airlines.
Early Profit
With its move into Los Angeles International Airport, Midway will become a transcontinental carrier. Although earlier expansion routes have taken as long as two years to mature to profitability, Midway expects its new flights to Southern California to turn a profit immediately. David R. Hinson, Midway’s chairman and chief executive, says that if bookings for the first three months are any indication, its planes on the route will be as much as 70% full.
“Southern California has an enormous gross national product,” he said in an interview. “Los Angeles is the strongest demand we have ever experienced for a new city. It is outstripping every new city we have ever started. We think there is a tremendous need for airlift between California and Chicago, and we want to be a part of that.”
Midway began operations in November, 1979, a year into deregulation. At first it linked Chicago with Cleveland, Detroit and Kansas City, flying three DC-9s. Today, Midway has a fleet of 45 jets, serves 31 cities and owns a commuter airline that serves another 21 cities. Its destinations include St. Thomas and St. Croix in the U.S. Virgin Islands and Nassau in the Bahamas.
The small airline’s most important competitive advantage is the location of its hub, Chicago’s “other airport.” Midway Airport is only about half as far from downtown Chicago--about 10 miles--as is O’Hare International.
Commuter Feed
Midway Airport was one of the nation’s busiest airports until the late 1960s. Then it lay dormant until Midway Airlines came along. Today, seven carriers operate out of Midway Airport; Midway Airlines dominates with 80% of the flights.
Hinson expects that many of the people who will be using the Midway-LAX service will be fed by its commuter airline, the Midway Connection, from such cities as Moline, Ill.; Grand Rapids, Mich., and South Bend, Ind. Others will come from such cities as Cleveland and Detroit on Midway’s own flights. Such passengers could get to the West Coast on other carriers, of course, but they would have to change at the busy and congested O’Hare.
“Those are the increments, one or two passengers (from each of those Midwestern cities), that will allow us to have a 70% load factor from Midway to Los Angeles,” Hinson says. “It’s less of a hassle” for the passenger. “There are a number of passengers who want to avoid O’Hare, and they would prefer an alternative to the two airlines (American and United) that serve those markets.”
Midway expects a banner year in 1989, Hinson says. In the first quarter, the company reported net income of $2.9 million, contrasted with a $5.3-million loss in the first quarter of 1988.
Its biggest problem, Hinson concedes, will be to improve its market identity. “Recognition in Los Angeles is the difficulty for us,” he said. “It is going to be difficult to make much noise.”
