The first thing you notice are the twin rows of first-class seats throughout the aircraft. And then there's the china and the linen napkins, the free wine and the lobster thermidor. Not the usual airline fare for coach passengers.
But then, Midwest Express is not your usual airline.
Consumer Reports magazine this year has once again ranked the little Milwaukee-based carrier the nation's best airline in terms of customer satisfaction. Conde Nast Traveler and Zagat, one of the nation's leading travel guides, also consistently rate the airline as the best.
Catering to business customers with first-class seats and fine food at coach prices, Midwest Express is one of just two airlines--the other is Southwest--that have managed to make a profit every year in the 1990s, a period that covers the worst financial turbulence in airline history.
Midwest Express is a niche player in the airline industry. With just one-quarter of 1 percent of national market share, the airline is one of the few successful products of airline deregulation.
Its business focus comes naturally. Started 15 years ago this week as part of KC Aviation, a subsidiary of Kimberly-Clark Corp., which had operated a corporate jet service for its employees since the end of World War II. In 1995, Kimberly-Clark spun off the airline as a publicly owned corporation.
"We're culturally a niche player," said Midwest Chairman Timothy E. Hoeksema, a former chief pilot for Kimberly-Clark. "We are the epitome of what was envisioned by deregulation."
From the start, Midwest Express has targeted the business traveler, focusing on the high-yield passengers. For the most part, airlines in the deregulated world turned their attention to the traveling masses with low fares and cheek-to-cheek, three-across seating.
The airline charges competitive coach fares on its routes, including lower fares for advance purchases. When confronted with competition from a low-fare carrier, the airline has matched almost all fares.
When airline deregulation began, Hoeksema said it became clear "the needs of the business travelers were not being met." It was a business plan that would prove as successful for Midwest Express as low-fare, no-frills travel would prove to be for Southwest Airlines.
"We treat people as though they were coming over for dinner," said Hoeksema, describing his airline's reputation for comfortable seating, fancy dinnerware and good food. "When people find good service they support it."
Brenda F. Skelton, senior vice president for marketing, said she was "a little sheepish" about the awards Midwest Express has received for its service. "Our competitors are doing such a poor job," she said.
While service is a big factor in the airline's success, it is only part of the formula Midwest Express has used to remain profitable in an industry that has seen most start-up airlines fail over the past 20 years.
Midwest Express provides jet service to underserved markets, flying from its hubs in Milwaukee and Omaha to such places as San Antonio, Kansas City, Mo., Hartford and Raleigh-Durham, N.C., in addition to South Florida and major cities in California and on the East Coast. The airline estimates it can make a profit on a route with a minimum of 50,000 passengers a year.
"Our focus really has been to take travelers, particularly from the Midwest, and get them to the big cities and back home the same day," Hoeksema said. Midwest Express offers the only nonstop jet service in 65 percent of the markets it serves, according to the airline.
Although the airline has eliminated 25 percent of the seats on its fleet of 34 McDonnell Douglas jets to accommodate the rows of brown leather first-class seats, and spends on average twice as much for food as the major airlines, the lure of comfort and good service has paid off. Approximately 60 percent of Midwest Express passengers are business travelers whose last-minute schedules often mean full fares for the airline. The average number of business travelers for the rest of the industry is around 40 percent.
As a result of the high number of business travelers it carries, Midwest Express estimates its yields are 30 percent to 40 percent higher than the major airlines.
Airline profitability is often measured by a single number: the cost per available seat mile, or the amount on money it costs an airline to move one seat through the air for one mile. At Midwest Express that cost is about 11 cents per mile--one of the highest in the industry, where the average is closer to 9.5 cents. Southwest Airlines, the benchmark for the industry, is about 7.5 cents a mile.
Midwest Express, for instance, estimates the average cost of its in-flight meals is $10, more than twice the average for the industry. On top of that, the airline spends another $7.50 for the setup tray--the chinaware, glassware, silver service and linens that are used to serve the meal.
But Midwest Express estimates that for every 2.4 cents a mile extra it costs to provide good service, the airline gets 3.4 cents a mile back in revenue.
As the airline continues to expand--Hoeksema says it plans to continue growing at a rate of 12 percent or more a year--its business strategy will be further tested. It is increasingly entering direct competition with low-fare airlines such as MetroJet, the dedicated low-fare carrier operated by US Airways. The two airlines will begin head-to-head competition between Washington's Dulles International Airport and Milwaukee in September.
Already, Midwest Express is experiencing some revenue loss from its early encounters with low-fare carriers. Although it reported record first-quarter earnings this year, its revenue yield dropped 7.2 percent, primarily due to what it called "competitive pricing pressures in certain markets and increased passenger volume in lower-yield seasonal markets."
Adding to the cost pressures: both its pilots and flight attendants voted within the past six months to unionize, a move almost certain to raise labor costs. Neither group has negotiated its first contract with the airline.
Whatever the challenges that lie ahead, Hoeksema doesn't plan to change his airline's dedication to service. "You've got to work at it all the time," he said. "We're careful not to believe all our press clippings."