Transportation
Northwest Hits Back at AMR
By Ted Reed
TheStreet.com Staff Reporter
6/15/2007 4:35 PM EDT
URL: http://www.thestreet.com/newsanalysi.../10362931.html

Despite all the changes in the airline industry, some carriers haven't abandoned their guiding principles -- and "keep out of my hub" is the oldest principle in the book.

That's why there was no surprise in Friday's announcement that Northwest (NWA) will begin service between New York's LaGuardia Airport and Dallas effective Sept. 5. Not after AMR's (AMR) American said last month that it will begin LaGuardia-Minneapolis flights the same day.

To be clear, it's OK to fly from your hub to my hub, but it's not OK to fly from a third city to my hub. Northwest has long been among the most prominent enforcers of the code.

"Some things never change," said aviation consultant Robert Mann. "Northwest is well known for being defensive and retaliatory. It's pretty well understood."

Northwest's most recent enforcement exercise took place in February in response to new flight announcements by Frontier (FRNT) .

Frontier, which has its hub in Denver, said it would begin flights from Northwest's hub in Memphis to Denver, Las Vegas and Orlando, Fla. Days later, Northwest said it would begin service from Memphis to Denver, Las Vegas and Orlando -- plus add new service between Indianapolis and Denver. In other words, it not only matched the Memphis service, but also invaded Denver.

The industry has seen similar moves before. In 1993, Eight-month-old Reno Air announced plans to begin service between its Reno hub and Minneapolis. So Northwest said it would add flights from Reno to Minneapolis, Los Angeles, San Diego and Seattle.

"Their intent is to punish us for flying into their hub," Reno Air President Jeff Erickson told the Los Angeles Times then. "They think they can drive us out of business because we are small."

Subsequently, the Transportation Department intervened, and Northwest scaled back its response to compete only on the Reno-Minneapolis route. Meanwhile, the airline industry remains the prototypical small world, insulated not only in its patterns of behavior but also in the people it employs.

So on Thursday, Erickson was elected to the board of Midwest (MEH) , which last month announced a code-share agreement with Northwest.