Why buy? Southwest's new Frontier

Maybe it's better to buy something because you want it instead of buying to collect a debt. That may be the lesson in Southwest's surprise bid for Frontier, the Denver carrier that ageed in June that it would be taken over by Republic Airways. Frontier owed Republic money and this way it could satisfy its creditor and keep flying. With Southwest ownership, Frontier flies for another year or two and likely gives way to Southwest's own Boeings after Frontier sells off its Airbus fleet.
What does Southwest get? It gets to bump United even further out of Denver, where UAL was always the big player. UAL now has about 35% of the Denver business, while Frontier has some 20% and Southwest has just 12%. Granted, that 12% is a lot more than Southwest's share at Denver just three years ago when it started up in the Mile High City.

Seeking the bottom un-farely

Everyone's looking for the bottom, from housing to retail to...airlines. In fact, they're looking so intently that they're feeling a bottom before their toes start to touch. The latest premature eureka comes from observers who note that the major carriers are trying their second fare hike in two weeks. Led by American and United, the big guys added another $10 to $20 on to roundtrip fares (depending on distance).
These observers seem to be placing a lot on Rick Seaney, the farecompare.com commentator. "The pace of domestic airfare sales has dried up recently," says Seaney. "I have been cautioning consumers for the past month that they procrastinate on purchasing airline tickets at their own risk - two airfare hikes in the past few weeks is the strongest signal I have seen that the bottom is either here or near," he says.
But let's inject a few notes here: the low-cost carriers, led by Southwest, JetBlue and AirTran, aren't taking part in the fare hikes. In fact, they're launching and pushing sales, and many of them are for travel in the peak summer period. AirTran just began a $44-and-up promotion for travel through November, and Gary Kelly, the Southwest airlines chief, says June revenues look weak and probably won't improve until the rest of the economy finds its bottom.