A $113.6 million bid by Southwest Airlines for bankrupt carrier Frontier Airlines may make flying to Mexico a better deal for consumers.
Southwest has a history of opening in markets with low fares to force other carriers to do the same. The airline also has some of the cheapest fares around.
If successful in getting Frontier, it would give Southwest an entry into Mexico, where it doesn't yet offer flights.
So far Southwest's bid is just that -- a bid. Denver-based Frontier agreed in June to be acquired by Republic Airways for $108.8 million, so a bidding war could be in the air.
According to BusinessWeek, Southwest submitted a nonbinding proposal on July 30, saying it would pay at least $113.6 million for Frontier. Bids are accepted until Aug. 10, with an auction set for Aug. 11.
Southwest has been trying to get into the Mexico market for awhile. It had planned to have a partnership with Volaris, a low-cost airline in Mexico, but those plans have been delayed until mid-2010.
Taking over Frontier would also give Southwest additional landing slots at New York's LaGuardia airport and could give it the chance to easily link New York and Philadelphia to destinations in the West with one-stop service, according to the BusinessWeek story.
Expanding into Denver, Mexico and other cities will only help consumers, in my view.
In the Southwest Airlines blog, Ron Ricks, Southwest's executive vice president for corporate services and corporate secretary, says that even in a tough economy, this is the right move for the airline.
"We have the cash, access to capital, and collateral that allows us to take advantage of this existing opportunity and synergies between Southwest and Frontier. We believe this is an opportunity to expand our network with legendary low fares, add jobs into Southwest, and boost competition in Denver as well as other cities with our low fares and high quality Customer Service," Ricks writes.
If you want to fly to Mexico for a vacation, this is good news.
Aaron Crowe is a freelance journalist in the San Francisco Bay Area. Reach him at www.AaronCrowe.net
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