State and local government officials are putting together an incentive package aimed at attracting as many as 400 airline-related jobs to the Milwaukee area.
Republic Airways Holdings Inc., which bought Oak Creek-based Midwest Airlines earlier this year, likely will decide by the end of November where to locate the jobs, with Milwaukee competing with Denver and Indianapolis. The incentive package could be very lucrative, with Denver already committing to $1 million in job-creation and job-training tax credits.
The jobs at stake are tied to Indianapolis-based Republic’s recent purchase of Frontier Airlines of Denver. Republic purchased Frontier in a mid-August auction.
The positions include about 250 heavy maintenance and parts warehouse positions now at Denver International Airport, and 150 jobs tied to Frontier’s 150-person reservations center in Las Cruces, N.M.
“We certainly are aware of it and we are having discussions with the company,” said Tony Hozeny, spokesman for the Wisconsin Department of Commerce, Madison.
A financial incentives package has not yet been presented to Republic, Hozeny said.
“We’re still in the discussion stage,” he said.
Republic spokesman Carlo Bertolini confirmed that Milwaukee is still in the running for the jobs.
“The review process is continuing,” he said. “We’re going to make a very careful decision. It’s a decision we only get to make once.”
Not a bidding war?
Bertolini insisted that Republic isn’t trying to “stoke a bidding war” among the three cities.
“We’re just trying to manage our acquisitions,” he said.
Republic hasn’t decided if all 400 jobs will go to the same city or be split, Bertolini said.
Frontier informed its New Mexico call center employees on Sept. 28 that it planned to shut down the operation and move it elsewhere.
Frontier Airlines chief executive officer Sean Menke is heavily involved in the talks with the three cities.
Menke faces a quandary: He wants to avoid emotional decisions that might lead to recommending his hometown airport over others. But he also said Denver International Airport and the city and county of Denver didn’t grant his earlier cost-saving requests as Frontier tried to pull itself out from under bankruptcy protection.
Now he wonders how much those earlier talks and lingering frustration will play in decisions about the company’s future.
“It’s an interesting sort of dilemma that the politicians are in here,” Menke said. “There’s been a lot of questions about whether they’re going to step up and support the company.”
Menke is expected to remain at the helm of Frontier while also overseeing certain functions at Midwest, such as route network planning, ticket fares, marketing and branding decisions.
Deals in the works
Colorado and Denver officials are putting together an incentives package that includes about $1 million in job-creation and job-training tax credits. The deal also includes cost reductions on things such as facility leases at the airport, which are meant to offset a city tax on aircraft maintenance parts that some airline officials have called onerous.
Republic chief executive officer Bryan Bedford has said he’s looking to make a decision on where to locate jobs quickly after receiving the three cities’ packages.
Milwaukee County Executive Scott Walker said Milwaukee 7, an economic development group for seven counties in southeast Wisconsin, has “taken the point” on the negotiations with Republic.
Jim Paetsch, director of corporate relocation, expansion and attraction for Milwaukee 7, declined to confirm that the group is negotiating with Republic about locating jobs in Milwaukee.
“It’s our policy not to comment on specific companies,” he said.
Milwaukee Mayor Tom Barrett said the city is engaged in discussions with Republic, but declined to say whether any financial incentive package has been offered to the airline holding company.
“This is an effort to grow jobs in our city,” he said. “We’re on it.”
Adding jobs takes on greater importance as the area tries to recover from a recession that cost thousands of jobs, Barrett said.
Airport is low-cost
Walker said the role of Milwaukee County, which owns General Mitchell International Airport, is to “make the airport more attractive” for airlines looking to expand their operations.
“We’re one of the few airports in the country that has shown steady growth,” Walker said.
Republic’s decision could hinge on enplanement costs — the amount airlines pay per passenger that they carry in and out of an airport. The issue has plagued airlines at Denver International Airport for years.
Those costs, which factor into how much airlines charge for tickets, stood at an average $16.85 per passenger in 1995, but have fallen to $10.59 at Denver International, DIA spokesman Jeff Green said. Frontier’s costs are below the airport average.
Walker said Mitchell’s low enplanement costs — the average is $4.64 per passenger — could work to Milwaukee’s advantage.
Efforts have been made to keep costs low at Mitchell, in part through aggressive contract negotiations with airport concession operators and through capital projects that have improved operational efficiency, Walker said.
“There’s a good case to be made just in terms of (Mitchell’s) operation,” Walker said.
The Denver Business Journal, a sister publication of The Business Journal Serving Greater Milwaukee, contributed to this report.
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