Republic Airways CEO Brian Bedford doesn’t love the fact that lately air travel is the industry everyone loves to hate. “It’s funny how something that was really special 20 years ago – affordable for only a small segment of the population – has become so commoditized that it’s essentially taken for granted,” he says. “Someone can pay a really low fare to travel safely across the country, but if the flight is 15 minutes late or their luggage gets scratched, suddenly it’s ‘What a crummy airline.’ ”
So last fall, when Bedford got a chance to appear on a reality TV program – and showcase all the behind-the-scenes, underappreciated activity that makes relatively seamless air travel possible – he jumped at it. The program, “Undercover Boss,” films top executives incognito, as they work side-by-side with employees in a series of front-line capacities. With Indianapolis-based Republic in the midst of integrating a three-way merger with Frontier and Midwest Airlines undertaken in 2009, the experience was doubly enlightening. The CEO cleaned planes, emptied toilets and served as both a flight attendant and a customer service agent. He also got an earful from employees frustrated with the integration process and spent time working alongside former Frontier employees whose voluntary pay cuts helped the company recover from bankruptcy.
“It had been a long time since I’d had anyone yell at me and tell me I wasn’t working fast enough,” Bedford reports of the experience. “And I saw a lot of people very dedicated to what they do. But the not-so-good thing to hear was that through this transition employees really felt like they were kept in the dark and that their opinions weren’t valued.”
Republic has since installed web communications tools and focused on cultivating a more inclusive management style, reports Bedford, who admits that communications fell by the wayside while leadership was absorbed with integrating the three airlines and moving Republic into a whole new sector. Before the acquisitions, Republic was a $1.5 billion regional contractor for carriers like American, Continental, United, US Airways and Delta. The acquisitions boosted revenues to $2.6 billion and thrust Republic into a new competitive sphere – promoting and managing its own brand, flight network and reservation systems in competition with some of its biggest clients.
For Bedford, the shift was both an “offensive and defensive move” at a time of rampant consolidation among carriers in the wake of soaring fuel costs and a recession-induced drop in demand. “It creates a hedge for risk mitigation if there’s a problem with one of our current network partners, and it gives us a growth vehicle,” he explains. “If consolidation continues, the low-cost carriers will be the beneficiaries.”
Of the two acquired airlines, Midwest marketed itself more on amenities and service, while Frontier focused on price. Republic has melded the two. Shortly after the acquisition, the company started to retire the Midwest name and began repainting the tailfins of Midwest planes with Frontier’s signature western animals. But it also introduced stretch seating and other extras that budget-minded travelers can opt to pay for piecemeal. “We have a product and we want to allow people to tailor it to fit their needs,” notes Bedford, who likens the concept to customizing a car. “Hopefully if we give them more value, they’ll pay more for it.”
Integrating operations means all three entities will benefit from stripping out redundancies. It also puts a much-larger Republic squarely in the midst of an industry free-for-all.
But Bedford, a licensed pilot with a passion for flight travel, is betting that Republic can more than hold its own. “Whether you’ve got what it takes to differentiate your product and win in these highly contested markets is a real test of your character,” he says. “We’ll have to be at the top of our game.”