Southwest takes off
In a somewhat surprising merger of two low-cost carriers, the news that Southwest Airlines is buying smaller rival Air Tran Airways for US$1.4 billion may bring higher ticket prices but it may also add to passenger convenience.
"The acquisition of AirTran represents a unique opportunity to grow Southwest Airlines’ presence in key markets we don’t yet serve and takes a significant step towards positioning us for future growth," Southwest CEO Gary Kelly said.
Feisty Southwest already carries more domestic fliers than any airline in the US.
AirTran CEO Bob Fornaro stressed in a conference call with reporters that AirTran had "done a lot with not much" in terms of financial resources, but it was becoming more uncertain that AirTran had the ability to grow and remain competitive in an industry where the size of a carrier’s route network is increasingly important.”
“By creating a truly nationwide, low-cost airline, the merger will make Southwest a tougher competitor in the lucrative domestic business travel market,” said USA Today.
Kelly expects more corporate fliers to take advantage of an expanded city network. And some fare watchers predict passengers will benefit from a broader reach for the carrier’s low-cost strategy.
"America needs this now," said Tom Parsons of BestFares.com. "You could go from Rochester, N.Y., to somewhere on AirTran, and from Charlotte to somewhere on AirTran. But with this deal you can now go just about anywhere in the country, and to the Caribbean and Mexico, on Southwest.”
The deal surprised some travel experts.
That’s because Southwest and AirTran will no longer compete for passengers, which may raise fares.
"It can only mean further consolidation," said George Hobica, founder of airfarewatchdog.com. "I don’t think anyone really saw this coming.”
He complained that pricewise the merger could mean higher prices for tickets.
Southwest’s acquisition of AirTran also would bring Southwest’s informal, low-cost, low-fare service to Charlotte, another hub it has never served, and like Reagan National, a stronghold for US Airways.
The impact is to give both airlines new opportunities in Atlanta, the busiest airport in the world, as well as Washington, DC’s Ronald Reagan National Airport, New York’s LaGuardia and Boston’s Logan. Southwest also gains access to the Caribbean and Mexico.
In Atlanta, Southwest would be able to compete with Delta on its long-established home turf. In the past, AirTran was its only competitor.
The combined company will serve more than 100 million customers annually out of more than 100 different airports. Prior to the merger, Southwest had 34,636 employees, 544 aircraft, 461 nonstop routes and serviced 69 cities. Smaller AirTran services the same number of cities but had 8,083 employees, 138 aircraft and 177 nonstop routes.
By David Wilkening
David
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