Monday, September 27, 2010

Southwest Airlines will acquire AirTran in a sequel to Airline Merger Mania

The airline industry is becoming smaller and smaller by forming bigger airlines. Even the low cost rivals are merging now. How will it affect us, the punters that they stuff into the seats that are becoming smaller and smaller?
Well, obviously less choice for us means higher ticket prices. They rationalize less capacity as creating a less fragmented service. I’ve never had trouble sending myself and my bags around the world despite the fragmented service,

BUT WHAT intrigues ME IS THAT I am curious to know if they will keep the business class seats on AirTran? SouthWest is obtaining international markets like Cancun and they are happy that they will now have access to Hartsfield Atlanta, (ATL) Airport. Will moving into bigger airports mean more service for LUV?

Now that antitrust concerns have been overcome, and the merger between United and Continental, can go ahead, I may start to fly Southwest from Houston, because the new Mega airline based in Chicago, will only look after the Platinum and higher frequent flyers.
Gary Kelly, CEO Southwest said that it will give them a “Competitive advantage and instant growth”. From my perspective, I would rather see airlines grow due to passenger satisfaction, but that’s just me….
Airlines are obtaining growth through mergers and acquisitions rather than organic growth. SW has bought companies and integrated them well before. This will be made easy because both carriers fly similar 737 aircraft.
I’m going to take advantage of Southwest's double mileage offer on Denver flights and I survived a flight to Chicago Midway airport last week. I don’t enjoy having to stand between the poles to board, like kids lined up at school, and I miss the chance of being upgraded to first class. Never the less, Southwest remains a Texas airline, as Continental moves to Chicago. I was able to fly to Chicago for less than $200 round trip, whereas Continental charge 4x that price. The result of large carriers and their policies growing is that low cost carriers are thriving.
This expands Luv's presence in key markets, like New York LaGuardia, Boston Logan, and Baltimore/Washington, as well as enables them to serve Washington D.C. via Ronald Reagan National Airport. Also, it presents the opportunity to provide access to key international leisure markets in the Caribbean and Mexico,
When the deal closes, Southwest will integrate AirTran into the Southwest Airlines brand and will combine the carriers' frequent flyer programs
Continental will have to lease gates at Newark to Southwest, so things are looking up for Southwest. With an entry to Newark, and if you look at the 2 route maps, you will notice that the only state that SWA does not have a presence at, is Georgia. Now they will have gates at the world’s busiest airport William B. Hartsfield Atlanta International Airport in Atlanta, GA (ATL) and (KCLT) Airport at Charlotte.
There is not too much overlapping of routes, so it will work out well. There is some overlap in Baltimore and in some cities in Florida, but the ATL acquisition is worth this small inconvenience.
The only cloud in the story is their dark past of the 1996 ValuJet crash that prompted FAA shakeup, when the DC9 Flight 592 crashed in Florida and forced ValuJet it to merge with AirTran Airways

1 comment:

  1. All Air Tran flights will be operated status quo as Air Tran. Once the deal goes through, everything will slowly be converted to Southwest and everything Air Tran will disappear. Southwest is ACQUIRING the airline for the routes and to get them off the list of competition. Ticket prices will not go up as a result. Instead, customers in crazy priced markets will see a drop in prices. It's called the Southwest Affect. Quit spreading inaccurate information and not doing more research.