Southwest Airlines recently took its first step toward serving a greater part of the East Coast by acquiring AirTran Holdings Inc., owner of AirTrain Airways, in a $1 billion deal.
Southwest announced the acquisition on May 2 and expects to have a single operating certificate uniting the airlines in 2012. Once the certificate is obtained, Southwest plans to move forward with painting AirTran planes to match its color scheme, eliminate AirTran’s baggage fees and reconfigure planes so they are all single-class, the airline stated in a press release.
According to Southwest, the move was made to help it expand its service, particularly in the Southeast region of the country. Until now, Southwest did not have service to Reagan National Airport in Washington or Hartsfield-Jackson International Airport in Atlanta — the world’s busiest airport, the Wall Street Journal reported. It will also allow Southwest to increase service in Baltimore, Boston, Milwaukee and New York.
AirTran employees’ jobs are more secure because of the acquisition, and will be offered better benefits and compensation when the merger is complete, Southwest stated. AirTran customers’ rewards points will eventually be transferred to the Southwest Rapid Rewards program.
In addition to offering service to more domestic locations, Southwest will also take over AirTran service to Mexico and the Caribbean — the first time the airline giant has tested international waters. According to the Associated Press, the move translates to a 25 percent increase in passenger traffic for Southwest.
The acquisition will benefit consumers because Southwest is expected to maintain its low prices while offering service to more locations across the country. The airline is notorious for keeping operating expenses down. Despite increasing prices due to rapidly rising fuel costs, the airline has maintained its reputation of offering competitive prices.
Southwest has a history of bringing competitors’ airfare prices down. When it began offering service from Chicago to Minneapolis, it offered $150 tickets — compared to the $400 tickets other airlines were offering for the same route, The Washington Post reported. Ticket prices for the route eventually stabilized at $200.
Aviation consultant Darryl Jenkins says the acquisition will give Southwest enough growth to last up to a decade, after which time the airline may consider expanding service to international destinations, the Associated Press reported.
According to NASDAQ, Southwest was the leading domestic carrier in 2010 and ranked fourth in Fortune’s World’s Most Admired Company list for 2011.
Airlines that tend to have lower fares:
- Spirit Airlines
- Allegiant Air
- Virgin America
- JetBlue
- United
- American Airlines
It is extremely unfortunate that over the last one decade, the travel industry has already been able to to deal with terrorism, SARS, tsunamis, influenza, swine flu, and also the first ever true global economic collapse. Through everything the industry has proven to be solid, resilient in addition to dynamic, locating new ways to deal with hardship. There are often fresh issues and possibilities to which the marketplace must once more adapt and act in response.