NEW YORK — Southwest’s decision to buy AirTran will mean more routes and fewer delays and cancellations in small cities but higher fares in the Northeast and perhaps the end of the super-low sale fare.
Southwest Airlines, which has built a loyal following with its tongue-in-cheek ads and refusal to charge for checked bags, said Monday it plans to buy AirTran for $1.4 billion.
The deal will move Southwest into 37 new cities, expand its presence in New York and Boston and move it into Atlanta, the busiest airport in the nation.
Combining the AirTran and Southwest routes means more connecting options for people flying through places such as Moline, Ill., and Wichita, which should result in fewer delays and cancellations because there will be more options for rerouting passengers.
In bigger cities such as the Northeast hubs, however, fares will probably eventually go up. They may not rise right away, because many of those cities are still served by discounter JetBlue Airways, said fare expert George Hobica.
The acquisition may also spell the end of the deep-discount sales offered by AirTran and Southwest because there will be less competition. Right now, for example, AirTran is offering a $54 one-way fare between Baltimore and Boston.
“The era of irrational, stupid, destructive fare sales is over,” Hobica said. “This is the new normal. JetBlue now has permission to raise prices between Baltimore and Boston. Other airlines now have permission to raise prices between Washington, D.C., and Florida.”
In welcome news for weary travelers, Southwest said it will drop AirTran’s bag fees when the pair combine in 2012. Right now, AirTran charges $20 for the first checked bag and $25 for the second.
Some major airlines charge even more. Southwest claims it has lured passengers by refusing to charge for bags, and it has built a marketing campaign around the policy, with baggage handlers shouting declarations of love to suitcases on the tarmac.
The combined airline probably won’t be large enough to pressure big competitors such as United and American to give up the hundreds of millions of dollars a year they make from baggage fees, airline analyst Joy Sorenson said.
While Southwest will be about 25 percent larger when the deal is complete, it will remain the fourth-largest carrier by traffic. The upcoming combination of United and Continental will be No. 1, followed by Delta and American.
Southwest’s acquisition of AirTran is expected to close in the first half of 2011. It requires regulatory and shareholder approval.
Southwest will pay about $670 million with available cash and assume $2 billion in AirTran debt. Southwest and AirTran said the new airline will operate from more than 100 airports and serve more than 100 million fliers.
Holding pattern
Southwest Airlines is acquiring AirTran but will remain the nation’s fourth-largest carrier once the United-Continental deal closes this week. Key facts about the top U.S. airlines:
UNITED-CONTINENTAL HOLDINGS INC.
Headquarters: Chicago
Hubs: Houston; Chicago; Newark, N.J.; Denver; Los Angeles; San Francisco; Washington Dulles; Cleveland; and Tokyo
Employees: 87,529
2009 revenue: $28.93 billion
Destinations: 371
Fleet: 693 airplanes, plus regional aircraft
Daily departures: 5,800, including regional flights
Denver market share (does not include regional service): 31 percent
DELTA AIR LINES INC.
Headquarters: Atlanta
Hubs: Amsterdam; Atlanta; Cincinnati; Detroit; Memphis, Tenn.; Minneapolis; New York; Paris; Salt Lake City; Tokyo
Employees: 81,916
2009 revenue: $28.1 billion
Destinations: 369
Fleet: 733 mainline jets, plus 225 regional aircraft
Daily departures: 5,715, including Delta Connection
Denver market share (does not include regional service): 4.02 percent
AMR CORP., PARENT OF AMERICAN AIRLINES
Headquarters: Fort Worth, Texas
Hubs: Dallas, Chicago, Miami, Los Angeles, New York
Employees: 86,451 2009 revenue: $19.22 billion
Destinations: 250
Fleet: 619 mainline aircraft, plus 266 for regional affiliate American Eagle
Daily departures: 3,400
Denver market share: 2.82 percent
SOUTHWEST AIRLINES CO.
Headquarters: Dallas
Hubs: Southwest says it doesn’t have hubs, but its key cities include Dallas, Chicago, Denver, Phoenix and Baltimore
Employees: 34,636
2009 revenue: $11.02 billion
Fleet: 544 aircraft
Daily departures: 3,200
Denver market share: 16.99 percent
AIRTRAN HOLDINGS INC., PARENT OF AIRTRAN AIRWAYS
Headquarters: Orlando, Fla.
Hubs: Atlanta, Milwaukee, Orlando
Employees: 8,083
2009 revenue: $2.34 billion
Fleet: 138 aircraft
Daily departures: 686
Denver market share: 0.77 percent
Notes: United numbers are based on the separate 2009 operations of United and Continental airlines. The number of workers is expected to shrink after Continental closes its Houston headquarters, and the number of daily departures is likely to change as well. Delta’s fleet included regional aircraft June 30, but since then it has sold its regional subsidiaries. Denver market-share information provided by DIA.
