Discount Air carriers within the United States are being merged together. This is because AirTran was bought out by Southwest Airlines for $1.42 billion. Southwest can be able to compete with international carriers with the expansion that also gives it access to key eastern hubs. It threw some travel experts off their game to hear this. There is a lot less competition in the discount flying market meaning there is an expected increase in fees following the Southwest/AirTran combination, the majority are stating. Unless other airlines combine, there could be a lot less competition as well. AirTran customers should be quite happy to know that Southwest plans on keeping its policy of having no baggage fees.
East now seeing more of Southwest Airlines
Southwest Airlines spend $1.42 billion purchasing out AirTran. Nobody was all that amazed by this. In 2008 Delta merged with Northwest. October 1 is when Continental and United Airlines will merge. This means they could be the largest airline within the world. USA Today reports the deal gives Southwest a major presence in primary travel hubs such as New York’s La Guardia and Washington, D.C.’s Reagan National. Delta could be Southwest’s biggest competitor in the world’s busiest airport in Atlanta where it now has access.
AirTran stock will get Southwest bump
Within the United States, there isn’t any airline that beats out Dallas-based Southwest Airlines for carrying more passengers. Within the U.S., AirTran has been rated as the eighth largest carrier of passengers. According to the Associated Press, AirTran’s closing price was $4.55 but then increased 69 percent to be $7.69 with Southwest’s acquisition on Friday. Southwest will pay about $670 million with accessible cash. $2 billion in AirTran debt is going straight to Southwest. The deal should be closing fairly soon. In fact, by the first half of 2011, it should be closed. There could be an additional change by 2012. AirTran planes will all get a paint job to be Southwest planes.
Are merging airlines positive or negative?
The end of low air fares may be just around the corner with the Southwest/AirTran merger. The competition between companies is what keeps prices low, states the Consumerist. The competition being gone will leave Southwest and other corporations with less pressure. Without the pressure, prices are sure to go up. George Hobica of Airfarewatchdog told The Consumerist that the Southwest AirTran merger will also lead to more airline consolidation, further reducing competition and consumer choice. Southwest could have to decide whether to just raise its prices or continue to profit off of low fares, says Hobica. Another possible outcome is that a bigger Southwest could force the bigger airlines to compete on its level and lower airfares overall.
USA Today
usatoday.com/money/industries/travel/2010-09-27-southwest-airtran-merger_N.htm
Associated Press
google.com/hostednews/ap/article/ALeqM5hFjJQqYUno_x04Nx3mAvf9Na1EwwD9IGC59G0
The Consumerist
consumerist.com/2010/09/what-does-southwest-buying-air-tran-mean-for-consumers.html
