Southwest Airlines paid $1.42 billion to merge with AirTran, which is also a large discount airline in the U.S.. 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. Some say that fees because of the Southwest/AirTran merger could be going up without as much competition in the discount market. Competition within the market can be easier for the large company. Smaller companies will have to combine to compete with Southwest. The policy for no baggage fees is something Southwest is known for. Luckily for any riders of AirTran, the policy could be kept no matter what happens.
Southwest Airlines unleashed within the east
Southwest Airlines spend $1.42 billion buying out AirTran. Nobody was all that amazed by this. Delta and Northwest merged in 2008. Continental and United Airlines can be the largest airline within the world after merging on October 1. USA Today reports that 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. Access was given to Southwest in Atlanta which is a world’s busiest passenger airport. This is where Southwest and Delta will start to battle.
Southwest investment greatly increases with AirTran
Southwest Airlines is located in Dallas. Remarkably, more passengers ride with Southwest in the U.S. than any airline. AirTran is the eighth-largest U.S. carrier. As outlined by 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 has plans to pay with cash. It has in available money $670 million. Southwest took on more than just a company. It also took $2 billion in debt from AirTran. Assuming regulatory and shareholder approval, the deal is expected to close within the first half of 2011. By 2012, all AirTran planes will bear Southwest colors.
Airline combinations: bad or good for customers?
To customers, the Southwest/AirTran merger could mean the end of low air fares. The Consumerist reports that passengers benefit when you will find more carriers competing for their business. Fewer competitors in the discount realm could mean that Southwest and other air carriers have less pressure to keep fares low. Prices are sure to go up claims George Hobica of Airfarewatchdog. He told The Consumerist that this will happen because more companies will merge making for even less competition than before. Hobica suggests that you will find really only two things Southwest can do. It will either be able to improve its business of making cash off of low fares or raise its prices for everyone. Another possible outcome is that a bigger Southwest could force the bigger airlines to compete on its level and lower airfares overall.
Find more info on this subject
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
