It wasn’t so much a merger, it was Southwest eliminating a competitor.
What do you get when you merge one low-cost airline with another? At Atlanta Hartsfield-Jackson airport, it’s higher fares and fewer flights.
This should be no surprise. Haven’t we learned from the wave of airline mergers in recent years; Delta-Northwest, United-Continental and American-US Airways, that the aftermath is consistently higher fares and more fees?
In 2011 Southwest bought AirTran Airways for $1.4 billion, a deal that was rubber-stamped
by the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights then sailed through the Department of Justice.
It was such a smooth review process, it resembled a charade to trick the public into thinking someone was in charge and looking out for their best interests.
Southwest made an almost effortless segue into the Atlanta air service market.
It took over AirTran’s main hub which previously competed directly with Delta Airlines in many markets. Southwest then cut several routes from Atlanta.
The Cranky Flier
Before the merger, AirTran operated a connecting hub at Hartsfield-Jackson with 220 daily departures, while Southwest plans to drop that
to about 125 in January. Total reduction: more than 35 percent.
Also, Southwest-AirTran’s market share at Hartsfield-Jackson has shrunk
from 16 percent to 11 percent, while Delta’s has increased from nearly 78 percent to nearly 83 percent over the last four years.
Obviously, no entity has been more pleased with the merger results than Delta. The loss of AirTran took away the very competitive fares once available as a result of AirTran’s presence. Now Delta no longer has to worry about pricing pressure.
Airtran’s last scheduled flight from Atlanta will be on December, 28, 2014. After that, Southwest will be in total control of operations.”
Experts, industry insiders, and the community were all duped. Southwest was welcomed with open arms and was considered a big win for customers because it finally created competition against the old guard of legacy carriers like Delta, American and United.
Southwest’s marketing department advertised all over Atlanta at the start of the takeover, hyping that “they’re bringing lower prices to Atlanta”.
Gary Kelly, Southwest’s chairman and CEO proclaimed, “It’s about us bringing more competition, bringing more low fares. I think [Southwest’s daily departures from Atlanta] could grow significantly … We’ll have more flights than what they [AirTran] have today when all is integrated.”
Consumer expert Clark Howard, who was also taken in by Southwest’s siren song now acknowledges, “It’s been a real disappointment to some people in Atlanta. People who were interested in discount fares have come to realize that Southwest’s prices are not as aggressive as AirTran’s.”
Aviation consultants BoydGroup International, said that for the third quarter of 2013, the average one-way domestic airfare out of Atlanta increased by 20.6 percent compared with the same period in 2012.
Fares have risen for the consumer due to Southwest’s higher prices and Delta matching them.
AirTran Flying Off Into The Sunset
AirTran was founded in 1993 as ValuJet.
It had an inexpensive business class
, allowing you to upgrade for as little as $50. That included checked baggage and even a free cocktail in-flight.
When you fly Southwest, you don’t have a business class or the ability to reserve seats.
AirTran was playing a key role in keeping prices low at Atlanta, which was lost in the merger. The myth was that Southwest was keeping the major carriers in line on prices. But after AirTran was eliminated, Southwest joined the majors and began increasing its prices everywhere.
And while AirTran operated flights from Hartsfield-Jackson to six Caribbean destinations, Southwest as of January 2015 will operate only two: Cancun and Punta Cana.
Antitrust attorney Joe Alioto filed a lawsuit
challenging the Southwest-AirTran deal, claiming travelers have suffered from reduced competition. The Ninth Circuit Court of Appeals threw out the lawsuit, and Alioto has asked the Supreme Court to take up the case.
“Airlines are so concentrated that they are functioning as an oligopoly to raise prices, to curtail service because of the elimination of significant rivals,” Alioto said. “It’s awful.”
With three and a half months before the AirTran brand is retired, It looks like it will continue to serve these cities until the last day:
Orlando (MCO) based AirTran Flight Attendants say goodbye to their MCO base. another milestone toward the end of the AirTran operation.
Total daily flights: 164. Of course, everything ends on December 29th when AirTran’s 21-year history comes to a close.
Southwest’s reductions could reduce the Atlanta airport’s growth plans for years to come.
Earlier this year, a master plan update was delayed as planners scaled back traffic forecasts because of Southwest’s dismantling of AirTran’s hub. That is likely to contribute to reduced demand for more gates and concourses and delay the need for a sixth runway.
It’s a turnabout for this airport, where AirTran rapidly grew through the mid-2000s.
AirTran sought to gain a critical mass with its Atlanta hub by offering low fares and more flights. That sometimes led to it lose millions of dollars.
But Southwest, which boasts a 41-year profit streak, does not operate a traditional “hub-and-spoke” network. Southwest focuses on point-to-point service, instead of connecting passengers through a hub. Employment at the Atlanta airport has fallen from 5,300 pre-merger to 3,500 now.
No Going Back
Diana Moss, v
ice president of the American Antitrust Institute said
there is little accountability when merger results turn out different from Justice Department expectations. “Once the merger has gone through, there’s no DOJ going back to the airlines saying, ‘Okay you guys, let’s see what you promised us.’ “
Last week Southwest unveiled a new logo amid a brand overhaul that includes a new look for its aircraft.
Despite bringing affordable air travel to the masses, Southwest is no longer the industry’s low-cost leader. Bargains are few and far between.
In sum, good news if you enjoy the cattle call of Southwest.