The Southwest-AirTran merger: What it means to you




Posted on September 27, 2010 at 5:58 PM

Updated Monday, Sep 27 at 6:14 PM

DALLAS — The unexpected merger of low-cost airline rivals could affect what you pay to fly.

Dallas-based Southwest Airlines will acquire AirTran Airways for $1.4 billion in cash and stock. The deal gives Southwest an entry into Atlanta, the largest city it doesn’t serve and the nation's busiest airport.

Southwest also gains access to Washington D.C.'s Ronald Reagan National Airport, New York's LaGuardia and Boston's Logan.

The deal means Southwest will also be able to serve the Caribbean and Mexico.

The impact on fares for North Texas passengers will likely happen in two phases.

The first phase occurs when the deal closes sometime next year and stretches to 2014, when Wright Amendment restrictions are lifted at Dallas Love Field and then beyond.

Southwest's president, chairman and CEO Gary Kelly wants passengers to know that the acquisition of AirTran means some popular passenger amenities won't be changing.

"We have open seating; we have no plans to change that," he said. "We don't charge for bags; we don't plan to change that. We have single-class service; no plans to change that."

But passengers may see changes in fares from Dallas/Fort International Airport — which AirTran has served since 1998 — to Milwaukee, Orlando and Atlanta. Since Air Tran will have to withdraw from D/FW when the deal is done, that leaves less low fare nonstop competition for American, especially to Atlanta.

Currently, American matches AirTran fares to those destinations.

Rick Seaney of Dallas-based predicts that prices will increase. "If there's a lack of competition, fares go up," he said. "When supply outstrips demand — and right now, planes are completely full, there's no reason to discount — you take away competition, and the bottom line is, prices have to go up."

But after Wright Amendment restrictions end in October 2014 and Southwest can fly to any domestic destination nonstop from Love Field, North Texas passengers should look for the full benefits of the AirTran deal.

"I would expect Southwest to be flying to places like Hawaii within the next few years, and Canada, which opens all sorts of new competition with American out of D/FW," Seaney said.

But don't look for nonstop international flights from Love Field after 2014. That won't be allowed for any airline.