I won’t have a lot to say on the announcement of Southwest’s planned acquisition of Airtran. I’ll leave that to the Cranky Fliers and Dan Webbs of the world, it’s a little outside of my area of interest — I try not to fly Southwest or Airtran and have little interest in their mileage programs.
Still, it’s hard not to see this as a bg deal. This is obviously bigger than Southwest’s previous acquisitions.. Morris Air, run by Dave Neeleman who would go on to found JetBlue once his non-compete was up, and Muse Air which was founded by Southwest’s original President Lamar Muse and his son (and dubbed ‘revenge air’ after Muse’s ouster of Southwest and attempts to compete across Southwest’s key routes).
One expects Airtran to begin aligning policies with Southwest once the deal is approved. So Airtran’s baggage fees will go away. It’ll also raise Airtran’s costs to Southwest levels, which is good for their competitors. Though this eliminates a strong competitor in the ‘low cost carrier’ segment it will be hard for a Justice Department that’s allowing United and Continental to merge to block Southwest and Airtran.
In the end though I see this as a signal that Southwest isn’t Southwest anymore, that they don’t see the opportunities out there for strong organic growth within their business model. They tried to acquire Frontier and that failed, but it clearly wasn’t a one-off. This deal says it’s a conscious strategy to grow by acquisition and with a carrier whose low cost model is different (more hub-based than point-to-point) and with a different culture.
Frequent flyer perspective: A larger Southwest makes it an even bigger deal that Southwest is planning to relaunch their Rapid Rewards frequent flyer program in 2011, since the carrier itself will be bigger.
Otherwise, one less low cost carrier that I am choosing not to fly if I can avoid it but putting pricing pressure on the carriers that I do fly.
A big story for the airline industry, ho hum news for me.