With Southwest recently acquiring AirTran for $1.4 billion, there are now officially only two low cost airlines in serious competition in the US, Southwest and JetBlue. After the current mergers of United-Continental and Delta and Northwest, there are only four legacy carriers left. I’ve heard many different reactions to the Southwest/AirTran acquisition and airline consolidation in general. What will it truly mean the consumer? In my opinion; The good, the bad, and the ugly:
The good:
-AirTran customers will now get better service and be paying fewer fees
-Lower prices for consumers in Southwest’s newer markets
-Legacy airlines will have to be more competitive with pricing now that Southwest has such an expanded market throughout the US
-Americans will always have other transportation options, and will use them if necessary (This one is debatable because as we know, there are many times flying is our ONLY option. This is especially true for corporate travel.)
-Fewer delays and cancellations, due to more rerouting options in some areas.
The bad:
-Higher prices for consumers where Southwest and AirTran used to compete before the acquisition
-The potential of Southwest’s customer service to take a hit if they’ve stretched themselves too far
-Corporate travelers will likely not reap the benefits of this merger as discount airlines are often not used by corporate travelers.
The Ugly:
-For Delta…will likely lose a lot of business in places they share hubs with AirTran, such as Atlanta, Georgia
-For Jetblue…they are Southwest’s main competitor and Southwest’s growth could hurt their revenue share.
-The influence of more airline consolidation in the future creating higher prices and fewer options for consumers
-The airline industry has already changed dramatically over the last 20 years, for the worse….let’s hope we don’t allow continual merging of airlines that are already performing poorly individually. (Luckily, Southwest isn’t one of them!)
What are your thoughts on the acquisition/merging of airlines such as Southwest and AirTran?
Jill, I appreciate your viewpoints. During a panel disscussion yesterday one topic of discussion was future mergers and what is next - American/US Airways? What I fear is that larger does not always mean better - as shown by a carrier like JetBlue that understands and delivers excellent service. We will see.
ReplyDelete