Well it seems the market is picking up for consolidation – this time with Southwest Airlines agreeing to buy AirTran for $1.4 billion, with the merger to be concluded in early 2011, and a full operations merger in 2012.
So why? It’s not as if Southwest needs more aircraft – it’s about access to airports and slots – namely the access to Eastern USA as AirTran has a concentration in Atlanta (it’s home base), with access to Washington DC (Regan National) and New York (La Guardia)- tasty morsels indeed.
It also buys Southwest access to Mexican and Caribbean services without the rigmarole of applying for access – again a time saver and a cost reduction mechanism if they choose to exercise it.
Should the purchase go ahead there will be a small issue of a mixed fleet – which knowing Southwest they will bulldoze through quickly, stripping down the current 737-700’s and refitting them to their all economy standards (vs the mixed class inside them at the moment) and getting shot of the little 717’s that remain (although in the short term, Southwest will retain them for “smaller” markets).
I’m still not sure over this – Southwest are a power to be reckoned with and this could give them valuable access to markets. Of course, this will probably have to go through a few committees for approval so there is time for this to fall through. All I’d say is from this angle, expect a lot more planes painted in Blue, Orange and Yellow soon…..
