More Thoughts On Airtran And Southwest
As a huge Southwest fan, my initial reaction to the merger announcement was quite ecstatic. Since then, I have had some more time to digest this and read other’s opinions. Over at The View From The Wing, there is speculation that Southwest’s invasion of Atlanta might signal the end to bag fees. He makes a good argument, but I would counter with the fact that between Medallions and Amex Gold card holders, many people are already getting these fees waived. Furthermore, Southwest already blankets other airline’s hubs in fee free goodness, like Denver, yet United and even Frontier have not backed down from their stupid fees. I have a hard time believing Delta will react much differently.
What I could see happening is the expansion of bag fee waivers and discounts. I could see bag fees being waived for people booking vacation packages, or bag fees being included with certain sale fares. I could see it happening, but I wouldn’t bet on it. Airlines like Delta see these fees as the reason they are profitable. The could retrench, like United to catering to business and premium travelers who either don’t care about these fees as they are reimbursed from their company, or who are exempt from these fees anyways. By doing this, Delta would merely be focusing on their most profitable customers, rather than the market as a whole.
According to reports from Southwest’s media event this week, they feel that there is actually room to grow in ATL, and that it could easily be their largest market. What this merger will do is bring the Southwest effect to Atlanta. For those of you who don’t know, the Southwest effect is what happens when fares come down and service levels go up, due to competition. It is really easy to book a Southwest flight, knowing that without change fees, you are assured of receiving a lower price if the fare later goes on sale. You can also cancel your trip and use all of the amount paid towards a future flight. Neither is possible with Delta.
With extensive coverage in the Southeast, they will now become a truly national airline. In fact, with Airtran’s service to Mexico and the Caribbean, they will become an international carrier. From an aviation standpoint, the Caribbean flights require over-sea flight equipment, something they will also need if they are to fly to Hawaii. Southwest has acquired other carriers before, but it is becoming clear that the Airtran deal will completely change the scope of Southwest and the landscape of the competitive market in North America.
