Southwest AirTran Merger On Track For April-June
This just in:
The Southwest Airlines pilot’s union has just approved an agreement that will allow the two companies to merge their workforces. This is a major issue that infects every potential airline merger, and the fact that an agreement has been reached all but assure the merger will go through. You may remember that when Southwest last attempted to merge with Frontier Airlines, their pilots rejected the deal.
Some Background
If you are a pilot, the only thing that matters in your professional life is your seniority position. Every airline has a seniority list, and your rank on that list is used to determine where you are based, what aircraft and routes you fly, and whether or not you are a captain or a first officer. Ultimately, these factors determine your salary as well. The lowest ranking pilots, the ones hired last, are forced to do reserve duty as a first officer at an undesirable base. The undesirable bases are often ones with the highest living expenses, as contrary to popular belief, new pilots don’t make much money. Senior pilots do well, but that means working your way up over decades. In this industry, you are lucky if your airline does not merge, become acquired, or go out of business during that time. If that happens to you, you could be the highest ranking captain at your airline one day, and then be the lowest ranking first officer at another airline the next day. The fact that you have been flying as a captain for 30 years will be utterly irrelevant.
So you can just imagine a situation where you have two different seniority lists that have to be merged; you are going to get a lot of people pushed back on the list. This is why it is such a contentious issue. To further complicate matters, Southwest actually pays its pilots very well, so they are concerned that their pay and benefits might suffer. The Airtran pilots are naturally happy at the likelihood that their pay and benefits will rise to Southwest levels, so it is difficult to see them objecting.
Back To The Merger
Southwest shareholders must now approve the merger, along with regulators. Southwest anticipates the closing of the deal in the second quarter of 2011, a time that is fast approaching. If past mergers are any indication, I would expect the following: First, there will be the equivalent of a code share, where you could book flights on either airline from either website. Then, they might then start merging frequent flier programs. Merge might be too strong of a term; expect members of the Airtran program to be transitioned to the Southwest program just like people are being transitioned from the old Southwest program to the new one. The next step is cross fleeting, where you will see Southwest aircraft serving Airtran routes and the other way around. Gradually, the new carrier will start to share check in counter space and gate space as they re-brand to eliminate the Airtran name. Aircraft will get repainted, to the joy of aviation nerds everywhere. The final step is the merging of the operating certificates, so that there really isn’t an Airtran anymore as far as the FAA and air traffic control is concerned.
Somewhere along the way, sooner rather than later I hope, Airtran will compensate it’s fliers for the loss of first class by quickly granting free luggage and free ticket changes. This seems like the easiest thing to do from a technology and organization standpoint. It is always easier to eliminate a fee rather than to enact a new one. Once those fees are dropped, you will immediately be seeing me booking Airtran/Southwest for my trips to Atlanta, by far the largest market currently not served by Southwest.
