Southwest Acquires AirTran: Six Reasons This is a Great Move – BNET Headwinds
Part one of my story focused on the positive things to come out of this merger.

Lambert cautious over Southwest-AirTran deal – St Louis Post-Dispatch
I was asked if I thought the AirTran/Southwest merger opened up any opportunities for St Louis. I think the quote they used was a bit too optimistic sounding.

Southwest Acquires AirTran: Four Reasons This Isn’t the Best Plan – BNET Headwinds
And now for the potential downside. Lots of people are hyping up the merger, but there is always a downside risk.

Spirit Airlines is Going Public and Its Business Model is Producing Stellar Results – BNET Headwinds
Spirit is going public and that means we have data to play with. These guys are doing very well.

Mesa Air Group Shows Everything That’s Wrong with the Bankruptcy Code – BNET Headwinds
In case you missed Mesa’s reorganization plan, you’ll want to take a look. It’s a frustrating look at how management can take advantage of the bankruptcy process.

Combining airlines may be challenging for Southwest, AirTran – Ft Worth Star-Telegram
Lots of questions for me on the Southwest/AirTran integration and any potential bumps along the road. (Though the pay rates quoted aren’t right. Those are closer to what a 10 year captain makes.)

I’ve seen countless articles/posts/interviews talking about how the Southwest/AirTran merger is going to be terrible for every other airline out there. The newly-created behemoth will dominate and crush everyone around. Seriously? Don’t believe conventional wisdom here. This merger is actually good news for most airlines. And one of the biggest winners might be Frontier.

For Frontier, there are a couple of things that should help relieve some pressure in both its hubs. We can start with the most obvious place for gains to be made, Milwaukee. Frontier, Southwest, and AirTran have been in a royal rumble in Milwaukee for awhile now. There isn’t enough room for the three of them, but nobody wants to blink first. Now, there will only be two airlines and rationalization of the network can’t be far behind. Here’s a fancy-pants Venn diagram showing where things stand today:

Southwest and AirTran only overlap on four routes out of Milwaukee (three of which Frontier flies as well), but on those, capacity will likely come down and that can only help the situation. But that’s only part of it. There are another five or six cities that AirTran and Frontier both serve from Milwaukee that I expect will only be served by Frontier in the future.

Right now, AirTran has a deal with SkyWest to fly regional flights in Milwaukee. There is no way that deal is surviving the merger, so my guess is service to those cities will quietly disappear. Maybe we’ll see one or two stay on with larger aircraft (St Louis?), but the rest will probably go away.

Lastly, there’s DFW. Southwest will not serve DFW when the merger is complete, so the current flight from Milwaukee will go away. Maybe it will eventually be served from Dallas/Love, but that won’t be legal until 2014.

So in Milwaukee, things should start to look better. And then there’s Denver.

Frontier and Southwest are competing in Denver, but AirTran has only a token presence. Why is that a good thing? Distraction. Much of Southwest’s growth has been focused on Denver, and now Southwest will be busy bringing AirTran into the fold. I don’t expect we’ll see nearly the focus on Denver as we’ve seen before.

That’s bound to be good for Frontier. (And yes, United’s distraction from its Continental merger will help there as well.) But Frontier isn’t the only beneficiary. Sure, distraction can help everyone except for Delta, which will be the focus of the distraction at its Atlanta home base. But what’s the chance that Southwest continues to serve all those smaller cities from Atlanta that AirTran serves today? Delta might end up with more frequency to compete against on big routes but competition might disappear completely on smaller routes. And that’s where legacy carriers enjoy the highest fares.

Oh, and what’s the chance that AirTran’s challenge to Allegiant in Orlando with sub-daily flights sticks around? I’d be surprised to see Southwest stick with that strategy. Spirit will probably be happy as well assuming that Southwest’s higher costs make it easier to Spirit to compete in the Caribbean. In other words, there are potential opportunities for just about everyone here, even Delta.

I like to try and ease into the work week, but Southwest rudely prevented that from happening by announcing the airline would acquire AirTran bright and early yesterday morning. But that’s ok. I forgive them. This is a really interesting move for the airline, so it’s worth shifting into overdrive here. I put a post up yesterday on BNET about what’s good about this (I have another going live today on what’s bad), but here I want to talk what it means for you, the customer. Unlike the United/Continental so-called “merger of equals,” this one is all Southwest. Also unlike that merger, we actually know a fair bit about how the post-merger Southwest will look, surprisingly. So, here’s what we know.

Southwest Rules, AirTran Drools
Make no mistake here. Southwest is the acquiring airline and AirTran’s name and brand will disappear completely. Headquarters will be at the Southwest campus in Dallas. I can’t say I’m sad to hear that. AirTran’s legroom on the 717s are so awful that I try to avoid them despite the fact that I love my Douglas jets. I’ve also found some of AirTran’s customer service policies to be more along the lines of customer disservice and I look forward to those dying as well.

You can use that basic plan as your general guide on what stays and what goes in the combined airline, but that doesn’t mean everything AirTran does is bad and will go. No, Southwest will find what it likes and keep it. I’m just not sure what that might be.

No Fees, No Change
Though Southwest will always want to hedge its bets by saying that things could change in the future, we can expect the bulk of the Southwest product to remain. In fact, CEO Gary Kelly gave some examples:

• No change fees (AirTran charges $75 today)
• No bag fees (AirTran currently charges $20 for the first and $25 for the second)
• All coach class (AirTran currently has a business class cabin)
• Open seating (AirTran lets you pay extra for a seat assignment today)

Southwest Will Fly Douglas Jets
For the first time (if you exclude the Muse Air acquisition years ago), Southwest will operate some good ole’ Douglas jets. Ok, so they’re actually Boeing 717s, a design Boeing continued when it bought McDonnell Douglas back in the 1990s, and AirTran has 86 of them. Southwest has confirmed that it will keep the planes. Today, they’re configured with 12 business class seats and 105 knee-crunching coach seats. Southwest expects to still have 117 seats onboard but without business class. That means your knees will also be free to roam about the country along with the rest of you.

This will complement Southwest’s fleet of 25 737-500s which today seat 122 people. The capacity on those is close enough that Southwest will be able to schedule them similarly, I would assume. You can also expect to see Southwest’s massive fleet of 737s seating 137 people grow by about 50 planes when AirTran’s 737s get painted. But there will also be this new opportunity of a 100+ strong fleet of airplanes with 20 fewer seats. That can be used to serve smaller markets.

No Route Decisions Except That DFW is Toast
As you would expect, it’s way too early for the airline to be announcing route decisions but there is one that has already been made. When the merger is complete, Southwest will not serve DFW because under its Wright Amendment settlement, it says it won’t serve the airport. Today, AirTran serves Atlanta six times daily, Milwaukee twice daily, and Orlando once a day. Those will disappear, but they could come back from Dallas/Love in 2014 when the Wright Amendment is lifted.

Some have talked about how Southwest is a point-to-point airline while AirTran is a hub-and-spoke airline, but I disagree. Look at some of Southwest’s bigger cities and they look a lot like a hub to me. In fact, CEO Gary Kelly said “We don’t see Atlanta developing for us any different than the way we operate Chicago Midway.”

Where I do expect to see change is on the small city side. Yes, the 717s will help serve smaller cities that Southwest can’t serve today, but a lot of AirTran’s business is short term incentive deals that I’m not a fan of. Southwest clearly isn’t against airport incentives, as it showed when it went into the Florida panhandle, but I can’t imagine it’s going to be as interested in most of the incentive opportunities since very few of these turn into sustainable opportunities. While AirTran is happy going in and out of markets on a whim, Southwest wants to build sustainability.

We also know that we’ll see Southwest’s airplanes finally land at places like Washington/National, Charlotte, Memphis, Des Moines, and Wichita, places that have been rumored for years. And there will be the ability go international now as well. Lots of opportunities are opened up with this deal, but I expect lots of doors will be closed on the smallest cities in the network.

But beyond city selection, there will be big schedule changes as well. I think this chart sums things up nicely:

Southwest is all about frequent flights whereas AirTran just throws flights out there one or two at a time (or less than daily on some routes). The traditional Southwest market is a lot different than the traditional AirTran market (if there is such a thing), so Southwest is going to have to figure out how it wants to serve the Molines and Allentowns of the world, if in fact it does at all.

And that’s really what we know so far. Lots of speculation out there on what could and couldn’t happen, but it will all unfold in the months to come. They expect to close on this next year, and I don’t imagine there will be any pushback from the feds. They love Southwest, so this should get the seal of approval.

Now let’s see what you think. I’m particularly interested in what Atlantans have to say about this. Will it make you more or less likely to fly Southwest/AirTran?

[Original photo via Flickr user Mark on AirTran Team]

Union-Vote Rule Change: Bad News for Non-Union Delta, JetBlue – BNET
The National Mediation Board made some rule changes recently and it may be causing some airlines to sweat.

Southwest Airlines’ March Meltdown — Less Than Meets the Eye – BNET
Southwest had a rough March, but it hardly means that things are heading south.

How will the new United-Continental treat customers? – Cleveland Plain Dealer
I talked about some of the issues that the combined United/Continental will face (in the infobox) on the side.

AirTran-Frontier: Once Friendly Airlines Are Now Kicking, Gouging Eyes -BNET
The hammer has finally dropped. The once-cozy AirTran-Frontier deal is now over. It’s been fun to watch the fight.

spice up your flight – antibride.com
If you’re traveling for your wedding, it can’t hurt to try to get some perks.

Mesa Air Group Loses Battle with Delta, and US Airways Must be Smiling – BNET
Mesa’s contract with Delta is toast, and that means US Airways has even more leverage.

Spirit Airlines: Why a Threatened Pilot Strike Could Take the Company Down – BNET
Not quite as dramatic as the title would suggest, but a strike threat at Spirit is a bigger deal than at a larger airline.

United-Continental Merger: Continental Is Taking the Reins, No Question – BNET
Another clue about the leadership team at United/Continental is out there. There is no trace of United President John Tague on the integration team.

Did you guys see this really odd story about some problem passengers on an AirTran flight last month? I can’t quite figure out how this thing blew up to the point where people were thinking it was a terrorist dry run, but it looks like the reports were embellished by someone claiming to be on the airplane. (He wasn’t.) The email started shooting through cyberspace at lightning speed. It’s amazing how false rumors get spread and taken as truth so quickly. (Just ask Fox News.)

On November 17, AirTran flight 297 was supposed to leave Atlanta at 440p for a flight to Houston. There were some issues on the plane, they pulled some people off to question them, and eventually they let them back on. According to FlightAware, AirTran 297 lifted off at 745p. Seems pretty routine, but then Tedd Petruna stepped in.

Tedd says he was a passenger on that flight, and it was a much more dramatic than what was initially reported. In his email regarding the flight (thanks, Airline Biz), Tedd says he was up in first class (AirTran actually has business class, not first, but ok) and he got involved.

Eleven “muslim men” got onboard (how he knew that, I couldn’t tell you) and scattered throughout the plane. Apparently one guy up front called to another guy in the back (again, how he knew he called a guy in the back, we’ll never know) and started speaking loudly in Arabic. The flight attendants repeatedly told him to turn the cell phone off, but he wouldn’t.

Then, in the back of the plane, two younger Muslims started watching porn (how the hell did a guy in the front of the plane see this?) and in his eyes, that’s only allowed right before Jihad (apparently not true).

This crap goes on and on until our hero Tedd apparently wrestles the guys to the ground until the TSA and police stormed the airplane. They took the 11 guys off the plane and removed their bags. We’re done, right? Nope.

The 11 get back on the plane and the crew decided to walk off instead of fly with these guys. Tedd got up and stormed off the plane as well. Apparently so many people stormed off the plane that they canceled the flight (we obviously know isn’t true) and he eventually landed at 1230a (they have no flight that late.)

So without even doing any additional fact-checking, this thing seems highly suspicious. But it gets even more hi-lariously wrong. AirTran told the Atlanta Journal Constitution that Tedd Petruna wasn’t even on the plane in the first place! Oh sure, he was supposed to be on it, but he missed his first flight from Akron/Canton to Atlanta, so he ended up not making it to Atlanta until about a half an hour after 297 first tried to leave.

According to AirTran, it’s a very different story. It sounds like these guys weren’t dressed in any particularly memorable way, and there wasn’t any sort of fight on the airplane. No TSA or police officer ever came on the airplane either. So really, it sounds like a rowdy group of guys who wouldn’t turn their cell phones off so they pulled them off the plane to check it out. After they talked to them and checked to make sure they weren’t a security threat, they let them back on and that was that.

Twelve passengers opted not to travel on that flight, and the crews were swapped (probably because they didn’t want to fly with these guys), but that was it.

I just wonder why AirTran isn’t really being more proactive here. They posted a refutation on their “internal website” of each point made by Tedd in his email and they sent it to the media. I’m not sure how long of a list that was, but I never saw anything. I’d think they would want to get the truth out there, because it sounds like they handled the situation just fine. As for our hero Tedd, I really have to wonder what the heck he was thinking.