The Merging of an Airline: the Atlanta Connection

By Jim Burress

Atlanta, GA – Transcript:

[Reporter] Last year, Southwest Airlines bought a lot of TV time for this ad:

[Sound of commercial]

[Reporter] In it, Southwest ramp agents storm an AirTran plane on the tarmac, bearing their chests, which collectively display the message "Bags Fly Free."

Southwest had officially waged war on AirTran.

What you might not know is that AirTran countered with this ad:

[Sound of commercial]

[Reporter] Here, a cowboy corrals passengers dressed in cow costumes a poke at Southwest's non-assigned seating and overall casual' approach.

AirTran couldn't afford TV time, so it posted the ad on YouTube.

And that says a lot about the two airlines. Southwest makes money and Southwest spends money. AirTran runs a much leaner operation, which is part of what makes it so attractive to Southwest.

So, back to those baggage fees. Can Southwest just walk away from AirTran's cash cow? Speaking at a recent luncheon in Dallas, Southwest CEO Gary Kelly said, "Yes."

[Kelly] "Customers hate these fees. They hate them. So, why would you do something to your customer that you know they're going to hate? It just makes no sense to us."

[Reporter] Kelly is less firm on what role Atlanta will play in the merged airline. In the acquisition, Southwest instantly inherits AirTran's passenger load. That's about 22-percent of the Atlanta market. But that market share comes with a price mainly, operating a hub and spoke system. That's something Southwest has never done.

[Kelly] "So I think it's far too early to judge whether we'll want to keep the current scheduling approach that they're using, or whether we want to make radical changes to that."

[Reporter] Kelly says no changes will come this year, and it's unlikely Southwest will cut flights. Just the opposite, according to the airline.
Meanwhile, an issue that could take years to sort out is how to integrate the two airlines' pilots. Kit Darby is an aviation consultant.

[Darby] "We joke that three things matter in the airline business: seniority, seniority, and seniority. Any time you tinker with it, pilots are going to be nervous."

[Reporter] Time off, income, route flexibility -- they're all functions of how long a pilot's been with the airline. Darby thinks the pilot unions will work it all out without much fuss.

[Darby] "If it's good for business, and they did a merger because it's good for business. So if it's good for business, in the long run, it should be good for the employees. Now, short term, with recessions or fuel prices, there could be ups and downs. But 5-10 years down the road, if this merger was done for the right reasons and it's done right, which I have every expectation it will be then the employees, all the employees, should benefit from this."

[Reporter] If the merger's a win-win for employees, what about Atlanta travelers? Overall, AirTran's fares are actually a bit lower than Southwest's. But Southwest will create new competition. Plans include adding Canada and Hawaii in the future.

All that means you'll likely pay less, whether or not you fly Southwest.

Jim Burress, WABE News