Two of the largest United States of America discount airlines were merged together when AirTran was bought by Southwest for $1.42 billion. Easters hubs can be accessed by Southwest as a result of this combining which may also make it possible for the company to compete internationally. The deal caught travel experts off guard. Some say that fees as a result of the Southwest/AirTran merger could be going up without as much competition within the discount market. Competition in the market could be easier for the large company. Smaller companies will have to combine to compete with Southwest. However, a definite positive for previous AirTran passengers can be Southwest's policy of no baggage fees, which the airline said it will maintain across the board.
Southwest Airlines in the east now
Southwest Airlines spend $1.42 billion getting out AirTran. Nobody was all that amazed by this. There was a different merge in 2008. Delta and Northwest were merged. Continental and United Airlines will merge Oct. 1, creating the largest airline in the world. According to USA Today, the deal is great for Southwest which now has many more travel hubs. This is shown as it has access to Washington D.C.'s Reagan National now also as New York's La Guardia. Delta could be Southwest's biggest competitor within the world's busiest airport in Atlanta where it now has access.
Southwest stock greatly rises with AirTran
Dallas-based Southwest Airlines carries more passengers than any airline in the United States. AirTran is the eighth-largest United States carrier. As outlined by the Associated Press, AirTran's closing price was $4.55 however then increased 69 percent to be $7.69 with Southwest's acquisition on Friday. Southwest will pay about $670 million with available money. $2 billion in AirTran debt is going straight to Southwest. In the first half of 2011, the deal could be expected to be close. All AirTran planes may have been changed to Southwest by 2012.
Airline combinations: good or bad for consumers?
The combining of Southwest and AirTran might be bad. This might mean low air fares could disappear. The Consumerist reports that passengers benefit when you will find more carriers competing for their business. The competition being gone will leave Southwest and other corporations with less pressure. Without the pressure, prices are sure to go up. George Hobica of Airfarewatchdog told The Consumerist that the Southwest AirTran merger will also lead to more airline consolidation, further reducing competition and consumer choice. Hobica suggests that there are really only two things Southwest can do. It will either be able to improve its business of making cash off of low fares or raise its prices for everyone. Also, Southwest might just make it harder for other companies to get business leading them to lower their prices overall.