Southwest Airlines to Take Over AirTran

Southwest Airlines announced plans to take over AirTran for a consideration of about $1.42 billion. The transaction would bring together two of the largest carriers known for their cheap tickets across the USA. The acquisition would increase Southwest’s market penetration into as many as 37 new cities. The largest in the circuit is Atlanta. In fact, the Hartsfield-Jackson International airport of Atlanta is the busiest in the country and a major business travel hub. In addition, Southwest would get a bigger market share of cities like New York, Boston, Key East Coast – the areas where the airliner has been on an expansion spree.

Passenger Benefits

Besides getting the combined benefits of both the airlines, passengers can look forward to further attractions. For instance, Southwest does not plan to retain AirTran’s bag fees. AirTran charges $20 and $25 for the first and second checked bags of passengers. Charges for the same service by big carriers like American Airlines and United Airlines is about $25 and $35. For Southwest, it translates as the possibility of adding customers of such airlines to its own portfolio. Furthermore, the new airline would be serving more than a 100 airports offering a slew of flights to over a 100 million passengers. The deal also has the potential to further boost the tourism sector as visitors booking flights to USA in the future would get the full advantage of this transaction. In fact, similar path breaking developments in the hotel industry coupled with such major decisions in the aviation sector constantly add value to the US holiday market.

Time frame of the Deal

The takeover requires regulatory as well as shareholder approval and is expected to be over within the first two quarters of 2011. The complete merging of services is expected to take place in 2012.