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Southwest moves into Atlanta

29-Sep-2010
Southwest CEO, Gary Kelly
Southwest CEO, Gary Kelly

Perhaps not since the march of General Sherman has Atlanta seen such a sudden change in the status quo. While infinitely smaller than Delta, AirTran operates to dozens of cities from Delta’s hub city. Unlike Southwest’s usual “go-slow” approach, it will enter the Atlanta market with a fully fledged, nationwide network as well as routes to some near-international Caribbean and Mexican points. It also inherits a full infrastructure system at the airport.

This pre-packaged network, which AirTran has found increasingly difficult to maintain, will present Delta with quite a different challenge when owned and operated by the powerful and successful Southwest. Along with the routes, Southwest gets a cadre of customers who have already chosen away from Delta and are predisposed to use AirTran’s successor.

Delta controls a massive 76% of total domestic weekly capacity at the world’s busiest airport. AirTran is in second place with a 17.6% share, according to OAG schedules.

Atlanta domestic carrier capacity share (%)

Carrier

Capacity share

Delta

76.0%

AirTran

17.8%

American Airlines

2.2%

US Airways

1.5%

Continental

0.9%

United Airlines

0.7%

Spirit Airlines

0.3%

Frontier Airlines

0.3%

Alaska Airlines

0.1%

Pacific Wings

0.1%

Delta’s position in international markets to/from Atlanta is even more imposing, with an 84.4% share, against AirTran’s 3.2%. 

Atlanta international carrier capacity share  (%)

Carrier

Capacity share

Delta

84.4%

AirTran

3.2%

Korean Air

2.8%

Air France

2.6%

Air Canada

1.8%

British Airways

1.7%

Lufthansa

1.7%

KLM-Royal Dutch Airlines

1.7%

While Delta will doubtless remain the primary operator at the airport, Southwest customers nationwide will now have the ability to travel to/from one of the nation’s most dynamic metro areas, filling what had been a huge “white spot” in the network.

More slots at controlled airports

In addition to the new position in Atlanta, AirTran brings slots at two of the nation’s most constrained airports, New York’s LaGuardia and Washington’s Reagan.

Current AirTran services

LGA to

 

DCA to

 

Akron

3

Atlanta

6

Atlanta

9

Milwaukee

6

Indianapolis

2

Fort Myers

1

Milwaukee

6

Orlando

1

Newport News

2

   

The chart shows the slots currently held and operated by AirTran at the two airports, with each number representing an arrival and departure slot. This purchase gives WN an increasing presence at airports that it has recently found increasingly appealing.

In addition to Reagan, AirTran currently serves Atlanta from the regions’ other two airports, BWI and Dulles. If continued, Southwest will also be a player at Westchester County airport near New York where AirTran  operates.

Plenty of synergies

AirTran currently has a large operation at Baltimore, one of Southwest’s primary focus cities. The merger will allow for schedules to be rationalised and will add a number of new destinations from its already strong BWI presence.

Southwest will also get a mini-hub (or focus city) at Milwaukee, where AirTran has a significant presence. In the process of beefing up its presence there, it will come face-to-face with one of its past takeover targets, Frontier.

Finally, quite a few new cities will begin to appear on the Southwest route map. These include Branson, Missouri, Portland, Maine, and Rochester, New York.

For some time now, there has been speculation that Southwest would eventually dive into the near-international marketplace. Had the Frontier merger succeeded, it would have inherited a few international points. The same ability to ease into such operations is present in an AirTran takeover, again with the infrastructure and operating permits already in place.

One of the first comments made by most observers was to point out the large fleet of 717s operated by AirTran. This, of course, is a point of incompatibility, as it was with the Frontier fleet of Airbus aircraft.

And while about 40% of the FL fleet is comprised of B737-700s, a type that is abundant at Southwest as well, they are configured in a two-class system that is, or at least has not been, the Southwest model.

Mergers take time and time allows for change

As we are seeing in the UA/CO combination, the process of bringing different companies together is a step-by-step process. Those carriers have openly stated that real operational integration is years away.

The same kind of gradual change will be a part of the Southwest/AirTran coupling and that will provide time for Southwest to perhaps “experiment” with some new ideas. It is evident that today’s Southwest differs markedly from the airline that existed in 2000 and even more so from its origins.

If the airline is now interested in airports like LGA and DCA and is thinking of flying to Cancun, might it not also be toying with other changes as well? When better to try new concepts than in a transition period when the aircraft and other infrastructure pieces are already in place?

Increasingly of late, Southwest is shedding some of its previous tenets and exploring options. The next move is theirs to make.


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