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Founded in 1992 as ‘Valujet’ and changing to its present name in 1997, Orlando-based AirTran is an American low-cost carrier with hubs in Atlanta, Milwaukee, Baltimore and Orlando. AirTran has a major presence in eastern and mid-western US markets, as well as a growing presence in the Caribbean. The airline is one of the largest operators of Boeing 717 aircraft in the world and is among the largest LCCs in the USA.
Location of AirTran main hub (Atlanta Hartsfield-Jackson International Airport)
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider AirTran fits the LCC profile and it is included in our reporting on this basis. Please note: when reporting for an airline is changed from or to LCC the historical data is not affected and it can lead to a distortion in the current reported data. Contact us if you have any queries.
759 total articles
133 total articles
Southwest Airlines aims to realise its goal of dismantling AirTran’s hub in Atlanta in Nov-2013 as a means to bolster local passengers at the airport in the hopes of improving Atlanta’s performance. The declaration that Atlanta will officially become a point-to-point operation completes efforts by Southwest to eliminate unprofitable flow-through routes and concentrate on areas where it, along with AirTran, has relative strength.
After completing its acquisition of AirTran in May-2011, Southwest set its sights on network optimisation between the two carriers. The exercise essentially resulted in many small markets being eliminated from AirTran’s network and Southwest’s determination that Atlanta would perform more effectively in the combined network through the adoption of Southwest’s point-to-point route management strategy.
Southwest Airlines sits at an interesting crossroads as the US market reaches a high level of maturity ushered in by legacy carrier consolidation and its own merger with AirTran Airways that is targeted for completion in 2014. With the changes, three distinct business models are emerging in the US – full service, hybrid and ultra low-cost.
But Southwest does not fit neatly into any of those categories, which the carrier might view as a positive attribute as it examines how to evolve its business model. Southwest's history of a skittish approach to change leaves many questions unanswered as to how the airline can retain the attributes that make it a recognisable brand while making key decisions to ensure a large pipe of steady revenue generation.
The low-cost pioneer during the last couple of years has seen its edge in that regard soften as Chapter 11 reorganisations and consolidation among the US majors has resulted in those airlines lowering their unit costs. During 2012 Southwest’s unit costs increased 4.2% year-over-year, and on a stage length adjusted basis there was roughly a 30% difference in its nearly USD7 cent unit costs compared with Allegiant Air, who along with Spirit is considered the new breed of ultra low-cost carrier.
Memphis International Airport is getting a small boost during 2H2013 when Southwest, through its AirTran subsidiary, adds service to Baltimore, Chicago Midway and Orlando in Aug-2013. The new service being introduced by AirTran could possibly help combat the airport’s declining traffic stemming from Delta’s ongoing pull-down of its Memphis hub. AirTran is not directly replacing service to the smaller markets Delta is pulling down in Memphis, but Southwest appears ready to make a larger commitment to the airport as it works to usher in its own branded flights from Memphis later in 2013.
At the same time, Southwest appears to be eliminating some marginal markets from its network as the busy travel season in the US winds down, including the first route cut from Greenville/Spartanburg, South Carolina, a market Southwest inaugurated in Mar-2011. One of the initial markets from Greenville – Orlando, Florida – is being cut during 2H2013. Southwest is also taking over service operated by AirTran in Grand Rapids, Michigan, and adding its own branded flights to some of its larger markets.
Southwest Airlines plans to aggressively grow its return on invested capital (ROIC) by 8 ppts in 2013 to 15%, driven by USD1.1 billion in revenue gains derived from schedule adjustments, new ancillary fees and an improved revenue management system. The carrier must close a wide gap in order to meet its goal after recording a 7% ROIC for the 12M ending in Sep-2012, and admitting it fell short of an original 15% target for 2012. But Southwest management is confident that 2013 is the year it will attain its often-cited return goals as it seeks to contain unit cost growth and capture USD400 million in estimated synergies from its acquisition of AirTran.
Carrier executives are tempering some of the confidence they are exuding about meeting ROIC goals with a cautious declaration that there is no guarantee that 15% returns will be displayed in the airline’s year-end 2013 results.
Southwest CEO Gary Kelly told investors in late Dec-2012 “it is not a promise, but we’re sharing with you our plan”. Previously Southwest has struck a cautious tone for 2013 as its operating profit during 3Q2012 plummeted USD174 million to USD51 million.
United ends 2012 as world's biggest airline, Emirates third. Turkish and Lion Air the biggest movers
United Airlines, following its merger with Continental, has ended 2012 as the world's biggest airline measured by available seat kilometres for the current week, ahead of second placed Delta, whose capacity fell 0.3% year on year, according to Innovata. Fast growing Dubai-based carrier Emirates is the world's third biggest airline by this measure, and could be in second place by the end of 2013 if the past year's growth rates are maintained.
Southwest Airlines remains easily the largest LCC, while Lion Air and Jetstar have each climbed the LCC top 10, to sixth and seventh places respectively, overtaking Westjet. Atlanta Airport (just) remains the world's largest, ahead of Beijing Capital Airport, in terms of seat throughput for the week, but this ranking seems certain to reverse in 2013.
The biggest movers in the overall World Top 50 list include Turkish Airlines, which jumped seven places to rank 15th globally, while Indonesian carrier Lion Air vaulted eight places to enter the global Top 40 for the first time. Iberia and India's Jet Airways fell four and seven places in the 2012 rankings, respectively.
Global Airline Alliances collectively grew capacity at higher than the world rate, with SkyTeam expanding fastest of the three majors, although Star Alliance remains easily the largest.
Southwest Airlines is ceding some markets from Atlanta to Delta during 2Q2013 as work continues towards fully optimising the combined networks of Southwest and AirTran, the carrier acquired by Southwest in 2011. The cuts reflect Southwest’s desire to transition AirTran’s Atlanta hub from a connection centre to its traditional point-to-point model as smaller markets such as Flint, Michigan and Rochester, New York are pegged for elimination. But Southwest is also cutting Charlotte, one of the top destinations from Atlanta, and redeploying the capacity to its strongholds of Chicago Midway, Houston Hobby and Orlando.
The moves are occurring as Atlanta’s largest carrier, and Southwest-AirTran’s main rival, Delta is declaring that Southwest is facing some challenges in changing the dynamics of AirTran’s operations in Atlanta. Overall Delta believes the capacity changes Southwest is making in Atlanta should create a rational operating environment. But it is not yet certain if Southwest will be successful in spooling up Atlanta to its expectations.