Southwest uses AirTran for access to business travelers

by Tom Johansmeyer on

The key to success in the airline industry is the business traveler. This category flies often, has less flexibility in pricing and spends more on flights than a leisure traveler could possibly imagine. So, it’s hardly surprising that Southwest‘s acquisition of AirTran – a $1.42 billion transaction – could help deliver greater share of the white collar travel crowd to the low-cost carrier.

According to MSNBC:

Southwest – which currently serves key cities such as Dallas, Chicago, Denver, Phoenix and Baltimore – has long been considered a vacationer’s airline. But it has lured corporate road warriors with offers like Business Select fares that cost more but promise priority boarding, extra frequent-flier credit and a free drink.

So, we’re looking at an expansion of Southwest’s strategy into a more lucrative market. Southwest has already proved that it can thrive in the volatile leisure market, ostensibly more challenging than catering to the business crowd. It seems as though this strategic shift is as close to a “sure thing” as one can imagine in the airline industry.

The acquisition also provides Southwest with international routes, as it picks up AirTran’s access to Mexico and the Caribbean.
[photo by AGeekMom via Flickr]

Traveling over Thanksgiving? Here’s the best time to fly

by Grant Martin on

The only thing that’s worse than traveling through congested airports and highways during the Thanksgiving season is the airfare that’s associated with it. Taking advantage of the demand, airlines perennially jack up the prices on everyday airfare, making the simplest of tickets outrageously expensive.

Naturally, the easiest way around these fares is to fly on lower-demand days, or not Tuesday and Sunday. To illustrate this, our friends over at Travelocity put together the above dandy chart to show the differences in fares among travel days. It’s pretty easy to see that the Tuesday and Wednesday before Thanksgiving are the most expensive days to fly. Conversely, departing on Thanksgiving Day and returning on Tuesday, the 30th is most often the cheapest.

Bear in mind that the data above only applies to domestic routes — for travel to foreign countries (where there is no Thanksgiving), airfares can be drastically different and potentially even cheaper. More reason to spend the holidays abroad, we reckon.

What the Southwest/AirTran merger means for consumers

by George Hobica on

Southwest Airlines announced yesterday that it will acquire AirTran in a cash plus stock deal.

Here’s what to expect:

1.) Good news for AirTran passengers and travel to/from/through Atlanta in general. Southwest has better service than AirTran, and lower fees (assuming that Southwest keeps the low/no-fee model, see number 4, below). Southwest is not keeping the AirTran brand.

2.) Southwest and AirTran don’t have much route overlap, so the merger in and of itself won’t lead to higher fares. But both airlines offer aggressive airfare sales almost weekly. We’ll see fewer of these, and fares will inch up. Remember, though, that fares can only go so high before consumers stay home, drive, take the BoltBus, or Amtrak. One route that does overlap is Boston to Baltimore, which both airlines fly nonstop for $78 round-trip; but JetBlue flies the route at the same fare, so as long as there are two airlines flying nonstop on the route, prices will stay reasonable. (In fact, Baltimore probably has the most overlapping routes, so we expect fares to go up there.)

3.) More fare pressure if other airlines continue the merger dance. American and US Air must be in panic mode as Southwest continues to grow. What next? An American/US Air marriage? Frontier/Midwest combine with USAir? JetBlue+American? The Southwest/AirTran merger came out of the blue, so anything and everything could be on the table.

4.) This impacts Delta, at least at first, the most. Will Delta eliminate checked bag and ticket change fees on competing routes to/from/through Atlanta to compete with Southwest’s fee model? Or will Southwest add fees? AirTran was a minor thorn in Delta’s side, but Southwest is going be a major thorn. AirTran was not a particularly healthy airline financially, and Southwest is.

5.) Southwest now becomes an international airline, if it keeps AirTran’s routes to Aruba, the Bahamas, etc. It also becomes a multi-aircraft airline, if it keeps AirTran’s Boeing 717’s along with Southwest’s 737 fleet.6.) Silver lining: as with all mergers of this kind, a plus is that if your flight is delayed or canceled you can now be re-routed over a much bigger route structure.

7.) It’s doubtful that Southwest will keep AirTran’s business class cabins, instead moving the airline to Southwest’s one-cabin model. Same for advance seat selection, which AirTran currently offers.

8.) The merger should win speedy Justice Department and DOT approval, since there is virtually no route overlap between the two airlines.

George Hobica is the founder of Airfarewatchdog™, the most inclusive source of airfare deals that have been researched and verified by experts. Airfarewatchdog compares fares from all airlines and includes the increasing number of airline-site-only and promo code fares.

[Flickr photo via gTarded]

Airline mergers could lead to fare “creep”

by Tom Johansmeyer on

The Southwest/AirTran merger isn’t expected to push fares much higher. The disappearance of seats that comes with airline consolidation would make you think that prices are about to rise, as the fundamental commodity of the airline industry becomes increasingly scarce. But, we’re not close to that point yet, notes USA Today:

“We’re not at the tipping point,” says George Hobica, founder of Airfarewatchdog.com. “I don’t think fares will be impacted much until we have three legacy carriers and one discount carrier remaining.”

The number of seats, however, is shrinking across the airline industry. Since September 2007, the number of domestic seats available has fallen 10 percent.

According to Hobica, look for fares to “creep upward,” but not at a rate that will horrify customers, a position supported by Frank Werner, associate professor of finance at Fordham University. He tells USA Today: “Generally, airline mergers remove competition from the skies, leading to higher prices. This will happen in markets where the combined Southwest/AirTran will not have a dominant market share.”

[photo by SkilliShots via Flickr]

Continental Airlines to finally start charging for meals

by Tom Johansmeyer on

There’s no free lunch on Continental Airlines. Starting on October 12, 2010, it will start to charge passenger for grub on some flights. The carrier is rolling out a new menu for coach, which means it will be the last of the major airlines to take the plunge. Food will continue to be free for intercontinental and some international routes – not to mention domestic flights of longer than six and a half hours.

So, what does actually paying for your food get you? According to the Houston Business Journal:

The menu will include freshly prepared hot and cold meals similar to those served in casual dining restaurants, such as Asian-style noodle salad, grilled chicken spinach salad, Angus cheeseburgers and Jimmy Dean sausage, egg and cheese sandwiches.

Snack and dessert options, including gourmet cheese and fresh fruit plate and several types of snack boxes will also be available for purchase.

Sandra Pineau-Boddison, VP of food services for Continental, tells the Houston Business Journal, “The new menu is a direct result of feedback from our customers, who told us they wanted more food choices on our flights.”

[photo by Deanster1983 via Flickr]