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]

JetBlue in-flight internet access coming in 2012, worth the wait?

by Tom Johansmeyer on

JetBlue is going to offer in-flight internet access! This is exciting news, right? JetBlue is one of the more exciting airlines in the market right now, having figured out how to offer solid customer service without jacking up fares (a combination the major carriers believe is impossible to attain … despite the fact that JetBlue has done so). So, the airline is getting into the internet game, a space in which it has lagged many other carriers.

Unfortunately, JetBlue isn’t going to begin installing the equipment until the middle of 2012, as it needs to be checked out and approved by the FAA before the airline can put it into production, according to FlightGlobal. The slow start might actually work to JetBlue’s advantage.

Rather than implement the solutions already out on the market, JetBlue has selected a different type of internet access technology, which should translate to better internet service for its passengers – which pairs well with the high levels of customer service the airline already offers. Unlike existing internet access systems, which interact with the ground, the JetBlue system will hit satellites. JetBlue CEO Dave Barger explains to FlightGlobal:

“In just the three years since we launched BetaBlue, the first commercial aircraft with simple messaging capability, technology has advanced by generations. Rather than invest in current technology, designed to transmit broadcast video and audio, we elected to partner with ViaSat to create broadband functionality worthy of today’s interactive personal technology needs.”

Barger also says, “This system will be designed for the 21st century, not just for today’s personal connectivity needs, but with the bandwidth to expand to meet tomorrow’s needs as well.”

[Via Business Insider]

Airlines continued to cut jobs – 25 months in a row

by Tom Johansmeyer on

There’s a reason why airlines have positioned themselves for a solid performance in 2010: in addition to charging all those extra fees, they have been cutting positions (and thus expenses). In July alone, the industry in the United States trimmed 2.3 percent of its workforce relative to July 2009. That made 25 consecutive months of net job losses in the domestic airline sector.

According to the Department of Transportation‘s Bureau of Transportation Statistics, 378,100 people were employed full-time by the airline industry in the United States in July 2010, a decline of 8,700 from July 2009. Five of the six network carriers cut positions, with Delta adding headcount only because of its Northwest acquisition. Only two low-cost carries reported net cuts for this period (Southwest and AirTran).

According to the Associated Press, maintenance and ticket agent positions are getting hit most:

While the number of in-flight airline employees like pilots and flight attendants is regulated by the Federal Aviation Administration, the bulk of airline employees-maintenance crews, reservations and ticket agents-work on the ground and aren’t subject to federal minimums. Airlines are operating with less staff to save money, but they’re also outsourcing maintenance and other work to other countries where labor is cheaper.

[photo by aflcio via Flickr]

Galley Gossip: 5 reasons flight attendants don’t serve first class predeparture beverages

by Heather Poole on

You’ve boarded a flight and you’re feeling pretty relaxed sitting in that big comfy first class seat. Sucka, you think to yourself as a couple of passengers check you out on their way to coach. Glancing at your watch, you wonder where the heck the flight attendant is because you’re dying of thirst and shouldn’t she be offering drinks right about now!

Predepartures. That’s what flight attendants call the drinks that are served before takeoff to passengers seated in business and first class. If there’s time flight attendants will walk through the aisle and take individual orders, but time is the keyword here. With so many full flights staffed with minimum crew, there’s usually not enough time to check the emergency equipment, set up the galley, hang all the coats, get passengers situated AND serve predeparture beverages. This is why flight attendants might choose to do a one shot service and offer passengers Champagne (if we have it), orange juice, and water- or nothing at all. Because it’s more important to get flights out on time than it is to serve drinks before takeoff.

What most passengers don’t realize is that it’s against FAA regulations for an agent to shut an aircraft door until all the overhead bins have been closed. If the agent can’t close the aircraft door on time, the flight will be delayed. If the flight is delayed (even by a few minutes) someone will have to take the blame. This means someone will get written up. If an airline employee is written up too many times for causing a delayed departure they might very well lose their job. On time departures are a big deal in the airline industry. So that gin and tonic the passenger in 3A is crying about is not a concern if passenger 23D refuses to sit down and passenger 14E can’t get her suitcase inside an overhead bin and the flight attendant working in the back is calling up front to let someone know there are seven bags on their way up that need to be checked.

Here are a few other reasons flight attendants might not serve you a drink before takeoff….

1. DELAYED BOARDING: Boarding is even more chaotic when a flight is delayed. If passengers are blocking the aisles waiting to get to their seats, flight attendants aren’t going to jump over them in order to serve drinks.

2. NO CATERING: Everyone is seated and the flight attendants don’t look very busy. Why aren’t they serving drinks? If the catering truck hasn’t come to swap out the carts they have nothing to serve.

3. THE GALLEY ISN’T SET UP: The catering carts do not come on board ready to go. Flight attendants have to organize them first. If we don’t do this during boarding, the service during the flight will be delayed. Besides organizing the carts, we also have to break up several bags of ice, count the meals, load the ovens, and make sure we have everything we might need for the service in flight. The one time I didn’t do this we took off without dinner plates and I had to serve first class passengers their entrees on cookie plates.

4. MINIMUM CREW: Nowadays most narrowbody aircraft (one aisle) are staffed with minimum crew. This means if we’re not greeting passengers at the door, we’re busy setting up a galley. In the past we used to have extra flight attendants on board to lend a hand to passengers who might need it during boarding and help serve food and drinks in first class. Not the case anymore.

5. DRY FLIGHTS: Some countries do not allow flight attendants to unlock the liquor carts until after takeoff. There are even a few cities in the U.S. where it’s against the law to serve an adult beverage on Sunday before noon.

Photo courtesy of Kevin H