Moderated by Tom Sabulis
Southwest Airlines launches service in Atlanta Feb. 12, as it acquires AirTran.
Two industry experts tell us what to expect when the low-frills, free-bags carrier begins competing against Delta, the hometown giant. Expanded service and beaucoup deals? Perhaps. But it’s not all rosy. One predicts passenger traffic will drop at Hartsfield-Jackson airport.
Read what Michael Boyd, president of Boyd Group International, an aviation research and consulting firm in Evergreen, Colo., has to say, and check out commentary by Tom Parsons, CEO of bestfares.com, below that. Then tell us what you think of Southwest’s acquisition of AirTran.
By Michael Boyd
The Southwest acquisition of AirTran signals major changes in airline service at Hartsfield-Jackson International Airport. Most of them are not what people are expecting.
Southwest is one of America’s most ethical companies. Its success is because they really do like their customers, and it shows on every flight. From that perspective, Southwest is a great successor to AirTran.
However, Atlanta consumers are in for some surprises when Southwest launches service next month. First, there will be fewer flights.
Over 60 percent of all passengers on AirTran’s Atlanta flights are connecting to or from other cities. But Southwest has announced that it will “unwind” that connecting operation, which means fewer passengers through Atlanta, and hence, fewer flights than AirTran is operating.
In fact, Southwest has indicated that it will operate 13 percent fewer flights at Atlanta than AirTran. Since connecting passengers represent the equivalent to fill about 100 of the current 180 AirTran flights, these reductions are likely just the first.
Fact: more than 25 of the cities to which AirTran now flies have less than 40 percent of the passengers made up of folks going to or from Atlanta. The other 60 percent are connections. Without these, Southwest will not be able to support those routes.
And there won’t be much of a “Southwest effect” — where a sudden reduction in fares will stimulate more traffic. AirTran has already achieved that in 24 of the top 25 routes from Atlanta.
Remember, Southwest’s operating costs are higher than AirTran’s. It’s the added connecting passengers that support the high-flight frequencies. That means that if Southwest is only after Atlanta passengers, they absolutely will need to reduce flights from where AirTran is today. (To read a report on Southwest’s merger effects on Atlanta, go to www.aviationplanning.com.)
As for Delta, they’re not worried. In fact, they’re probably smiling broadly.
The merger gives them a higher-cost competitor than AirTran, and one with a much more limited product. There’s no advance seat selection on Southwest, and regardless of the hype, a lot of travelers prefer it. But, for a family of four, not knowing until they get on the plane whether they’ll be sitting together is an issue — one that they didn’t always have with AirTran. Unlike AirTran, there are no business-class seats for passengers to upgrade to, either. And the Southwest strategy to not chase connecting passengers in Atlanta opens a huge new base of passengers for Delta.
Then we have the issue of operational systems.
Unlike AirTran, Southwest has work rules that restrict how it can handle flights at airports. AirTran can use outside vendors and part-time employees. This means a number of the routes that AirTran could fly — not only at Atlanta, but elsewhere — Southwest cannot. Example: Bloomington, Ill., was a successful market for AirTran. Southwest decided it couldn’t make money there. Result: over 48 percent of Bloomington’s traffic is at risk. That’s a downside of this merger. Some communities are seeing air service reduced — as Atlanta will.
There’s no argument: Southwest is a fine company. But it’s a very different airline than AirTran, and that means it will have a different operation at Atlanta, too. A smaller one. Our forecasts indicate passenger traffic through the airport will decline by about 6 percent as a result of this merger.
It’s nothing personal. It’s strictly business.
By Tom Parsons
The good news is that once Southwest’s acquisition of AirTran is complete, Atlanta will have 180 to 200 daily nonstop Southwest flights, making it one of the airline’s number-one hubs, along with Chicago and Las Vegas. This will offer Atlantans more options than ever before.
If you are trying to get to Austin, you’ll find nonstop flights and also multiple one-stop options through Houston, New Orleans and St. Louis. If you want to fly to San Diego, you’ll find connecting flights through Chicago, Denver and Houston. When you look at the options, with both nonstop and one-stop service, it will be the first time that a low-cost carrier has served over 100 cities.
There are some downsides to the acquisition, too. Southwest will eliminate service to some AirTran cities like Newport News and Moline, and frequent flyers who are used to racking up segments on cheap short-haul flights on AirTran may not like Southwest’s program.
Also, Southwest does not have first-class seats or seat assignments, so you’ll want to check in online 24 hours in advance to get in the best boarding group. You can also pay $10 extra each way to get in the early boarding group. If you are traveling with young children, you’ll be able to board early on Southwest. (Delta reserves many of its premium seats for elite flyers.)
Southwest’s frequent flyer program is much different than Delta’s. Southwest’s program is based on the dollar amount spent and the type of ticket you purchase, while Delta’s is based on the number of miles flown. I don’t know any other program that offers more perks for the business traveler, especially if you qualify for A-list Preferred status, which offers double the number of points, or 24 points per dollar spent on Business Select fares.
When it comes to on-time performance, lost luggage and customer service, Southwest is a top-ranking airline. The airline proclaimed itself the winner of this triple crown five years in a row. The airline also has friendlier rules than Delta when it comes to changes, cancellations and luggage. If you need to change a ticket, Southwest does not charge a change fee, you just pay the difference in fares. On Delta, you’ll pay a $150 change fee plus the difference in fares. On Southwest if you need to cancel a ticket, you’ll receive a credit for the entire amount and you can check two bags for free.
When it comes to fares, I believe Atlanta will be like Denver, where Southwest is competing against Frontier and United — it has been one big dog fight, especially when it comes to cheap fares and promotions. In Atlanta, I expect deals to be flying from Delta and Southwest. The last airfare sale we had from both Southwest and AirTran offered sale flights through May 16; I’ve never seen Southwest offer a sale window that big.
Atlanta, I think, will see cheaper fares to new cities that were not served by AirTran. For example, during Southwest’s recent sale, Southwest offered fares from Atlanta to Austin for $99 one-way or $198 roundtrip, for travel beginning Feb. 12, when Southwest starts service. Delta matched the fare, but Delta is currently charging $409 roundtrip on that route.
To take advantage of the cheapest fares, book in advance, be flexible, wait for sales and remember that 80 percent of Southwest-initiated sales start on a Tuesday and end on a Thursday. Not only will we see cheap new destinations, but we will also see deals to old destinations.
At the end of 2012 when we look at the statistics on fares from Atlanta, I think you’ll find a substantial drop in the price of fares, while the rest of the U.S. will see a price increase.