Discount Airlines within the United States of America are being merged together. This is because AirTran was bought out by Southwest Airlines for $1.42 billion. Southwest can be able to compete with international carriers with the expansion that also gives it access to key eastern hubs. The deal caught travel experts off guard. There is a lot less competition within the discount flying market meaning there is an expected increase in fees following the Southwest/AirTran merger, many are stating. It will also force other air carriers to merge in order to compete. The policy for no baggage fees is something Southwest is renowned for. Luckily for any riders of AirTran, the policy can be kept no matter what happens. Article source – Is the AirTran/Southwest merger good or bad for consumers? by Personal Money Store.
Southwest Airlines turning up all around the east now
Southwest Airlines spend $1.42 billion purchasing out AirTran. Nobody was all that surprised by this. In 2008 Delta merged with Northwest. October 1 is when Continental and United Airlines will combine. This means they will be the largest airline in the world. As outlined by USA Today, the deal is great for Southwest which now has many more travel hubs. This is shown as it has access to Washington D.C.’s Reagan National now as well as New York’s La Guardia. Delta could be Southwest’s biggest competitor in the world’s busiest airport in Atlanta where it now has access.
Southwest will get a little help from the extra stock options from AirTran
Dallas-based Southwest Airlines carries more passengers than any airline within the United States of America. Within the U.S., AirTran has been rated as the eighth largest carrier of passengers. As outlined by the Associated Press, AirTran’s closing price was $4.55 however then increased 69 percent to be $7.69 with Southwest’s acquisition on Friday. $670 million can be paid with accessible cash by Southwest. Southwest will assume $2 billion in AirTran debt. Assuming regulatory and shareholder approval, the deal is expected to close within the first half of 2011. All AirTran planes may have been changed to Southwest by 2012.
Will customers do better or worse with merging air carriers
To customers, the Southwest/AirTran combination could mean the end of low air fares. As outlined by the Consumerist, it is good to have more competition. Without competition, the prices will go up. The competition being gone will leave Southwest and other corporations with less pressure. Without the pressure, prices are sure to go up. Prices are sure to go up states George Hobica of Airfarewatchdog. He told The Consumerist that this will happen because more corporations will combine making for even less competition than before. Hobica suggests that there are really only two things Southwest can do. It will either be able to improve its business of making money off of low fares or raise its prices for everyone. Other larger corporations may be forced into lowering their prices. This would only be if Southwest becomes a competitor to them.
Further reading
USA Today
usatoday.com/money/industries/travel/2010-09-27-southwest-airtran-merger_N.htm
Associated Press
google.com/hostednews/ap/article/ALeqM5hFjJQqYUno_x04Nx3mAvf9Na1EwwD9IGC59G0
The Consumerist
consumerist.com/2010/09/what-does-southwest-buying-air-tran-mean-for-consumers.html
No comments:
Post a Comment