Tuesday, April 26, 2011

DOJ gives blessing to Airtran Airways sale to Southwest Airlines

AirTran Airways' sale to Dallas-based Southwest Airlines got the all-clear from the U.S. Department of Justice Tuesday, removing the last major hurdle before the deal closes next Monday.

The Justice Department's antitrust division said it determined that the merger "is not likely to substantially lessen competition." "The merged firm will be able to offer new service on routes that neither serves today, including new connecting service through Atlanta's Hartsfield-Jackson International Airport from cities currently served by Southwest to cities currently served by AirTran," the Justice Department's statement said. It added that "the presence of low cost carriers like Southwest and AirTran has been shown to lower fares on routes previously served only by incumbent legacy carriers."

Despite overlaps, the Justice Department's antitrust division did not challenge the deal "after considering the consumer benefits from the new service." It added that airports affected by the overlaps are not subject to restrictions on slots or gate availability.

The two airlines expect to officially complete the acquisition May 2. After that, it could take up to two years to fully combine the two carriers under the Southwest name. Southwest expects to complete its work for a single operating certificate in the first quarter of 2012.

The deal will bring Dallas-based Southwest to Atlanta, bringing a bigger competitor to go up against Delta Air Lines. It will eventually spell the end of Orlando-based AirTran as its operations are folded into Southwest. Southwest is expected to eventually eliminate AirTran's baggage fees to align it with Southwest's free checked bags policy, but that won't happen immediately.

Southwest is known for its open seating and its role as an all-domestic airline that pioneered the discount carrier model.

“We are pleased that this merger is going to move forward,” Hartsfield-Jackson general manager Louis Miller said.

“It will ultimately provide additional routes, services and choices for our customers,” Miller said. “It will help stimulate more traffic.”

The merger of two low-cost carriers was not expected to raise much resistance from antitrust enforcers, though the American Antitrust Institute in a report late last year said price increases after the merger might not be captured by a standard analysis of market share and concentration.

(Kelly Yamanouchi - Atlanta Journel-Constitution) 

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