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AirTran/Southwest Merger a Sound Move, According to Boyd Group International Report

/ Source: GlobeNewswire

EVERGREEN, Colo., Oct. 4, 2010 (GLOBE NEWSWIRE) -- A study issued today by Boyd Group International concludes the Southwest Airlines purchase of AirTran is consumer-positive and a near-perfect fit, but it will have minimal structural effects on the airline industry, and will not materially alter the competitive picture at Atlanta, where it inherits a major AirTran hub.

Higher Fares Not Indicated. The Report covers all the key operational areas in the proposed transaction. While a major financial event for Southwest, it will far from shake the foundations of the airline industry.

"The main merger effect in the near term will be different aircraft liveries," noted Michael Boyd, president of the Colorado-based consulting firm. "There are no indications that service or fare levels will materially change. Southwest does have somewhat higher operating costs than AirTran, but it's an airline more than four times larger, with a very different route structure. At this point, any projections of higher fares at ATL due to this merger are entirely inappropriate."  The study found many of the two airlines' metrics to be closely aligned, including their system-wide cost per departure, "which are peanuts apart," according to Boyd.

However, the study found there won't be a "Southwest effect" lowering fares. That has already been accomplished by AirTran, which competes in 24 of the 25 largest metro passenger markets from Atlanta. "Southwest is replacing AirTran, not marching into Georgia like a winged General Sherman," Boyd said.

Delta Atlanta Dominance Not Threatened. The study analyzed the competitive situation at Atlanta. "Delta has competed very effectively with AirTran, and will continue to do so with Southwest." A challenge facing Southwest, however, is the difference between AirTran's product, which offers amenities such as a business class cabin and advanced seat selection, and the more basic Southwest approach. "Delta has seat selection, upgrades, a global frequent flyer program, and often in-flight entertainment systems. When fares are the same or close, Delta has an advantage – more than it had with AirTran." 

The Report analyzed the smaller markets AirTran serves from Atlanta. "The feed traffic from places like Bloomington and Sarasota will provide Southwest strong connecting revenues," it states.

The Report also provides extensive additional data reviews, including analyses of market shares at Baltimore and Orlando, and comparisons of market-specific traffic, yield and load factors between AirTran and Delta.

The only distant downside the Report could identify is that the planned AirTran Milwaukee hub is now unlikely. "Southwest has eight connect points east-west. It doesn't need a ninth."

The complete report can be downloaded at .

Founded in 1984, Boyd Group International is a multi-dimensional aviation research and consulting firm based in Evergreen, Colorado, with focus on strategic planning and industry forecasting. Clients include major airlines, airports, financial institutions and labor organizations.

The Boyd Group, Inc. logo is available at

CONTACT: The Boyd Group, Inc. Michael Boyd (303) 674-2000