The merger of two low-cost airlines has a lot of people,
including industry experts and frequent fliers, scratching their heads.  

What could the acquisition of AirTran by Southwest mean for travelers?

Peter recently chatted with Scott McCartney, “The Middle Seat” columnist for The
Wall Street Journal about this and more travel news. 

Peter Greenberg: It’s
been a crazy couple of weeks in the airline business: The Continental/United
Airlines merger closed; then people were little bit stunned when Southwest
announced they were buying AirTran—both relatively healthy airlines. Scott, tell
me what this means, please.

Scott McCartney: Like
you, I have long thought that the U.S. airline industry would consolidate down
to three major international carriers, and three major discounters. Now I think
it is going to be three major international carriers, and two major discounters:
one discounter that flies Boeing jets, and one discounter that flies Airbus
jets. 

PG: When
you’ve got that few airlines left, who wants to be a discounter anymore?

SM: That is a really
interesting question. Gary Kelly has certainly changed just about everything
that he can at Southwest Airlines, but I think that at the end of the day they
recognize that they are a low-fare carrier. They have to offer low fares to fill
up their airplanes, and that’s probably always going to be the case. I don’t
think there is much danger that if you only have a very large JetBlue, and if
you only have a really large Southwest, that there wouldn’t still be low fares
in this country. 

PG: Here’s my
prediction, and you tell me if you think this flies: The real battleground in
this situation seems to be Atlanta, Boston and LaGuardia. Think about where the
routes are, where Southwest and AirTran have some traction and overlap with some
competing routes. I can’t wait to see what the airfare wars are going to be like
in Atlanta. 

SM: I
think you’re right. I would add to that list Reagan in Washington, D.C., where
Southwest can gain access through AirTran, and also Baltimore. Baltimore is
fascinating to me. Southwest and AirTran are the two biggest carriers there. Put
them together, and it really becomes a fortress hub for Southwest. It will be
interesting to see how they behave. In Atlanta you now have a much larger
competitor with deeper pockets. Look what’s happened in Denver as Southwest has
gone in there. I think Atlanta is in for a real battle.

PG: There was a
time, not too long ago, when Herb Kelleher, the former CEO of Southwest, told me
he would never fly into Denver because it was responsible for so many delays for
his own airline. And now they’re there. 

SM: They’re there.
They’re in Boston Logan: he told me they would never fly there. They’re in
Philadelphia, in LaGuardia, for goodness sake, and they’re going to go into
Newark. 

PG: Of the two
airports—obviously I hate to say “never”—but I would never expect to see
Southwest in LaGuardia or Newark, and they’re going. 

SM: And it
used to be that the words, “Only one type of airplane” were chiseled over the
granite the front door at Southwest.  I’m kidding, but that was so fundamental
to their culture, and now they’re willing to take on two types of airplanes with
AirTran’s 717. I think you could end up seeing them fly three types of
airplanes.  

PG: Do they become
now an international airline?

SM: Well, they do
just that by acquiring AirTran. That is something they’ve been working towards.
I think you’re going to see much more growth there. We’re likely see them go
into Canada, to Mexico and Caribbean with AirTran. But do they get a bigger
airplane and start flying across the Atlantic? 

PG: You know, at
this point they’re actually a trans-con carrier if you want to consider
Birmingham to Los Angeles as a trans-con flight. So they can expand.

SM: They can expand.
There’s lots of room for Southwest to expand. They’re already the largest
domestic airline in the United States if you just look at domestic service. I
think there’s plenty of room for them to get bigger. 

PG: You know, you
talk to the guys at Continental, and they say they only want to be in the
international business because it is the only place they make money.

SM: That’s
right. Continental has had the really interesting experience of competing
against Southwest because of Houston. And they’ve been doing it for years.
They’ve kind of found a way: It is better to avoid Southwest than fly head to
head to with them. If your costs are higher, and the fares are going to be
priced lower, you just can’t compete. 

PG: Now the best
news this week that made me laugh: The airlines are quietly wanting to bump the
federal air marshals out of first class and put them into coach. I always laugh
because every time I get on the plane they’re always sitting in 3B, reading
their Tom Clancy novel, wearing their Dockers, and trying to blend. We know who
you are!

SM: I heard in
conversations with a couple of airline CEOs that it’s a revenue issue for the
airlines, there is no doubt about that. But it is also a security issue here.
Air marshals are too easily identified in first class, and the bombing attempts
we’ve seen have been in coach. I think the days of knife-wielding attackers
storming the cockpit are not the biggest threat to airlines right now. I was
once seated next to a guy who clearly had the look of a marshal. He opened up
his laptop and up came the Federal Service scheduling form on his screen.

PG: Nothing gets by
you.

SM: And then he
spent the entire flight surfing the Web looking at Lindsay Lohan news. 

PG: Wait a second.
She is a terrorist. You know why she is a terrorist? She terrorizes morning news
shows; she should be taken off. 

SM: There you go. I
interviewed a guy who used to be head of security at American Airlines. He is a
former FBI agent, a very sharp guy, and he knew that the guy next to him was an
air marshal. So he waited until the flight was over to talk to him and
introduced himself. And the air marshal says, “How did you know? ” And he said,
“Well, you had a book in front of you, but you never turned a page.”

For more travel news you can use, listen to Peter’s most recent radio show
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Related links on PeterGreenberg.com:

• Southwest Buys AirTran to Advance International Prospects
• Continental & United Merge: What Does It Mean For Consumers?
• Travel Reporters Analyze Effects of Continental-United
  Merger on Air Travel
• Travel Detective & Middle Seat Columnist Talk Upgrades,
  Downgrades & Passenger Rights
• What’s Ahead for the Delta-Northwest Merger?