Southwest to buy AirTran

Associated Press

NEW YORK

Southwest agreed to buy AirTran in a $1.4 billion deal that will combine two of the country’s largest low-fare airlines and give Southwest a bigger slice of the market in the Northeast and in Atlanta, the busiest hub in the nation.

The acquisition announced Monday moves Southwest, which already carries more passengers than any other American airline, into 37 new cities.

It gains a foothold in cities such as New York and Boston, where it already has been expanding, and adds to its push to expand internationally. Southwest gains routes to Mexico and the Caribbean, where remaining discount airline JetBlue has a big presence.

Southwest has been targeting Atlanta, where AirTran competes with Delta Air Lines, because it is a hub for business travelers, who tend to pay higher fares.

The buyout is the latest in a wave of consolidation in the airline industry. Continental Airlines and the parent of United will combine this week to topple Delta as the largest airline in the world. Delta got the title when it bought Northwest in 2008.

For fliers, it could mean higher airfares in cities where competition is already fierce, such as Boston, New York and Baltimore.

Fares probably won’t leap dramatically anytime soon, said fare expert George Hobica, because JetBlue Airways competes on many of the routes where AirTran and Southwest overlap in the East.

But travelers also should be prepared for fewer fare sales when Southwest and AirTran combine, Hobica said. Locked in a constant battle with Delta in Atlanta and other discounters on the East Coast, AirTran puts fares on sale nearly every week. The acquisition by Southwest will take out a competitor and make fare sales less important for the combined airline.

Passengers in smaller cities such as Moline, Ill., and Wichita, Kan., will have more options for flights and connections, which means more opportunities to avoid delays and cancellations.

In welcome news for weary travelers, Southwest said it will drop AirTran’s bag fees when the pair combine in 2012. Right now, AirTran charges $20 for the first checked bag, $25 for the second.

Some major airlines charge even more. Southwest claims it has lured passengers by refusing to charge for bags, and it has built a marketing campaign around the policy, with baggage handlers shouting declarations of love to suitcases on the tarmac.

Southwest will remain the No. 4 airline by traffic. AirTran is the nation’s eighth-largest airline.

Southwest’s acquisition of AirTran is expected to close in the first half of next year. It requires both regulatory and shareholder approval.