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Hot Non-TV Story Is an Airline Industry Shocker: Southwest to Buy Low-Cost Rival

Sep 27, 2010  •  Post A Comment

Consolidation in the airline industry–hit hard by the economy–continued today with the announcment by Southwest Airlines that it would buy one ot its primary low-cost rivals.

Southwest will purchase Air Tran Airways for $1.4 billion, according to a number of media reports.

According to USA Today, "The deal stunned some travel experts, who said the union of Southwest and AirTran would force up fares now that leading low-cost carriers are uniting rather competing.

The USA Today article continued, saying that  "[O]ther airlines will likely be forced to consolidate to survive, further reducing alternatives for fliers.”"This is truly a shocker, and it can only mean further consolidation,’ says George Hobica, founder of airfarewatchdog.com. ‘I don’t think anyone really saw this coming. More than any recent merger, it spells bad news for low fares, since both airlines were leaders in the low fare space and had frequent, almost weekly, sales. I can only imagine that now pressure is on for American to find a partner, and also US Airways, and that will lead to even less fare competition.’ "

5 Comments

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