So, what are the consumer repercussions of the surprise acquisition of AirTran by fellow low-fare airline Southwest? Airfarewatchdog‘s George Hobica is worried that fewer competitors, especially at this price point, will mean that Southwest and other airlines will have less pressure to keep fares low. He also expects more mergers on the horizon.
Hobica tells Consumerist, “This is truly a shocker, and it can only mean further consolidation. 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 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.”
Consumers usually benefit when there are more suppliers competing for their business. The question is whether the embiggened airlines will use their new positions to leverage efficiencies across the network, or to raise prices. And is it more better for travelers to have two low-cost carriers fighting each other, or to have one a more powerful low-cost carrier able to go more toe-to-toe with the bigger legacy airlines?
Southwest Buys Air-Tran