Regulators Clear Southwest-AirTran Merger
DALLAS (AP) – U.S. antitrust regulators cleared the way Tuesday for Southwest’s purchase of AirTran Airways, saying the combination of two big discount airlines isn’t likely to hurt competition.
The Justice Department said the airlines overlap on some nonstop routes, but it decided not to challenge the deal because competitors can get airport gates and landing slots on those routes.
Southwest, based in Dallas, plans to close the $1.4 billion purchase on Monday. The deal will immediately increase Southwest’s size by one-fourth, although it will temporarily operate AirTran as a separate airline.
Southwest will gain AirTran’s hub in Atlanta, which Southwest currently doesn’t serve, and pick up AirTran’s service to Mexico and the Caribbean.
Some consumer advocates worry that mergers are reducing the number of U.S. airlines and making it easier for the remaining ones to boost fares. In the past three years, Delta bought Northwest, United combined with Continental, and Southwest made its play for AirTran.
The Justice Department had imposed some conditions on earlier deals — for example, pressuring United and Continental to give Southwest gates at Newark, N.J. It didn’t do that in Southwest’s case. Instead, it said the presence of low-cost carriers such as Southwest and AirTran on routes served only by so-called legacy airlines has been shown to produce lower fares.
The Justice Department’s approval was widely expected after Southwest announced last week that it planned to close the AirTran purchase on May 2.
Southwest Airlines Co. flies to more than 70 U.S. cities and had revenue of $12.1 billion last year. It carries more U.S. passengers than any other airline, although United Continental, Delta and American are larger when including international traffic.
AirTran Holdings Inc., based in Orlando, Fla., had 2010 revenue of $2.6 billion and serves nearly as many cities as Southwest, although some are smaller.
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