Bumpy Ride for Agents from Southwest-AirTran Combo?
by Michèle McDonaldThe immediate impact of Southwest Airlines’ acquisition of AirTran Airways will be somewhat anticlimactic, both for travel agencies and their customers.
For months to come, the carriers will continue to operate separately. Bookings must be made through the operating carrier’s channels. Neither carrier will sell seats on the other’s flights. Agency and customer issues must be resolved with the appropriate carrier. There will be no intermingling of Southwest’s Rapid Rewards and AirTran’s A+ Rewards programs in the immediate future.
But over time, all that will change.
Eventually, the two carriers will have a single operating certificate and a single designator code.
A+ Rewards will be absorbed into Rapid Rewards. AirTran’s planes will be reconfigured in the single-class Southwest style – a move that some corporate travelers, who are accustomed to AirTran’s business class upgrade – $49 to $129 over full Y – aren’t looking forward to.
The acquisition also will give Southwest access to new business travel markets, notably Washington and Atlanta. Ironically, it will be denied immediate access to another major airport – Dallas/Ft. Worth – served by AirTran. The Wright Amendment prohibits Southwest from serving both DFW and Love Field simultaneously, at least until 2014, so it is planning an “orderly” draw-down of AirTran’s DFW services.
Agent impact
Southwest says it is too soon to talk about how the acquisition will affect its relationships with travel agencies.
“Our marketing and corporate sales group will be looking into how both carriers work with travel agents and choosing a strategy for the future that takes into account our new markets as well as international destinations as a result of the acquisition,” a spokeswoman told Travel Market Report.
“It is too early at this point to know anything. We were competitors until Monday afternoon [May 2], so it will take some time for us to get inside the business and evaluate how AirTran works with agencies and what, if any, changes we want to make and what we want our forward-moving strategy to look like.”
There is no timeline established yet for that decision, she added.
Bumpy ride ahead?
In 2010, Southwest generated 84% of its revenues from its website; the remainder is generated largely by travel management companies, rather than offline leisure agencies.
Some TMCs expect a bumpy ride.
Speaking on condition of anonymity, a prominent travel agent said he expects more difficulties in working with the combined carrier.
“AirTran is much easier to work with in terms of GDS, first class, pre-reserved seats, etc.,” he said.
That could make Delta a “big winner,” particularly in Atlanta. When AirTran is no more, Delta “truly becomes the home town airline,” he said.
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Henry Harteveldt, principal analyst with Forrester Research, noted that once Southwest integrates AirTran, it is likely to exit online travel agencies “and any other third-party intermediaries that it does not consider to be a source of higher-yielding business,” including meta search sites.
“I expect those relationships will end once the carriers are merged,” he said.
Two former airline executives also saw some negatives for agents.
One said he believed that “in general, this is not a positive development for agents. Southwest drives more direct business than most carriers and certainly more than AirTran. Thus, smaller agents concentrated in their bigger markets – Atlanta and Orlando – will feel the fall-off in ticketing, influence and overrides.”
The other noted that both AirTran and Southwest have been “pretty aggressive” with corporate accounts. But the Atlanta corporate community isn’t happy about losing AirTran’s business class and assigned seats, he said. “They are glad a low-fare carrier will still be here, but will miss some of the AirTran products.”
He noted that Delta has gotten the Northwest merger behind it and is “improving the operation, product and service. It should be a good competitive fight.”
