Need to be transported by air with a low fare? AirTran Airways offers low-cost passenger transportation to almost 70 cities, mainly in the eastern US, but also in Aruba, the Bahamas, Jamaica, Mexico, and Puerto Rico. The airline operates from a primary hub in Atlanta and secondary hubs in Baltimore; Milwaukee; and Orlando, Florida. AirTran maintains a fleet of about 140 Boeing aircraft (717s and 737s). It is a leading carrier in the Atlanta market, behind Delta, which handles the largest share of the traffic at Hartsfield-Jackson Atlanta International Airport. AirTran Airways was acquired by Southwest Airlines in 2011.
Southwest, based in Dallas, acquired AirTran Airways for $3.2 billion in stock, cash, and the assumption of AirTran debt, among other factors. The acquisition allows Southwest to significantly expand into geographical areas that it previously did not serve (or underserved), primarily in the Southeastern and Eastern parts of the US and smaller cities close to international vacation spots in Mexico and the Caribbean. In addition, the two companies had similar identities but with a few key differences. AirTran often offers lower fares than Delta, but unlike low-fare leader Southwest, AirTran Airways provides reserved seating and business-class service. Like Southwest, AirTran Airways has been able to maintain a lower cost structure than many of its larger rivals. The two companies are hashing out the new leadership structure; within days of the acquisition Southwest's executive VP Bob Jordan was appointed as the new president of AirTran Airways. Southwest plans to integrate AirTran into its operations over a period of several years. Eventually, it will be completely absorbed into the Southwest brand.
The merger arrived on the heels of the 2008/2009 recession that grounded a number of the bigger airlines with revenue losses. Some discount carriers, like AirTran, actually experienced higher profits in 2009. AirTran was well positioned in the market as skittish consumers sought budget fares, and fuel prices leveled out. A big contributor to its banner year in 2009 was a boost in "other revenues," which included fees for extras such as transporting pets and unaccompanied minors, liquor sales, priority seat selection, and (unlike Southwest) checked baggage. AirTran's other revenues increased about 80% or $113 million in 2009 compared to the year prior.
The company's 2010 revenues got a tailwind, posting 10% higher than 2009; however, net income was in choppy air and nosedived more than 70% over 2009. The company blames the drop on an almost 25% increase in fuel prices, more than $18 million in legal fees (in connection with the Southwest merger), higher operating costs, and cancelled flights due to weather.
At a time when other airlines are shrinking their networks, AirTran took advantage of its solid financial situation in 2009 by adding some 25 non-stop routes, including flights to new cities in Florida, Missouri, New Jersey, North Carolina, Pennsylvania, Tennessee, and West Virginia, as well as Aruba, the Bahamas, and Mexico. It continued the trend in 2010 with new service to Montego Bay, Jamaica; Gulfport, Mississippi; and Lexington, Kentucky.
AirTran also has a marketing partnership with Frontier Airlines. Touted as a first among low-fare carriers, AirTran and Frontier refer passengers to each other and credit miles from one another's frequent flier programs. The deal stops short of code-sharing, which involves one carrier selling tickets for another's flights, but potential customers on the AirTran website can go to Frontier to book flights to destinations not served by AirTran, and vice-versa.