Air Tran Grabs Mdw Gates, Dca,lga Slots

[Columbia blue]

Airtran Airways has agreed to buy the DCA,LGA slots and the MDW gates and routes from ATA.

http://biz.yahoo.com/prnews/041026/nytu254_1.html

 

[airport]

I thought AirTran might take a few ATA 737's, too.

 

[JetClipper]

I think that one of the reasons low-fare carriers have been so successful is that until recently there has been little overlap in their route networks. Therefore, each airline had it’s particular markets pretty much to themselves. However, these carriers’ business models rely on very fast growth to keep their costs low, and they are beginning to run out of “uncontestedâ€￾ expansion opportunities.

Air Tran entering Southwest’s long-held territory at MDW should shape-up to be quite a slug fest. However, given WN’s historic ferocity when dealing with encroachers on their markets (e.g. they do not play well with others), it will be interesting to see how this plays out. I see Air Tran retreating at some point in the future, but I could be wrong.

 

[funguy2]

JetClipper... I think in general, you are right. However, I think as long as it has secured facilities and slots, etc, AirTran can operate MDW similar to BWI... which is to say somewhat out of the way of Southwest in a successful niche of their own...

AirTran will fly from MDW to BOS/LGA/DCA, Southwest will fly MHT/PVD/ISP/BWI.

AirTran will likely not enter MDW-MCI, and Southwest will likely not enter MDW-MSP (near term anyway).

I suspect there will be some overlap, like California and FLA, but I think they will offer two different products, like the difference between Southwest and America West at PHX.

Lastly, I think AirTran has the right aircraft and the right costs to do MDW well, where ATA had airplanes that were too big (175 seats on the smallest) and too expensive.

Oh, and lastly, while the initial deal has AirTran acquiring some assets, things are not necessarily complete. America West (speaking of them) have publicly said they may consider offering a second option to ATA's BK judge/creditors/shareholders. If you recall, RSA brought US Airways out of BK after trumping a deal between US Airways and TPG... So its not always the first deal that gets completed.

I have to agree, though, that whatever happens should be interesting to watch.

 

[WorldTraveler]

JetClipper's point is very valid. People have been speculating for years about which legacy carriers will fold first. In reality, some of the LCCs are not likely to be here for much longer either. Yes, some of the legacies will certainly fail but they do have alot more staying power - if for no other reason than that the creditors have so much to lose that they are willing to keep them on life support for a very long period of time.

This is very good news for AirTran. They are a very well run company and know what it takes to succeed. They will do fine in MDW- although it is fanciful to think WN will roll out the red carpet.

It will be interesting to see who moves into DFW, another big vacancy waiting to be filled. FL will not likely do much with DFW at this point. However, if FL succeeds at acquiring TZ's assets, HP might decide DFW makes a good eastern expansion.

 

[Cfm56]

Southwest Airlines To Boost Chicago Service In 1Q
By Elizabeth Souder, Of DOW JONES NEWSWIRES, Dow

DALLAS (Dow Jones)--Southwest Airlines Co. (NYSE:LUV) (LUV) Chief Executive Gary Kelly said the airline plans to grow "significantly" in Chicago in response to ATA Holdings Corp. (NASDAQ-NMS:ATAH)'s (ATAH) bankruptcy filing.

Kelly said he wants to add service at Southwest's fourth largest location, Chicago Midway Airport, in the first quarter. He said the growth is in response to AirTran Holdings Inc. (NYSE:AAI)'s (AAI) bidding to buy ATA's Chicago service.

Kelly declined to say how much Southwest will grow in Chicago. The airline has 19 gates at Midway and operates 145 daily flights there.

Kelly said the gates could accommodate 40 more daily flights. He said he hasn't decided whether to bid for more gates. "I think everything has changed now. ATA has outsourced capacity," he said. "There is no desire on our part to stand still in Chicago."

"Chicago is a battleground and has been a battleground historically," Southwest CEO Kelly said. "We feel like we've made a significant contribution in building Midway. The last thing we're going to do now, after all this building effort, is to not grow with the market."

Kelly said growth in Chicago doesn't preclude expansion in the airline's newest destination, Philadelphia, or adding more cities. Southwest has been growing at a rate of about 10% and will continue at about the same rate, he said.

"Our No. 1 priority today is Chicago Midway. Close behind is Philadelphia, if we can get more gate capacity," he said. Kelly said he is talking to Philadelphia airport officials about getting more gates there.

The CEO also said he is delaying decisions for other areas of growth until it is clear what opportunities are available. With a chunk of the U.S. airline industry operating in bankruptcy, many experts are anticipating a big shakeup.

Southwest Airlines President and Corporate Secretary Colleen Barrett also announced Thursday she is creating two new departments: a labor and employee relations department and a leadership and employee development department.

The new departments will not involve increasing headcount, but rearranging other employee oversight, she said.

 

[jimntx]

Just heard on CNN that Chicago mayor will oppose transfer of ATA gates to AirTran unless guaranteed that 3200 ATA employees in Chicago get to keep their jobs. Like that will happen.

 

[AA191]

Let us remember that the gates belong to the City of Chicago and not to ATA. Also a Bankruptcy judge will be involved. I would suppose that the DCA and LGA slots will go to another carrier besides ATA and HP but that ATA and HP will fight over the planes and with the City of Chicago. The DCA and LGA slots are worth much more than $83 Million

Also - any airline can fly to Hawaii, this America West needing approval on the route is bizzare. The only thing I can think of is that they need ETOPS 757's.

But it is all about the City of Chicago and the Bankruptcy judge and his view on the slots right now.

 

[Speedbird]

JetBlue's CEO today stated in his airline's quarterly conference call that he believed that the "slots" that ATA was using at LGA were actually "slot exemptions" and as such ATA had nothing to sell to AAI since those slot exemptions were granted to ATA by the NY/NJ Port Authority. David Neeleman went on to say that since jetBlue had only received a partial allotment of slot exemptions by the Port Authority to use LGA that his airline should be first in line to receive any freed up exemptions not used by other airlines who had already received slot exemptions, like ATA. Whether or not any of this is true, it just points out that this deal is anything but done and will have other competitors trying to get a piece of the deal by hook or crook.

 

[coolflyingfool]

I think the huge wild card in this is how much WN wants to get involved. IF, and I mean IF, WN wants to acquire the 737-800's like Gary Kelly, CEO, said, then all bets are off. WN cold move the -800's to the West Coast and long hauls and shift some -700's to MDW and offer a lot more MDW to the coasts service. WN could through a wrench in also by trying to acquire, say 5 gates, from the City of Chicago who really owns the gates. WN might be willing to pay a little more to prevent anyone else from creating an equal sized hub operation at MDW. I can see WN promising the city to add a certain amount of flights to get the gates. Kind of like what WN did to acquire the gates they have now from when the original Midway failed. Just my thoughts.......

 

[funguy2]

Yes, but I would bet the city of Chicago also has an interest in ensuring somebody flies from MDW to BOS, LGA, and DCA. Its going to be harder to position MDW and the easy, close to downtown, convenient alternative, type airport, if it does not have connections to other similar airports, which BOS, DCA, and LGA arguably are.

While the city cannot dictate where the carriers fly, they can at least ensure some gate availability to carriers likely to fly to certain places. I think we can all be certain that, at this point, LUV will not fly BOS, LGA, or DCA from MDW (or anywhere else).

 

[WorldTraveler]

The US Dept. of Transportation will step in if WN is allowed to acquire enough gates to render the possibility of another airline hub in MDW impossible. In the perversity that is the airline industry, you will see all of the legacy airlines line up with AirTran in pleading to the DOJ to NOT allow WN to acquire any more gates because the legacies have all had to deal with the DOJ horning into how their hubs are run. You can't expect one group of airlines to play but the rules and exempt a certain carrier just because it has somewhat different stripes. At the end of the day, WN is just like any other airline and just like Wal-Mart: they want to control the market to such an extent that customers really don't have any other choice. In a free market economy, it is the role of the government to ensure that otherwise scarse resources are equitably allocated.