AirTran Continue Successful to Be Successful in This Highly Competitive Industry?
The objective of this study is to answer the question of whether AirTran will continue to be successful in this highly competitive industry.
According to Rouse (n.d.) in her work on AirTran Holdings, Inc., the ability of AirTran Airways to grow in the worst environment for the airlines in a long time and stated to be an unexpected turnaround. The stated strategy of AirTran is the development of a brand identity that is innovative in nature and that distinguishes it from other low-fare and full-service airlines. Two segments are reported to be targeted by AirTran: (1) price-sensitive travelers; and (2) leisure travelers, in the eastern U.S. (Rouse, 2005) AirTran also has a business class product reported to be equal to the first class service of its competitors.
Primary Services and Elements
Products of AirTran include: (1) a frequent flier program — A+ Rewards; (2) X-Fares Standby Program — offering flight to any AirTran destination for $55 per segment or $75 per long-haul segment; (3) travel partnerships with corporations including BellSouth, State Farm and John Deere; (4) public-private partnerships that enable AirTran to shift risk of expansion to communities and businesses; (5) was named best low-fare airline 2001 and 2002 by Entrepreneur magazine; (6) cost structure among lowest in domestic airline industry; (7) launch customer for new Boeing 717 having made close ties with Boeing and Boeing Capital Corporation. (Rouse, 2005)
II. Recent Merger with Southwest Airlines
AirTran is a wholly-owned subsidiary of Southwest Airlines and is reported to offer “coast-to-coast and near-international service” with approximately 500 daily flights to 47 destinations. (The Wall Street Journal, 2013, p.1) AirTran customers are able to exchange loyalty points between the A+ Rewards and Southwest Airlines Rapid Rewards programs. There is however reported to be trouble in paradise with the merger of Southwest and AirTran airlines now in its third year. The two airlines are reported to have combined in order to provide service to more domestic passengers and for this purpose have been splicing their flight schedules together in 2013. This has resulted in passengers being delayed needing rebooking. As well, price differences and availability of seating is reported to “show up for the same flight on Southwest’s and AirTran’s online sites.” (The Wall Street Journal, 2013, p.1) Furthermore, it is reported that early boarding privileges on Southwest does not equal the same on AirTran flights. Frequent-flier credits are also still separate and companion passes for Southwest cannot be used for AirTran. It is reported that the original promise of the two being ‘one airline’ is a promise that has been broken. The airlines are losing customer’s bags and failing to deliver them on the same flight as the owners of the bags. Overbooking is on the rise for the two airlines and so are complaints. It is specifically reported that the “two discount airlines face huge merger hurdles largely because Southwest lacks a reservation system capable of handling many aspects of AirTran’s business, such as international flights.” (The Wall Street Journal, 2013, p.1) Reported as well is that presently Southwest “has agents of both airlines trying to work two reservation systems on different windows of their computer screens so one airline can check in customers from the other.” (The Wall Street Journal, 2013, p.1) Reported as well are problems when operations are interrupted by bad weather in that the employees “have to deal with rescheduling passengers. Agents can’t see all possible alternative flights in one place and have to check route by route to find open seats for stranded customers.” (The Wall Street Journal, 2013, p.1)
Summary and Conclusion
It is yet to be seen how well the two airlines will integrate and the merger between Southwest and AirTran airlines continues. It is certain that the future success of AirTran is highly dependent on the success of its merger with Southwest Airlines.
McCartney, S. (2013) Southwest and AirTran Airlines: Mergers and Aggravations. The Wall Street Journal. 18 Jul 2013. Retrieved from: http://online.wsj.com/article/SB10001424127887324448104578611980670019710.html.
Rouse, MM (2005) AirTran Holdings Inc. Internet Mini Case #11.
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