Been working on an analysis of what impact of Southwest Airlines’ purchase of AirTran will have on the Queen City. It was getting kind of long, so I decided to split it into two parts.
The basics: Southwest doesn’t currently fly to Charlotte. AirTran does, with flights to Atlanta (ATL), Baltimore (BWI), and Orlando (MCO). Atlanta is the key market as that’s easily AirTran’s biggest hub. Based upon what Southwest is saying and the nature of the route, I’d have to say that the odds of Southwest or AirTran flying Charlotte-Atlanta nonstop in two years are pretty low.
Here’s why: AirTran currently operates Atlanta as a banked hub, in which a bunch of planes all arrive at about the same time, people connect to their intended destination, and all those planes leave at about the same time. Southwest doesn’t do the banked hub thing. As Gary Kelly, Southwest Airlines’ chairman/president/CEO said during the airline’s conference call last week:
Without attempting to be too colorful — that’s not a new statement — we’re chang[ing] routes, we’re changing cities. We’re adding and subtracting. What you have with AirTran today is not what you’re going to have with those airplanes when they’re integrated into Southwest Airlines. So it will be a very different route network. If nothing else, the hub-and-spoke system that they currently operate in Atlanta, we won’t do that. We’ll have our typical point-to-point network established.
The exact reason though that AirTran makes CLT-ATL work is because of hub-and-spoke. In the second quarter of 2011, ignoring people connecting at either end, only about 215 passenger a day flew each way between Atlanta and Charlotte. Unsurprisingly, Delta Air Lines and US Airways dominated the route, combining for nearly 90 percent of this origination and destination (O&D) traffic. That leaves AirTran with on the order of 24 O&D pax a day each way, or about eight for each of on average three flights a day on aircraft that seat 117. The route survives only because AirTran connects many more people a day to other destinations in Atlanta, something Southwest will greatly reduce the possibility of doing.
Lowering fares on the route isn’t the answer either. It’s only 227 miles as the jet flies between CLT and ATL, so the vast majority of people going between the two cities drive regardless of what air fares are. And AirTran/Southwest certainly can’t force Delta or US Airways off the route — after all, Atlanta and Charlotte are their largest hubs respectively and they currently fly CLT-ATL a combined 19 times a day to collect the connecting traffic. O&D passengers are almost bonus for them.
So yes, it’s pretty much a given that Charlotte-Atlanta on Southwest isn’t happening.
Orlando: Another bad sign here. AirTran, which currently has a daily nonstop to Orlando, is dropping the route come mid-August. No indication it’s coming back as even a Saturday only service through the end of October, which is as far out as AirTran schedules are available. While there’s been some seasonal variation on how often AirTran has flown the route in the past, the answer most certainly in the past few years has not been “no nonstops at all in October.” For example, in September 2010, AirTran flew the route three days a week. AirTran can, of course, still connect people going to Orlando for now in Atlanta. And Southwest, for which Orlando is a big station, is certainly free to add the route in the future regardless of what happens on CLT-ATL.
The decision to drop the MCO nonstop isn’t all that surprising though as federal data doesn’t suggest that AirTran wasn’t doing all that well on CLT-Orlando. They flew the route daily in 2Q2011 yet AirTran achieved only a 18.2 percent market share of a 364 passenger a day each way market. That’s 66 people a day, which isn’t too good when you’re flying a 117 seater. The average fares on AirTran were also not too good, at an average of $116.64 each way. The market average was $155.24; US Airways got $163.77 each way and had a 72.2 percent market share.