Feds close investigation of airlines’ proposed merger

Courtesy Southwest

ATLANTA – The federal government on Tuesday closed its antitrust investigation into the proposed acquisition of AirTran Airways by Southwest Airlines, effectively giving the green light to the combination of the two low-cost carriers.

The action paves the way for Southwest’s entry into a number of key markets, including Atlanta, and brings about the end of AirTran, which has a significant presence in Atlanta.

“After a thorough investigation, the division determined that the merger is not likely to substantially lessen competition,” the Department of Justice’s Antitrust Division said in a statement. “The merged firm will be able to offer new service on routes that neither serves today, including new connecting service through Atlanta’s (Hartsfield) Jackson International Airport from cities currently served by Southwest to cities currently served by AirTran. The division said that the presence of low cost carriers like Southwest and AirTran has been shown to lower fares on routes previously served only by incumbent legacy carriers.”

In September, Southwest announced it was buying AirTran Airways for $1.4 billion. The deal is expected to be finalized on May 2. The combined airline’s operations are expected to be fully merged by 2012, officials previously said.

“Although there are overlaps on certain nonstop routes, the division did not challenge the acquisition after considering the consumer benefits from the new service,” the Justice Department said. “Also, the airports affected by the overlaps are not subject to restrictions on slots or gate availability. Where such restrictions exist, entry by other airlines may be particularly difficult.”

Dallas-based Southwest currently serves 72 cities, all in the United States. AirTran, based in Orlando, Fla., currently serves 69 cities in the United States, the Caribbean and Mexico.

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