AirTran expands to Caribbean while cutting flights domestically

By Kelly Yamanouchi
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The Atlanta Journal-Constitution

AirTran Airways is making a foray into the Caribbean even as it cuts flight schedules elsewhere amid weaker demand for travel.

It’s another venture into international markets for AirTran, and a step into a burgeoning market for low-cost carriers. AirTran plans to begin flying from Atlanta to Nassau, Bahamas, and to Aruba in December; and to Montego Bay, Jamaica, in February.

Although international travel to Europe and to Asia has declined significantly as business travel suffered, leisure travel has experienced milder declines.

Orlando-based AirTran has taken some small steps into the international arena in the last several years, but had some hiccups along the way.

The carrier launched its first international route in 2000 with flights from Atlanta to Freeport, Bahamas, which were discontinued in 2007. In 2008, it begin flying from Atlanta to San Juan, Puerto Rico.

AirTran also flies to Cancun, Mexico, but had a stop-and-start entry into the market. It canceled its 2005 plans to start Cancun flights after hurricanes damaged resorts there. It resumed those plans with Atlanta-Cancun flights that started in February 2009, but demand early on was weakened by concerns about crime and then swine flu.

The ability for AirTran to expand internationally was boosted by a decision about six years ago to order longer-range Boeing 737 jets.

“The aircraft gave us the ability to fly anywhere in the United States and really from Atlanta to anywhere in the Caribbean and Latin America,” said Kevin Healy, AirTran’s senior vice president of marketing and planning. “We’ve taken our time getting into the Caribbean in part because there’s better opportunities domestically and in part because we want to understand the market better.”

Healy said AirTran has the technical capabilities for partnerships with foreign carriers, but “it’s not a real high priority.”

Last year, AirTran sold aircraft and delayed future plane deliveries. It does not expect to grow its fleet until 2011. That means adding new routes often means cutting flights elsewhere. AirTran announced in August it will pull out of Newark, and may reduce flights in Florida, he said.

Airlines that have a low-cost carrier model like AirTran historically were known primarily as domestic carriers, and the Caribbean has long been dominated by legacy carriers like American Airlines and Continental Airlines. But low-cost carriers including JetBlue, Spirit and AirTran have been building a presence there.

American recently scaled back its San Juan hub, and “that created a lot of white space” for low-cost carriers, said Andrew Watterson, a partner in consulting firm Oliver Wyman’s aviation practice in Dallas. “It fits with the business model of the LCCs because these are either leisure customers going on holiday or visiting friends and relatives.”

Florida and New York, which are big markets for AirTran, JetBlue and Spirit customers, have large populations from the Caribbean that fly there to visit friends and family, Watterson said.

The low-cost carrier model was pioneered in the United States, but Asian and European carriers like AirAsia and Ryanair copied the model and “showed it could work for these short international journeys,” Watterson said. “The international aspect has been kind of re-exported back to the U.S.”

Healy called the Caribbean a “natural expansion of the AirTran network,” as the industry shifts and it re-evaluates its operations. “I think there’s potential for additional international destinations in 2010.”