AirTran buyout has baggage, antitrust group says

The proposed acquisition of AirTran Airways by Southwest Airlines is unlikely to meet resistance from antitrust regulators, but it could diminish the overall effect of low-cost competition in the industry, according to the American Antitrust Institute.

Antitrust Institute vice president Diana Moss said the Southwest-AirTran deal "probably wouldn't meet with antitrust enforcement resistance," according to a written statement.

But, Moss wrote, the deal could raise issues not addressed in a standard antitrust review of where the two airlines' markets overlap.

Southwest and AirTran announced in September a merger deal to close in the first half of next year, pending shareholder approval and antitrust approval by the U.S. Department of Justice.

The deal would bring Southwest to Atlanta and would eventually mean the end of AirTran.

Moss said the acquisition of AirTran's hub could push Southwest toward more of a conventional hub-and-spoke route network.

The merger would "stretch the limits of Southwest's model" and lessen its ability to inject "competitive discipline through lower fares, more choice and entry and expansion," according to the paper by the Antitrust Institute, which is a non-profit research and advocacy organization.

AirTran spokesman Christopher White countered that the acquisition of AirTran by Southwest "is about growth," saying that "the end result would be better access to low fares for more people."

Southwest spokesman Beth Harbin said in a written statement that both airlines have an emphasis on "aggressive competition for the benefit of consumers. That's who we are. That won't change."

It also said the deal will remove AirTran, the second-largest low-cost carrier in the industry "and the source of some of the most aggressive price discounting and market entry." Any price increases after the merger may not be captured by a standard analysis of market share and concentration, according to Moss.

Moss also wrote that post-merger capacity cuts by airlines "have been largely overlooked in industry reviews." One example cited: Delta Air Lines' cuts in Cincinnati following its merger with Northwest Airlines.