ANALYSIS: AirTran continues shrinking as Southwest merger enters second year

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The Southwest Airlines-AirTran Airways merger entered its second year this summer, but AirTran is not going away any time soon.

Despite an ongoing process of transitioning AirTran's aircraft to the Southwest brand, AirTran's capacity and number of destinations have declined by only one third since August 2011, three months after Southwest acquired the carrier.

According to Flightglobal/Innovata data, AirTran's total capacity reached 1.9 million seats in August, down 34% from AirTran's capacity of 2.9 million seats in August 2011.

In August of this year, AirTran operated 16,200 flights, had 2.4 billion available seat miles and served 47 cities, according to Flightglobal/Innovata.

By comparison, the carrier operated some 24,300 flights in August 2011, when it had 3.8 billion available seat miles and served 70 cities.

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Dallas-based Southwest announced its intention to acquire AirTran in September 2010 and says it expects to complete the merger by the end 2015 at a total cost of $550 million. The company has already incurred merger expenses in excess of $350 million, according to securities filings.

AirTran's pullback has come as Southwest has assumed flying on some former AirTran routes, and as the company has moved some AirTran aircraft into Southwest's fleet.

Eleven of AirTran's 52 737-700s had been transitioned to Southwest at the end of 2012 and the company expects to transition another eight 737s in 2013, according to securities filings.

Southwest also entered an agreement to lease AirTran's entire fleet of 88 Boeing 717-200 aircraft to Delta Air Lines, with the first aircraft going to Delta in August.

Southwest has said it will replace that capacity with the installation of more seats on its existing aircraft and capacity gained from aircraft on order.

The airline holds orders for 146 Boeing 737-700s and -800s, with deliveries through 2018, and 180 of the Max 7 and Max 8 versions of the aircraft, with deliveries through 2024, according to Southwest securities filings.

Since the merger, AirTran has exited 27 cities, including major markets like Charlotte in North Carolina, Dallas-Fort Worth, Washington-Dulles, Miami, Phoenix and Seattle.

Also gone from AirTran's route map are smaller cities, places like Allentown and Harrisburg in Pennsylvania, Atlantic City in New Jersey, Asheville in North Carolina, Charleston in West Virginia, Sarasota and Miami in Florida, Branson in Missouri and Westchester, near New York City.

As AirTran retreated, Southwest entered some of its former markets, but not all.

This August, neither carrier served 15 cities that AirTran served in August 2011, according to Flightglobal/Innovata. They include Charleston, Dallas-Fort Worth, Allentown, Harrisburg, Atlantic City, Asheville, Lexington in Kentucky and others.

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Other markets have seen drastic reductions in AirTran capacity.

Between August 2011 and August 2013, AirTran's number of seats from Grand Rapids in Michigan declined 76%, while seats from Milwaukee fell 72% and seats from San Juan dropped 68%, according to Flightglobal/Innovata.

AirTran's capacity fell 50% or more on flights from Los Angeles, New York's LaGuardia airport, San Francisco, Minneapolis and Bermuda.

At the same time, however, Southwest has increased some of AirTran's international flying, with the carrier launching service in the last two years to Mexico City and San Jose del Cabo in Mexico, and more than doubling capacity to Aruba, Punta Cana, Cancun.

Despite acquiring AirTran assets, Southwest's capacity has also fallen in the last two years as it trimmed flying in an effort to meet financial targets.

In August 2013, Southwest's capacity reached 13.4 million seats, down 17% from 16.1 million seats in August 2011, according to Flightglobal/Innovata.

Combined capacity on the two airlines also declined in recent years, falling nearly 20% since August 2011 to 15.3 million seats in August 2013.

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