BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

__________________________________________

Joint Application of )

)

SOUTHWEST AIRLINES CO. )

AIRTRAN AIRWAYS, INC. ) Docket DOT-OST-2011-____

)

for approval of the transfer of international )

route authorities pursuant to 49 U.S.C. § 41105 )

__________________________________________ )

JOINT APPLICATION OF SOUTHWEST AIRLINES CO. AND 

AIRTRAN AIRWAYS, INC. FOR APPROVAL OF THE

TRANSFER OF INTERNATIONAL ROUTE AUTHORITIES

Communication with respect to this document should be addressed to:

Ron Ricks Steven A. Rossum

Executive Vice President – Executive Vice President &

 Corporate Services & Corporate Secretary General Counsel

Madeleine Johnson AIRTRAN AIRWAYS, INC.

Vice President – General Counsel 9955 AirTran Boulevard 

SOUTHWEST AIRLINES CO. Orlando FL 32827

2702 Love Field Drive

Dallas TX 75235 Edward P. Faberman

WILEY REIN LLP

Robert W. Kneisley 1776 K Street, N.W.

Associate General Counsel Washington DC 20006

Leslie Abbott, Attorney

SOUTHWEST AIRLINES CO. Counsel for AirTran Airways, Inc.

1901 L Street, N.W. (202) 719-7402

Washington DC 20036

(202) 263-6284

bob.kneisley@wnco.com

leslie.abbott@wnco.com

March 17, 2011

NOTICE: The Joint Applicants request that this Application be processed pursuant 

to the expedited non-hearing procedures in Subpart B of the Department’s 

Procedural Regulations. Any person may file an answer supporting or 

opposing this Application by April 7, with copies to the Applicants and all 

persons served with this Application.
i

TABLE OF CONTENTS

I. INTRODUCTION

A. The Joint Applicants

 

B. The Proposed Transaction

C. Request for Relief

II. THE PROPOSED ROUTE TRANSFER IS FULLY CONSISTENT WITH THE 

APPLICABLE PUBLIC INTEREST STANDARD UNDER SECTION 41105 AND 

LONG-STANDING DOT PRECEDENT FOR APPROVAL

A. Applicable Statutory Standard

B. The Proposed Transfer is Consistent With U.S. International Aviation Policy, 

and the Surviving Entity is a U.S. Citizen Fit to Hold the Authority

III. THE SOUTHWEST-AIRTRAN COMBINATION WILL PRODUCE SIGNIFICANT 

AND LASTING PUBLIC BENEFITS

A. The Combination Will Create a Nationwide Low-Fare Airline That Will

Enhance Domestic Competition Across the United States

B. Combining Southwest and AirTran into a Larger and Stronger Low-Fare Airline 

Will Allow Southwest to Resume its Long-Term Growth Strategy

C. Merging the Two Companies Will Generate Significant Net Synergies

D. Acquiring AirTran Will Enable Southwest to Initiate Small Community Service

On a Viable Basis

IV. APPROVAL OF THE JOINT APPLICATION WILL ENABLE SOUTHWEST 

TO INITIATE ITS FIRST EVER NEAR-INTERNATIONAL SERVICE, AND 

WILL IMPROVE THE U.S. TRADE POSITION INTERNATIONALLY 

V. BY CREATING A MORE EFFICIENT AND STRONGER AIRLINE, THE 

ACQUISITION WILL BENEFIT EMPLOYEES OF BOTH SOUTHWEST AND 

AIRTRAN

VI. SOUTHWEST AND AIRTRAN HAVE MINIMAL ROUTE OVERLAP; THE 

TRANSACTION WILL NOT MATERIALLY LESSEN COMPETITION IN ANY 

MARKET

VII. CONCLUSION
BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

__________________________________________

Joint Application of )

)

SOUTHWEST AIRLINES CO. )

AIRTRAN AIRWAYS, INC. ) Docket DOT-OST-2011-____

)

for approval of the transfer of international )

route authorities pursuant to 49 U.S.C. § 41105 )

__________________________________________ )

JOINT APPLICATION OF SOUTHWEST AIRLINES CO. AND 

AIRTRAN AIRWAYS, INC. FOR APPROVAL OF THE 

TRANSFER OF INTERNATIONAL ROUTE AUTHORITIES

Southwest Airlines Co. (“Southwest”) and AirTran Holdings, Inc., the parent 

company of AirTran Airways, Inc. (“AirTran”) (Southwest and AirTran together the “Joint 

Applicants”) have entered into an acquisition and merger agreement that will create the 

first truly national low-fare airline. The combination will provide enormous benefits to 

consumers and communities through a network of expanded domestic and international 

low-fare scheduled service. The combined airline will provide new flight options for 

millions of travelers at lower costs and bring greater economic activity to the areas 

served.

Accordingly, pursuant to 49 U.S.C. § 41105 and Subpart B of the Department’s 

Rules of Practice, Southwest and AirTran hereby jointly apply for approval of the de 

facto route transfer that will result from Southwest’s acquisition of AirTran. Additionally, 

by a concurrent filing, the Joint Applicants seek an interim exemption for the de facto

transfer pursuant to 49 U.S.C. § 40109(c). For the reasons discussed below, 
 Joint Application of Southwest Airlines and AirTran Airways

2

Southwest and Airtran request that both the exemption and final approval be 

expeditiously granted.

I. INTRODUCTION

Southwest and AirTran are proposing to combine their operations to create the first 

truly national low-fare airline. This will be accomplished by Southwest acquiring AirTran 

Holdings, Inc. as a wholly-owned subsidiary leading to an eventual combining of 

Southwest and AirTran under a single operating certificate as Southwest Airlines. 

Following the close of the transaction, the combined airline will serve over 100 U.S. 

cities with over 4,000 daily flights, and will generate hundreds of millions of dollars in 

annual savings to consumers as well as increased economic activity in the markets 

served by the combined carrier across the country. 

Unlike other recent airline mergers, the Southwest/AirTran combination is not 

premised only on projected cost synergies or new routings due to a larger network or 

alliance membership. Rather, the Southwest/AirTran acquisition will result in an 

expansion of low-fare service and competition to hundreds of markets that would 

otherwise not take place by either carrier absent the merger. The dramatic expansion 

of low-fare service due to the Southwest-AirTran combination will save consumers and 

businesses hundreds of millions of dollars annually by providing new low-cost 

competition throughout the United States. Other recent airline mergers, by contrast, did 

not even purport to reduce fares to consumers to any significant extent. 

The effects of the acquisition and merger on the three areas assessed under 

Section 41105 – financial viability, domestic competition and the trade position of the 

United States in international air transportation – will all be positive. Southwest and 
 Joint Application of Southwest Airlines and AirTran Airways

3

AirTran are a natural fit in several important ways. Both companies are low-cost airlines 

with an emphasis on outstanding customer service, and a history of providing benefits 

to consumers via low-fare competition. The acquisition of AirTran will allow Southwest 

to fill major voids in its current route network by initiating first-time service to both 

Hartsfield-Jackson Atlanta International Airport - the nation’s busiest airport - and 

Ronald Reagan Washington National Airport, as well as expanding its minor presence 

at New York LaGuardia Airport. Notably, the route networks of the two carriers are very 

complementary, and both airlines operate all-Boeing aircraft which will facilitate the 

consolidation and continued low operating costs.

The Southwest-AirTran transaction provides extensive public benefits that are 

discussed below in detail. In brief, the combination of these two carriers:

Provides customers with more low-fare destinations and stronger low-fare 

competition as the combined carrier expands its network and diversifies into 

new markets – large and small, domestic and international.

Adds 39 new destinations to Southwest’s current route network, enabling 

Southwest to offer its customers hundreds of additional nonstop, one-stop 

and connecting travel options. 

Provides new or expanded low-fare competition in major markets and hubs 

with high average fares, including Reagan National Airport (DCA), New York

LaGuardia Airport (LGA), Memphis (MEM) and Charlotte (CLT). 

Enables Southwest to initiate a major pattern of service in Atlanta (ATL), the 

busiest airport in the U.S. and the largest domestic market that Southwest 

does not currently serve. Although AirTran has a strong presence in ATL, 

there are many high-fare ATL city-pairs unserved (or under-served) by 

AirTran that would significantly benefit from low-fare competition provided by 

Southwest. 

Expands single-carrier service offerings to, from, and via cities that Southwest 

and AirTran both already serve – including Baltimore, Milwaukee and Orlando 
 Joint Application of Southwest Airlines and AirTran Airways

4

– all of whose airports have capacity available for the combined carrier, as 

well as other carriers, to enter and grow. 

Enables Southwest to extend service to certain small and midsize 

communities currently served by AirTran. These communities will reap

significant benefits from the expanded low-fare service and travel options 

made possible by connecting to Southwest’s much more extensive route 

system. The transaction will also allow Southwest to employ AirTran’s 

smaller B-717 fleet and operating experience to consider expanding the 

combined network to additional small and midsized markets.

Strengthens AirTran’s existing service to key near-international leisure 

markets in the Caribbean and Mexico and lays the foundation for additional 

near-international destinations in the future. 

Generates more jobs and more career opportunities for the combined 

employee groups. AirTran’s employees are expected to benefit significantly 

from becoming part of Southwest. Southwest is the most heavily unionized 

airline in the U.S. and offers, on average, the highest employee wages and 

benefits in the passenger airline industry. It has an unmatched history of 

working cooperatively with all of its employee groups. Both Southwest and 

AirTran employees are expected to benefit from the unique growth 

opportunities the proposed acquisition presents.

Facilitates Southwest’s ability to increase efficiency and boost profits and 

financial returns on capital, all of which are essential for Southwest to grow its 

fleet and expand its network, while promoting competition and providing more 

opportunities for employees, customers, and the communities it will serve.

Stimulates more orders for Boeing aircraft – one of America’s great

companies – which will promote U.S. job growth for Boeing as well as its 

subcontractors and vendors. Just recently, Southwest announced an order 

for 20 B737-800 aircraft to replace a like number of B737-700 aircraft in its 

fleet. Post merger, these larger, longer-range aircraft could provide 

significant public benefits by replacing AirTran’s smaller aircraft in markets 

such as DCA and LGA which are slot constrained, in Latin and Caribbean 

markets, or in long-haul markets to the West Coast or Hawaii. 

The combination of Southwest and AirTran creates a platform for growth that 
 Joint Application of Southwest Airlines and AirTran Airways

5

neither carrier would be able to undertake on its own, adding up to much more than the 

sum of the parts. Joining these two airlines will advance the public interest by creating

hundreds of new low-cost travel options that will provide greater competition and lower 

fares for millions of American travelers, more flights for communities, and more job 

opportunities as the merged airline continues to grow and provide low-fare competition 

across the United States.

A. The Joint Applicants

1. Southwest Airlines Co. 

Southwest, the nation’s largest low-cost, low-fare airline, provides scheduled air 

transportation throughout the United States and has its principal place of business in

Dallas, Texas.1 Southwest commenced service with three aircraft on June 18, 1971 as 

an intra-Texas carrier. Today, Southwest has a fleet of 548 Boeing 737 aircraft serving 

71 cities in 37 states with over 3,400 daily flights. Later this month Southwest will begin 

service to Newark, New Jersey (EWR), a major destination that neither it nor AirTran 

serves today. In 2010 Southwest carried 88 million domestic originating passengers, 

more than any other U.S. airline based on the most recent DOT data available.

Southwest principally provides point-to-point, rather than hub-and-spoke, service

and will continue to do so after the merger. This business model allows Southwest to 

optimize the use of key assets, including aircraft, gates, and employees, and also 

facilitates Southwest’s ability to provide frequent, conveniently-timed flights with 

predominantly nonstop routings for the benefit of its customers. In 2010 approximately 

73% of Southwest’s passengers flew nonstop to their destination. Southwest was 

 

1

Southwest also holds exemption authority to serve Canada but has not provided service under that authority. See 

Attachment B hereto.
 Joint Application of Southwest Airlines and AirTran Airways

6

profitable for the 38th consecutive year in 2010, earning net income of $459 million. 

Southwest is a “citizen of the United States” as defined in 49 U.S.C. § 40102, and will 

remain so after the transaction.

2. AirTran Airways, Inc.

AirTran is one of the largest low-cost scheduled airlines in the United States in 

terms of departures and seats offered. AirTran operates domestic service primarily in 

the East and Midwest, and also provides service to five international destinations in the 

Caribbean and Mexico, with new service starting to Bermuda in April 2011. 

Approximately one-half of AirTran’s flights originate or terminate at its major base of 

operations in Atlanta; the company also has a sizable presence in Baltimore, 

Milwaukee, and Orlando. AirTran currently operates a fleet of 88 Boeing 717-200 

aircraft and 52 Boeing 737-700 aircraft offering approximately 700 scheduled flights per 

day to 69 destinations in the United States and Mexico, Jamaica, the Bahamas, Aruba, 

and the Dominican Republic (see Attachment A).

Like Southwest, the traditional elements of AirTran’s service include low costs 

and low fares; excellent customer service; an attractive network; and the enthusiasm 

and skill of its employees. AirTran is a U.S. citizen with principal executive offices 

located in Orlando, Florida.

B. The Proposed Transaction

On September 26, 2010, Southwest entered into an agreement to acquire 100% 

of AirTran Holdings, Inc., the parent company of AirTran Airways and merge it and 

AirTran into Southwest. Closing of the transaction is subject to approval by AirTran 

shareholders (at a special meeting scheduled March 23, 2011), receipt of Department of 
 Joint Application of Southwest Airlines and AirTran Airways

7

Justice (“DOJ”) and certain other regulatory clearances, as well as other customary 

closing conditions. Following the closing, each outstanding share of AirTran Holdings, 

Inc.’s common stock will be converted into the right to receive $3.75 in cash and 0.321 

shares of Southwest common stock. The number of shares of Southwest common stock 

to be received is subject to adjustment based on Southwest’s share price prior to 

closing.2

The acquisition will allow Southwest to significantly expand and diversify its 

network and provide growth opportunities that are not possible or practicable for 

Southwest to achieve on a stand-alone basis. Southwest plans initially to operate 

AirTran as a wholly owned subsidiary but after a transition period will merge AirTran 

fully into Southwest. To ensure that customer expectations are met and to avoid 

potential confusion, Southwest expects to continue to market AirTran flights under that

brand until the AirTran customer experience, including aircraft configuration and

boarding procedures, are brought into conformity with the current Southwest customer 

experience. 

C. Request for Relief

Under long-standing precedent, the Department has determined that when two 

air carriers each holding international route authority come under common ownership 

and control, a de facto transfer of authority has taken place under 49 U.S.C. § 41105, 

requiring prior DOT approval. See, e.g., Continental/United, Order 2011-3-14, March 10, 

2011 at 5, n.10; Delta/Northwest, Order 2009-1-8, January 15, 2009, at 3. Accordingly, 

Southwest and AirTran jointly apply for approval of the de facto route transfer that, as 

 

2

Additional information about the transaction can be found at www.lowfaresfarther.com, Southwest’s Investor 

Relation webpage accessible via www.southwest.com, and www.airtran.com.
 Joint Application of Southwest Airlines and AirTran Airways

8

noted above, will result from Southwest’s acquisition of all outstanding shares of AirTran 

common stock. More specifically, the Joint Applicants request that the Department take 

the following actions: (1) approve the de facto transfer of AirTran’s domestic certificate 

of public convenience and necessity and international route authorities to Southwest; (2) 

reissue the international route authorities issued to AirTran in the name of “AirTran 

Airways, Inc. or Southwest Airlines Co”.; and (3) approve the final, de jure transfer of 

AirTran’s international and domestic authority to Southwest once the two carriers are 

combined into a single entity. See Continental/United, supra, at 5.

In addition, the Joint Applicants are concurrently requesting an interim exemption 

pursuant to 49 U.S.C. § 40109(c) pending final approval of the transfer of AirTran’s 

international route authorities under Section 41105. Based on long-standing 

Department precedent in previous airline acquisitions and mergers, the Joint Applicants 

ask that both applications be granted expeditiously.

II. THE PROPOSED ROUTE TRANSFER IS FULLY CONSISTENT WITH 

THE APPLICABLE PUBLIC INTEREST STANDARD UNDER SECTION 

41105 AND LONG-STANDING DOT PRECEDENT FOR APPROVAL

A. Applicable Statutory Standards 

Section 41105 authorizes the Department to approve an international route 

transfer if it determines that the transfer is “consistent with the public interest.” 49 

U.S.C. § 41105(a); see also Continental/United, supra, at 4; Delta/Northwest, supra, at 

4. The Department has stated that the primary criteria it considers in determining the 

public interest are “whether the certificate transfer would conflict with important 

international aviation policy objectives and whether the surviving entities are U.S. 

citizens and whether they will be fit to hold the authority.” Continental/United, supra, at 
 Joint Application of Southwest Airlines and AirTran Airways

9

4; Delta/Northwest, supra, at 4; American/TWA, Order 2001-4-7, April 6, 2001, at 4. In

addition, Section 41105(b) requires the Department to analyze the impact of the 

transaction on: (1) the viability of the air carrier applicants, (2) competition in the 

domestic airline industry, and (3) the trade position of the United States in the 

international air transportation market. Continental/United, supra, at 4; Delta/Northwest, 

supra, at 4; Delta/Comair, Order 2000-9-4, September 11, 2000, at 2.

Well-established Department precedent creates a presumption in favor of 

approving route transfer applications, “provided that they do not conflict with important 

international aviation policy objectives and are not otherwise inconsistent with the public 

interest.” See, e.g., UPS/Challenge, Order 2000-6-7, June 12, 2000, at 3. As 

demonstrated below, the Joint Applicants’ proposed transfer of international route 

authority generates substantial public benefits, satisfying the public interest standard 

reflected in Section 41105, and is fully consistent with the Department’s international 

aviation policies, relevant statutory criteria, and precedent in prior merger cases.

B. The Proposed Transfer is Consistent With U.S. International Aviation 

Policy, and the Surviving Entity Is a U.S. Citizen Fit to Hold the Authority

The route transfer approval requested by the Joint Applicants is fully consistent 

with the criteria specified in Section 41105, as well as the DOT’s international policy 

goals generally. The Department’s Statement of United States International Air 

Transportation Policy, issued May 3, 1995, identified increasing airline opportunities to 

expand their operations, increasing the variety and type of services available to 

consumers, and enhancing the access of U.S. cities to the international air 

transportation system as among the best ways to achieve the overall goal of promoting 

“safe, affordable, convenient and efficient air service.” 60 Fed. Reg. 21841, 21844 (May 
 Joint Application of Southwest Airlines and AirTran Airways

10

3, 1995). This proposed route authority transfer is fully consistent with this policy 

because it will increase international air service opportunities for the combined airline, 

expand the variety of international services offered to consumers, and connect more 

U.S. cities to the international air transportation system.

The route transfer approval requested by this Application will advance U.S. 

international aviation policy by fostering U.S.-flag competition to near-international 

destinations such as Mexico and the Caribbean. Because Southwest does not currently 

serve any international destinations, there is no overlap with AirTran on these routes. 

Connecting AirTran’s current international destinations to the combined 

Southwest/AirTran network will create new low-fare travel options for millions of 

consumers in dozens of additional cities, stimulating additional U.S. passenger traffic in 

these markets. Moreover, this combination will serve as a platform for potential

additional service to near-international destinations in the future, further advancing the 

Department’s international aviation policy goals. 

The transfer of AirTran’s international route authority does not give rise to any 

international aviation policy concerns. All of the AirTran routes, except those to Mexico, 

are governed by open skies or open entry agreements, and accordingly, will not prevent 

other U.S. carriers from entering these markets. The transfer of AirTran’s Mexico 

authority to Southwest will ensure that the current level of U.S. airline competition is 

maintained or improved. Because Southwest does not currently provide any 

international service, the number of U.S. carriers serving these markets will remain the 

same and no other U.S. carrier will be inhibited from entering the markets in question. 
 Joint Application of Southwest Airlines and AirTran Airways

11

Both Southwest and AirTran hold Certificates of Public Convenience and 

Necessity from the Department to conduct domestic scheduled service, and are 

“citizens of the United States” as defined in 49 U.S.C. § 40102(a)(15). The proposed 

acquisition of AirTran by Southwest will not change this. Both carriers remain fit to 

conduct operations as certificated air carriers, and the combined carrier will remain a 

citizen of the United States. Indeed, the combined carrier will be financially strong, 

more efficient, and a more effective low-fare competitor than either carrier would be on 

a stand-alone basis. 

III. THE SOUTHWEST-AIRTRAN COMBINATION WILL PRODUCE

SIGNIFICANT AND LASTING PUBLIC BENEFITS

The Southwest-AirTran transaction will provide substantial benefits to millions of 

U.S. consumers annually, from large, medium, and small communities throughout the 

United States. Initially, consummation of the transaction will enable Southwest to 

expand its network to 38 new destinations that are currently served by AirTran but not 

by Southwest. The combined network will initially serve 109 points compared to 71 for 

Southwest alone today. Over this larger network Southwest will be able to offer 

consumers online access to hundreds of new low-fare itineraries. The new services 

made possible by the merger will generate hundreds of millions of dollars in annual fare 

savings to consumers compared to the current high average fares in many of these 

markets. For this reason, the transaction will provide enormous benefits for consumers, 

communities, and businesses across the United States.
 Joint Application of Southwest Airlines and AirTran Airways

12

A. The Combination Will Create a Nationwide Low-Fare Airline That Will 

Enhance Competition Across the United States

The combination of Southwest and AirTran will create a strong and more 

diversified airline that is better equipped to expand low-fare service and compete with 

newly merged, larger network airlines. As noted above, approval of the acquisition will 

enable the combined carrier to expand the number of online options it can provide to 

consumers by connecting AirTran and Southwest networks. Most significantly, this will 

provide Southwest with its first-time access to Atlanta, the nation’s busiest airport where 

Southwest has no presence today. Southwest plans to build on the low-fare 

competition that AirTran already provides in Atlanta by adding a significant number of 

new nonstop destinations and numerous new online connections for consumers. This 

will enhance competition not just in Atlanta but also in the many new destinations and 

routings to, from, and through Atlanta that will benefit from Southwest’s entry and 

expansion into ATL. 

The linking of the two networks will also fill other large voids in Southwest’s 

current route system, including Southwest’s first-ever service to slot-controlled Reagan 

National (DCA), a larger presence at LaGuardia (LGA), and a small but new presence 

at legacy carrier hubs such as Charlotte (CLT) and Memphis (MEM). Moreover, where 

appropriate, Southwest will also be able to up-gauge AirTran’s existing aircraft at these 

slot controlled and congested airports with 175-seat B737-800 model aircraft that 

Southwest currently has on order, thereby increasing capacity and competition even 

where it may not be able to increase flight frequency.

3

 

 

3

Air Tran currently serves DCA and LGA with a combination of B737 and B717 aircraft having 137 and 117 seats 

respectively. 
 Joint Application of Southwest Airlines and AirTran Airways

13

B. Combining Southwest and AirTran into a Larger and Stronger Low-Fare 

Airline Will Allow Southwest to Resume its Long-Term Growth Strategy

As noted above, Southwest’s historic pattern of growth stalled severely in the last 

decade due primarily to the sharp and lasting economic downturn coupled with 

significantly rising operating costs. As a result, Southwest’s fleet has remained virtually 

flat in the last several years. Although Southwest has initiated service to a number of 

new destinations in recent years, it has done so by moving aircraft from relatively underperforming markets to new market opportunities rather than by expanding the fleet as it 

has done in the past. Southwest has stated publicly that additional fleet growth would 

not be prudent until it meets its internal financial targets that would justify the large 

investment required to acquire additional aircraft, and Southwest has not met those 

targets for the last several years.

The AirTran acquisition will fundamentally change Southwest’s no-growth 

outlook. By acquiring a currently profitable air carrier and generating hundreds of 

millions of dollars in ongoing revenue synergies, the transaction will enable Southwest 

to meet its financial targets to justify investment in new aircraft and growth. This will 

allow Southwest to resume its historic pattern of fleet growth and market expansion that 

has profoundly shaped the airline industry over the last four decades. By enabling 

Southwest to meet its financial targets as well as providing strategic opportunities for 

new growth, the AirTran acquisition will enable Southwest to exploit new opportunities 

that would either not be available to it at all, or would not be available on a financially 

viable basis, absent this transaction. Thus, this transaction is an historic opportunity for 

Southwest to resume its previous pattern of expanding low-fare service and competition

to more and more communities and consumers across the United States.
 Joint Application of Southwest Airlines and AirTran Airways

14

C. Merging the Two Companies Will Generate Significant Net Synergies 

Unlike other recent airline mergers, the Southwest-AirTran transaction is 

premised on creating a platform for growth of low-fare service and competition that 

would otherwise not take place, and the resulting consumer benefits by the spread of 

low fares farther across the country. Southwest has also forecast that it will gain 

hundreds of millions of dollars in net synergies from the AirTran acquisition. These 

synergies will be generated, for example, from efficiencies and best practices that can 

be shared between the carriers, and opportunities resulting from Southwest’s financial 

strength, including its industry-leading credit rating, to reduce AirTran’s financing costs

and better access the capital markets. Importantly, none of these synergies is expected 

to be generated by cutting wages, furloughing work groups, or closing cities. To the 

contrary, this combination is motivated by the expansion of low-fare service and new 

competition that would not be viable for either carrier on a stand-alone basis.

D. Acquiring AirTran Will Enable Southwest to Initiate Small Community

Service On a Viable Basis

Via the transaction, Southwest will gain access to AirTran’s fleet of 88 Boeing 

717 aircraft, which are smaller than, and have a lower overall trip cost than, Southwest’s

B-737 aircraft. These aircraft will give Southwest the ability to serve smaller markets

than it is able to serve profitably today with its current fleet. In addition, Southwest will 

benefit from AirTran’s experience in serving small and midsized communities 

successfully. Overall, the AirTran acquisition provides Southwest with a potentially 

effective means of serving cities and communities that are smaller than it has 

historically served, and which suffer from limited access to low-fare competition. 
 Joint Application of Southwest Airlines and AirTran Airways

15

IV. APPROVAL OF THE JOINT APPLICATION WILL ENABLE SOUTHWEST 

TO INITIATE ITS FIRST EVER NEAR-INTERNATIONAL SERVICE, 

THEREBY IMPROVING THE U.S. TRADE POSITION IN THE 

INTERNATIONAL MARKET

The route transfer requested in this Joint Application will improve the U.S. trade 

position in the international air service market by allowing Southwest to initiate and 

expand internationally more quickly and efficiently than it could otherwise. As noted 

above, Southwest does not currently serve any international destinations. Because 

Southwest has been a purely domestic carrier for its entire 40-year history, it would be a 

complex and time consuming process to initiate international service on its own. 

Moreover, as noted, Southwest has repeatedly stated its intention not to grow the fleet 

for the foreseeable future due to an inability to meet its internal financial targets that 

justify new growth. However, via this transaction, Southwest will be able to begin nearinternational service immediately upon the linking of the two networks, and to serve

many more destinations than it would be able to serve with a constrained fleet. 

Assuming the economic environment is favorable, Southwest intends to maintain 

AirTran’s current international service. Moreover, Southwest’s much more extensive 

domestic network, coupled with its much more powerful distribution system, particularly 

its website at www.southwest.com, adds the potential for an expansion of service to 

additional near-international destinations in the future. 

V. BY CREATING A MORE EFFICIENT AND FINANCIALLY STRONGER 

AIRLINE, THE ACQUISITION WILL BENEFIT EMPLOYEES OF BOTH 

AIRTRAN AND SOUTHWEST 

Before approving a route transfer under Section 41105, the Department takes 

into consideration the impact on airline workers. American/TWA, supra, at 4; 

Atlas/Polar, Order 2001-12-15, December 19, 2001, at 8. The merger of Southwest and 
 Joint Application of Southwest Airlines and AirTran Airways

16

AirTran and the transfer of international routes at issue in this proceeding will 

substantially benefit employees of both carriers by creating a more efficient and

financially stronger airline, with a larger network, that is better able to continue to 

provide industry-leading salaries and benefits, as well as job security that is unmatched 

in the airline industry.

The U.S. airline industry is notoriously volatile. It is highly competitive, capital 

intensive and subject to economic externalities, particularly sharp fluctuations in jet fuel 

costs. Against this backdrop, Southwest has achieved an unparalleled record of 

profitability for 38 consecutive years, and was the first airline to introduce a profitsharing plan when the company made its first annual profit in 1973. 

Southwest is also the most heavily unionized U.S. airline and works hard to 

maintain positive and productive relationships with the eight separate labor unions 

representing its employee groups. Through good times and challenging times, 

Southwest has never furloughed employees or cut wages and benefits. Indeed, 

Southwest has been widely recognized for its strong labor relationships and a unique 

commitment to its people, an achievement that is all the more impressive in an industry 

that is plagued by notoriously difficult labor relations. 

The Joint Applicants are committed to fair and equitable integration of the labor 

groups and do not anticipate involuntary furloughs of front-line employees.4To the 

contrary, the 43,000 employees of both Southwest and AirTran stand to benefit 

significantly from this acquisition by the creation of a stronger and more financially 

 

4 On February 24, 2011 Southwest announced it had reached an AirTran Transition Agreement with its pilots union. 

See Southwest Press Release at http://www.swamedia.com/releases/83693c07-ef8b-0850-5bf3-84004d66878b. 
 Joint Application of Southwest Airlines and AirTran Airways

17

secure company with a national network that will be better able to continue to provide 

industry-leading pay, job security, and long-term career opportunities. 

VI. SOUTHWEST AND AIRTRAN HAVE MINIMAL ROUTE OVERLAP; THE 

TRANSACTION WILL NOT MATERIALLY LESSEN COMPETITION IN 

ANY MARKET

Southwest and AirTran are a natural fit, both culturally and geographically. In 

addition to being low-cost, low-fare carriers with an emphasis on outstanding customer 

service, the carriers have very little market overlap. AirTran’s route structure is 

predominantly north-south concentrated mostly in the Eastern states, whereas

Southwest has a largely east-west orientation with a strong presence in the Western 

states that AirTran lacks. Furthermore, the few overlap routes are either leisure 

markets or have no structural barriers to entry such as slots or gate constraints that 

would impede competitors from entering or expanding existing service.

Official Airline Guide (OAG) schedules for the week of March 21, 2011 show only 

24 nonstop overlaps out of a total of 610 nonstop city-pairs served by Southwest and 

AirTran in total. Of these 24 markets, 9 have at least one nonstop competitor, in most 

cases another low-cost carrier. The remaining 15 markets are leisure markets where 

direct and one-stop flights via other carrier hubs offer effective competition. In addition, 

leisure markets tend to be extremely price sensitive, which serves as a strong 

disincentive to any carrier to raise fares. None of the airports where both carriers 

currently provide significant service – BWI, MKE, and MCO - are slot controlled, and

they each contain sufficient gates and facilities for competitors; in addition, each of 

those airports is served by many other airlines and at least one additional low-cost 

carrier besides Southwest and AirTran.
 Joint Application of Southwest Airlines and AirTran Airways

18

Beyond this, Southwest’s business model depends on stimulating large amounts of 

new traffic with low fares, a pillar of the well-known “Southwest Effect” dubbed by the 

Department many years ago. AirTran has followed a similar approach with its pricing. 

In addition to competing against other airlines, both Southwest and AirTran compete 

significantly against ground transportation or the decision of potential passengers not to 

travel at all; these non-airline forms of competition are present regardless of the level of 

competition by other airlines. 

In sum, combining these two low-cost carriers will stimulate new competition by 

expanding low fares to hundreds of new markets and adding flexibility and strength to 

the combined carrier, all to produce enormous benefits for the traveling public. 

VII. CONCLUSION

Southwest’s proposed acquisition of AirTran and the resulting transfer of AirTran’s 

international authorities to Southwest is fully consistent with the public interest under 49 

U.S.C. § 41105. The combination will advance the public interest and generate

significant public benefits by (1) creating a stronger, more efficient low-fare airline with a 

truly national network, (2) bringing expanded low-fare competition to ATL, LGA and 

DCA, and other critical domestic aviation markets, (3) increasing international 

competition by connecting Southwest’s existing network to destinations in the 

Caribbean and Mexico, (4) improving the trade position of the United States in the 

international air transportation market due to enhanced low-fare competition, and (5) 

benefitting the employees of both airlines due to enhanced career opportunities and job 

security. The requested route transfer is also consistent with the Department’s 

international aviation policies and approvals of route transfers in previous airline 
 Joint Application of Southwest Airlines and AirTran Airways

19

mergers and acquisitions. Accordingly, the Joint Applicants request that this Application 

be approved on an expedited basis for the reasons detailed above.

Respectfully submitted,

_______________________ _____________________

Robert W. Kneisley Edward P. Faberman

Associate General Counsel WILEY REIN LLP

SOUTHWEST AIRLINES CO. 1776 K Street, N.W.

1901 L Street, N.W. Washington DC 20006

Washington DC 20036 Counsel for AirTran Airways, Inc.

(202) 263-6284 (202) 719-7402

bob.kneisley@wnco.com efaberman@wileyrein.com

March 17, 2011

Washington DC
CERTIFICATE OF SERVICE

I hereby certify that I have this 17th day of March 2011 served a copy of the 

foregoing Joint Application of Southwest Airlines Co. and AirTran Airways, Inc. by email 

upon the persons listed below:

msinick@ssd.com 

carl.nelson@aa.com 

scott.mcclain@delta.com

sascha.vanderbellen@delta.com 

jeff.morgan@delta.com 

nssparks@fedex.com

robert.land@jetblue.com 

jhill@dlalaw.com 

recohn@hhlaw.com 

prrizzi@hhlaw.com 

jyoung@yklaw.com 

dkirstein@yklaw.com 

John.Fredericksen@suncountry.com 

mlbenge@zsrlaw.com 

jeffrey.manley@united.com 

hkamen@coair.com 

dan.weiss@coair.com 

howard.kass@usairways.com 

benjamin.slocum@usairways.com 

dave.pflieger@virginamerica.com

jegillick@zsrlaw.com

louis.miller@atlanta-airport.com

pwiedefeld@bwiairport.com

bbateman@mitchellairport.com

pbrown@goaa.org

john.allen@faa.gov

urskr@state.gov

______________________

Leslie C. Abbott
ATTACHMENT A

AirTran Airways, Inc. International Route Authorities

Docket Certificate/Exemption Authority Effective Date

2005-21134 Exemption ATL-CUN; BWI-CUN 8/6/2010

2010-0146 Exemption MKE-CUN 6/23/2010

2010-0292 Exemption ATL-Bermuda; BWI -Bermuda 12/10/2010

2009-0201 Exemption U.S. - Jamaica 9/4/2009

2009-0202 Exemption U.S. - Nassau, Bahamas 9/4/2009

2000-8052 Exemption ATL-Freeport, Bahamas 5/3/2010

2009-0200 Exemption US-Aruba 9/4/2009

2010-0158 Exemption US-Dominican Republic 7/8/2010 

2005-22228 Certificate 

(Order 2006-1-1)

Blanket Route Integration 

Authority

3/7/2006

AirTran Airways, Inc. Domestic Authority

Docket Certificate/Exemption Authority Issued Date

1998-4024 Certificate 

(Order 2009-9-10)

Interstate scheduled passenger 

certificate (PC&N)

9/15/2000
ATTACHMENT B

Southwest Airlines Co. International Route Authority

Docket Cert/Exempt Authority Effective Date

2008-0392 Exemption U.S. - Canada 1/9/2011

Southwest Airlines Co. Domestic Authority

Docket Cert/Exempt Authority Issued Date

2005-23296 Certificate 

(Order 2005-12-4)

Interstate scheduled passenger 

certificate (PC&N)

12/9/2005