Air Transport World

Tough times breed opportunity: like most US airlines, the low-fare specialist found itself scrambling to stay aloft after Sept. 11; now it is looking to take advantage of competitors' contractions. (Profile).(AirTran Airways)(Company Profile)(Statistical Data Included)

Two years ago, a restructured AirTran Airways two priorities: Survive competition from an aggressively resurgent Delta Air Lines at Hartsfield Atlanta International Airport and refinance $230 million of debt coming due at a time when the carrier was in no position to retire it (ATW 8/00, p. 31). With the cooperarion of Boeing, which was eager to retain the launch customer for the 717, AirTran delayed delivery of 10 previously ordered 717s and focused growth on enhancing points already served.

Priorities change. Boeing rook over AirTran's debt and agreed to finance deliveries of the next 20 717s. Then came the 2001 economic downturn and big post-Sept. 11 capacity reductions, opening what Chairman and CEO Joe Leonard describes as "opportunities that didn't exist before."

The biggest move came at Baltimore-Washington International Airport, where US Airways already was being squeezed by Southwest Airlines. When the former folded its Metrojet operation, the result was a reduction in its daily flights at BWJ from 154 to 26. So AirTran scrubbed some previous plans--including expansion at US Airways' Pittsburgh hub--and launched nonstop service out of BWI to eight markets, seven of which were part of its existing network.

AirTran will do more at BWI. The question is how much? One official calls it a "focus city;" another says it "acts more like a small hub." Maneuvering around Southwest, whose walkup fares often are below AirTran's, is key, especially as BWI could become SWA's busiest market. But AirTran thinks its two-class, low-business-fare strategy creates a niche between the no-frills and network carriers. It has a joint promotion with American Express that it claims produces premiums 50% above the average roundtrip ticket of $160-$170 and accounts for 53% of frequent fliers.

AirTran also created its A2B corporate travel program to attract small businesses and compete for companies already holding negotiated contracts with other airlines. Apparently, though, this was not enough to stimulate a moribund business travel market, so in mid-April it reduced business fares still more in markets where it competes with Delta.

Despite the downturn, AirTran estimates that business travel represents 55% of traffic versus 50% two years ago, although that is not a scientific number. …

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