Southwest Airlines' agreement to acquire AirTran Airways for $1.4 billion could have one reservations system provider and major online travel agencies feeling pinched.
On the tech front, Southwest chairman and CEO Gary Kelly said the airline is committed to replacing its reservations system, a TPF solution which Sabre supports for programming and HP for data center services.
Kelly, speaking during a conference call about the acquisition, said Southwest has narrowed the choice of replacement vendors to two companies, and that a migration would enable international service in a couple of years.
A Southwest spokeswoman declined to identify the contenders.
AirTran is hosted on the NavitaireNew Skies platform so Southwest would have to mull migrating to Navitaire or putting both airlines on a new system.
Reservations system providers in the running may include Sabre, Amadeus, ITA Software, Navitaire, HP, Travelport and others.
About a year ago, in October 2009, ITA Software began powering airfare shopping and pricing on Southwest.com so perhaps the relationship may expand.
An ITA Software spokeswoman had no comment on that scenario.
The Southwest-AirTran merger also could have distribution implications.
"AirTran is in more GDSs than Southwest and also participates in the online travel agencies," says Henry Harteveldt, chief airline and travel analyst for Forrester Research.
Southwest eschews OTA distribution in favor of its Southwest.com-direct strategy, and Harteveldt says he expects after integration that Southwest would pull AirTran flights out of the OTAs.
"My expectation is that Southwest will have AirTran exit the OTAs at some point between the merger being approved by stockholders and consolidating the two airlines’ inventory, availability, and pricing onto whatever platform they will use, even if that is an interim move prior to selecting a new res system," Harteveldt says.
Kelly said Southwest, the largest U.S. domestic airline, is not contemplating keeping AirTran as a separate brand in the long term.
He said Southwest will seeks to learn from AirTran, but doesn't contemplate abandoning signature Southwest customer service policies such as Bags Fly Free for first and second checked bags.
Kelly said Southwest has the right to change its mind after the merger, with a closing expected early in 2011, but does not envision continuing AirTran's practices of charging for bags, dual-class service or assigning seats.
"We are confident in what we are doing," Kelly said, referring to Southwest's brand and customer service strategies.
The acquisition is subject to regulatory approvals.
Under the terms of the deal, AirTran cannot solicit other acquisition offers, but can contemplate them if another entity makes an unsolicited bid. Southwest would have the right to respond.
The deal would help Southwest expand in Atlanta, a key market, and jumpstart Southwest's desire to launch international service, particularly in the Caribbean.