Mergers Could Help Discount Airlines, Airtran's Chief Says

WASHINGTON — Several major airlines probably will join forces this year, but discount carriers and their passengers shouldn't suffer from it — as long as regulators do their jobs, AirTran Airways' chief said Thursday.

Given the high price of jet fuel and slowing economy, "it is an understatement to say that mergers are likely," Bob Fornaro, chief executive of Orlando, Fla.-based AirTran Holdings Inc., said in a speech at the Aero Club of Washington.

RICK MCKAY/Cox Washington Bureau (enlarge photo) Robert Fornaro, president and CEO of AirTran Airways, discusses turmoil in the airline industry during a speech to the Aero Club of Washington, Thursday, Feb. 14, 2008.

But competition can be preserved even in a consolidated industry if antitrust officials "require the transfer of gates, facilities and slots away from any large newly combined airline," he said.

Currently, Delta Air Lines Inc. is in talks with Northwest Airlines Corp. about a possible merger. And UAL Corp., parent of United Airlines, reportedly is discussing a combination with Continental Airlines Corp.

"It may surprise you that AirTran is in favor of consolidation," Fornaro told an audience that included many industry and federal officials.

But the carrier, with its main hub in Atlanta, sees consolidation as a way to force Atlanta-based Delta to surrender assets at the nation's most popular airports. AirTran is eager to get a bigger presence in Atlanta, Chicago O'Hare, New York's LaGuardia and Washington's Reagan National airports.

For a discount carrier to attract more customers, "you have to go to the places they want to go," Fornaro said. "The key thing is facilities in congested airports."

It's not clear which, if any, assets the Justice Department would require Delta to relinquish to settle any antitrust concerns that might arise in a merger with Northwest.

Fornaro said that AirTran, which tried unsuccessfully to buy Midwest Airlines last year, is not currently pursuing any mergers itself.

He said another boost to competition in the industry would be construction of more airport infrastructure. "We got a huge assist from the construction of the fifth runway at Atlanta's Hartsfield Jackson International Airport," he said. "This 9,000-foot piece of pavement is arguably the most important piece of airport infrastructure in the country."