AirTran's Costs Help in the Battle for Milwaukee

Southwest's entry into Milwaukee sets up a steel cage match with AirTran, an airline that has been trying to solidify its growing position as the big guy in town. So will AirTran run away screaming? Not likely.

AirTran has worked hard to make Milwaukee its own after its effort to buy Midwest Airlines failed, and they won't be happy to see Southwest move in. But can they compete? I'd say so. Take a look at this slide from their recent annual meeting presentation.

AirTran's non-fuel costs are about as low as they go thanks to very strict cost controls at the airline. There will undoubtedly be fare sales as Delta/Midwest, AirTran, and Southwest fight it out in Milwaukee, and AirTran's low costs mean it can survive on lower fares quite nicely. I imagine this will be a long slog. If anyone flinches, it'll probably be Midwest and Delta.

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