Southwest and AirTran Merger

On April 26, 2011, the Department of Justice (DOJ) announced that it closed its investigation of the proposed acquisition of AirTran Airways by Southwest Airlines Company. Compass Lexecon was retained by Southwest – through its counsel Steven Sunshine at Skadden, Arps, Slate, Meagher & Flom LLP – to provide support for Southwest’s efforts to secure regulatory approval. Our team – which included Dennis Carlton, Chip Bamberger, Theresa Sullivan, Bryan Keating, Lynette Neumann, Nancy Bonn, Antara Dutta, Deidre Ciliento, and Jeff Raileanu – quantified the consumer benefits and assessed potential competitive harms arising out of the transaction. Using sophisticated econometric modeling and working closely with network planners at Southwest, we demonstrated that the merger will result in substantial consumer benefits through the enhancement of existing service and the introduction of new service. The team also dealt with novel issues arising out of the merger of two low cost carriers (LCCs). In particular, we modified econometric models typically used by the DOJ to assess competitive effects on overlap routes to also show that the introduction of new LCC service would lower fares on many routes. The DOJ acknowledged these consumer benefits as the reason that it did not challenge the acquisition.