Gary Kelly

Gary Kelly, chairman and CEO of Southwest Airlines, the dominant carrier at Baltimore-Washington International Thurgood Marshall Airport. (Baltimore Sun photo by Jed Kirschbaum / June 3, 2011)

Now that Southwest Airlines has completed its $1 billion purchase of AirTran Holdings, executives have launched the longer-term process of merging the two brands, retraining employees, rolling out larger aircraft, giving makeovers to AirTran planes and positioning Southwest for international expansion.

The merger, completed last month, gave Southwest a 70 percent share of passenger traffic at Baltimore-Washington International Thurgood Marshall Airport, where it already was the largest carrier. The deal eventually could mean more international flights out of BWI.

Southwest CEO Gary Kelly, in Linthicum on Friday for the annual meeting of the BWI Business Partnership, discussed the merger and its impact on air travel for the area.

Though decisions have yet to be made about specific routes and itineraries out of BWI and other airports — especially to and from destinations where the two airlines overlap — Kelly described the Baltimore hub as stable and said it's unlikely travelers through BWI will see radical changes.

"We like to say it's a dawn of a new decade and a new era for us," Kelly told BWI Business Partnership. "We're at the best point we've been in any point of our history. … We want to be bold, aggressive and want to grow, but to do it in a way that maintains financial security and job security."

That means finding ways to add flights and destinations — much of which will happen through the AirTran merger — while maintaining Southwest's position as a low-fare carrier.

"This is a great, vibrant and competitive part of the county and we see … opportunities," he said. "I know there are other airport options, but we want BWI to be the leading airport."

Kelly said the AirTran acquisition will help the company boost revenue to offset the higher fuel costs that are troubling all airlines. Southewest will also look to boost revenue by refining its frequent-flier program and adding larger aircraft. The larger planes will allow for longer flights as the company positions itself to take on and possibly expand AirTran's "near-international" service, which has included flights to the Caribbean and Mexico.

The company is also replacing its reservation system, with an eye toward booking international flights.

In an interview with The Baltimore Sun, Kelly spoke about the future of the Dallas-based airline, which celebrates its 40th year of operation this month.

Can you talk about your expectations for passenger demand this year?

Travel demand for the domestic industry is continuing to strengthen. I'm a little concerned about the state of the economy and its impact on business travel recovery in particular. We're seeing significant recovery in business travel, though it's not back to prerecession levels. But consumer travel is quite strong. At Southwest, we're gaining share and setting records every month.

Should passengers expect to see a reduction in flights per day for some destinations at BWI because of route overlaps between Southwest and AirTran?

Things will change, that goes without saying, but things would change without us acquiring AirTran. We'll continue to adjust routes and flight schedules. We've added cities and flights, though the last couple of years we had not added flights because of fuel costs. As long as fuel prices are stable, we'll be able to have a stable flight schedule. AirTran was known for adding [flights] and taking away, and that's not our operating style. We'll integrate AirTran's 14 nonstop destinations at BWI that we don't serve, and we'll try to keep those.

Some cities possibly could see fewer flights, some could see more. … But the overall message is that Baltimore is a very successful and strategic destination. Main route restructuring would begin in 2012.

Are passengers likely to see an increase in fares on Southwest flights at BWI in the wake of the merger?

We're going to work to keep our fares low. The acquisition has no bearing on our philosophy, and there's a lot of competition.

Can you talk about plans to offer or expand short international flights?

Now, international is solely related to AirTran, with seven international destinations. We want to keep those and are working hard to keep them. Southwest is not ready yet to fly international flights, and we're not ready to say we won't expand AirTran [international flights]. … We're going to modify our reservation system so Southwest can offer international flights sooner than later. It could be as early as next year.