Southwest Airlines will buy AirTran Holdings for about $1.4 billion in cash and stock would be the largest in it’s 39 years history.  The announcement comes as Continental Airlines and United Airlines parent UAL Corp. form a single company, a deal expected to be completed this week.  The purchase fulfills its goal of adding flights to Mexico, and the Caribbean, and expand it’s presence at New York’s La Guardia.

There is one change passengers will surely welcome: Southwest said it won’t keep AirTran’s bag fees when they fully combine in 2012. AirTran currently charges $20 for a passenger’s first checked bag, and $25 for the second. Major carriers like United and American charge $25 for the first bag and $35 for the second. Southwest claims it has lured passengers from those airlines by refusing to charge for bags, and has built a marketing campaign around the policy.

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