Airline Alliances Gaining Steam

[P][BR]Airline Partnerships Gaining Steam[/P]
[P]By LESLIE MILLER[BR].c The Associated Press [/P]
[P]WASHINGTON (AP) - Government approval of a partnership between United Airlines and US Airways to sell seats on each other''s flights [STRONG]could mean a similar agreement between Delta, Northwest and Continental airlines will get the go-ahead.[/STRONG][/P]
[P]The Transportation Department on Wednesday approved a code-sharing agreement by United and US Airways that will also allow them to coordinate schedules and offer reciprocal perks such as frequent flier miles, effective immediately.[/P]
[P]Kristi Tucker, a Delta spokeswoman, said the decision indicated the Transportation Department is likely to approve the three-way proposal.[/P]
[P]``It recognizes that marketing alliances are pro-competitive and pro-consumer,'''' Tucker said.[/P]
[P]Delta has acknowledged the alliance proposed in August was partly a response to the US Airways-United partnership announced the month before.[/P]
[P]The ``code-share'''' term comes from the practice of putting an airline''s two-letter industry code onto another''s flights.[/P]
[P]Small air carriers oppose the agreement, fearing the bigger airlines will be difficult to compete against because of their marketing clout and dominance of airport facilities.[/P]
[P]``I would call it a virtual merger,'''' said Ed Faberman, executive director of the Air Carrier Association of America, which represents smaller airlines. ``There''s no other industry that this would be permitted in.''''[/P]
[P]Smaller airlines are also concerned the government will approve the Delta-Northwest-Continental alliance, giving the five airlines about 60 percent of the market, Faberman said. United and US Airways have about 20 percent, he said.[/P]
[P]In its decision, the Transportation Department said it approved the partnership between the two financially troubled airlines because it would increase competition and benefit travelers.[/P]
[P]``We have not yet seen evidence that the agreements will unreasonably restrict either airline''s incentives and ability to compete independently or would be likely to result in collusion on fares or service levels,'''' according to the decision.[/P]
[P]The regulators said they would closely monitor the agreement and act against the airlines if they found the venture dampened competition.[/P]
[P]Glenn Tilton, United''s chief executive, said the decision was great news for the airline.[/P]
[P]``Our customers will enjoy expanded service options and frequent-flier benefits, as well as access to each carrier''s airport clubs,'''' he said.[/P]
[P]US Airways said on Wednesday that code-share flights will be phased in during the first three months of next year. The first tangible benefit will begin Oct. 14, when airport-club members can use both airlines'' airport lounges.[/P]
[P]The airlines also agreed to some restrictions to limit anticompetitive behavior and promised they would compete independently on fares and service.[/P]
[P]The United-US Airways alliance is intended to bring in more revenue to the financially strapped companies by combining US Airways'' strength in north-south flights on the East Coast with United''s strength in cross-country flights.[/P]
[P]US Airways, the nation''s seventh-largest carrier, filed for bankruptcy Aug. 11 and has cut costs dramatically, eliminated hundreds of flights on unprofitable routes, expanded the use of smaller, cheaper regional jets and extracted wage concessions from its workers.[/P]
[P]United, the No. 2 airline, has said it will also have to seek bankruptcy protection if it can''t cut its labor costs.[/P]
[P]Under the restrictions, the airlines cannot:[/P]
[P]Code-share on local traffic on routes where both offer nonstop service, such as Philadelphia-Los Angeles.[/P]
[P]Code-share on nonstop flights to the same destination from Dulles International Airport or Reagan Washington National Airport, except for flights between Washington, New York''s LaGuardia Airport and Boston''s Logan International Airport.[/P]
[P]Have different fares on routes served by only one airline.[/P]
[P]Fail to act independently when establishing their frequent flier programs and bidding corporate contracts.[/P]
[P]On the Net:[BR][/P]
 

nwa400

Member
Aug 28, 2002
84
0
www.usaviation.com
Time will tell! No reason to speculate because time will be the tell all. Get ready boys cause it is a new playing field now. Got a crystal ball?
 
Aug 19, 2002
1,062
737
The JFK
www.usaviation.com
[BR][BR]
[BLOCKQUOTE][STRONG][/STRONG]
[P][BR]----------------[BR]On 10/4/2002 1:16:03 AM Blueskies/400 UpperDeck wrote: [BR][BR]The other word being[STRONG]. Who is AMR's alliance with?[/STRONG][/P]
[P]----------------[/P][/BLOCKQUOTE][BR][BR][FONT size=1] That's more than one word.
FONT]
 

AAG2000

Advanced
Aug 20, 2002
186
0
The general assumption--right or wrong--in these competition analyses is that AMR is a behemoth that doesn't need a domestic alliance. However, if NW-CO-DL were approved, I bet AA could hook up with AS or any of the other small majors and no one would bat an eyelash. At that point there would be no turning back--the full-fare airline business in the U.S. would truly be a 3-player game.

That said, I'm still not sure I buy the argument that the approval of the UA-US codeshare is valid precedent for something as big as NW-CO-DL. DL-NW or DL-CO maybe, but the 3-way combination still seems a bit of a stretch (as much as this NW Silver Elite would love to earn WorldPerks miles on DL flights
 

Blackdog

Member
Aug 24, 2002
81
0
www.usaviation.com
All I know is, You can't get us (NWA) into SkyTeam fast enough! We really need a new strong alliance partner who's focus is on service. And the pass benefits don't hurt either! Looking forward to hopping on a DL jet non-stop from my hometown!
 

DTWRedTail

Newbie
Oct 26, 2002
5
0
AA doesn't have to have any domestic alliances. They just buy whomever they want [QQ, TW] or put them out of business [Vanguard, Braniff].
 

DTWRedTail

Newbie
Oct 26, 2002
5
0
[P]Well, at DTW, room is being made for DL to occupy the North 1/2 of the main ticket counter at WorldGateway. That's also why C concourse is being enlarged and B also. [/P]
[P]I think NW and CO will be joining SkyTeam rather soon.[/P]