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Air Travel Partnership Gets Off Ground
Non-traditional deals between airlines may create more competition in an unstable industry
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Business New Haven
10/28/2002
By: Melissa Nicefaro
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An agreement between US Airways and United Airlines to sell tickets for each other's flights received government approval early this month.
The U.S. Department of Transportation approved the agreement between the two financially troubled airlines in hopes that increased competition would benefit consumers.
A central feature of the alliance is the expansion of the US Airways network under the practice known as “code sharing.” This allows passengers to book a trip that involves both airlines with the convenience of single-ticket pricing, a one-stop check-in and coordinated baggage handling.
Code-share flights will be phased in during the first quarter of next year with subsequent phases to be introduced soon thereafter. The first tangible benefit of the alliance began October 14 when members of either carrier's airport club program were able to use the lounges of both.
For New Haven travelers, this partnership will allow passengers on both airlines to make connections between the two on a single reservation, through new streamlined ticketing, baggage handling and check-in procedures. The agreement also provides easier East Coast and Caribbean access for United passengers, through US Airways, while US Airways passengers will gain easier access to more cities in the West, as well as Europe and Asia, through United.
“It's a good thing, it gives the passenger on the ground more choices,” says Rick Lamport, Tweed-New Haven Airport manager.
The deal is more beneficial to those flying out of larger airports. “The only bad thing is that they have to hook up with United Airlines,” Lamport says. “If the only way they can get on a United Airlines flight is to get to Philadelphia, that is a problem. It is a good thing, but it means wondering how our passengers here hook up with United.”
Other airlines such as Delta, Northwest and Continental are also considering similar deals, a factor that won't directly affect the New Haven market, but may weaken US Airways in general, according to Lamport.
“It all depends on the competition. If we can stimulate competition, maybe we can improve our air service. It all becomes a reactionary thing,” Lamport says, adding such marketing approaches have good points and bad points.
“It's hard to out-guess the aviation industry because they don't tell you what's going on until it happened.”
For consumers, the key benefit of the deal is a crossover of frequent-flyer programs. For members of the US Airways' Dividend Miles and United's Mileage Plus frequent traveler programs, the alliance will offer greatly enhanced opportunities to earn mileage points and new award destinations. Mileage accrual will begin in November or December; points will begin to become redeemable in January. For Dividend Miles members, this means access to new reward destinations in Asia, Latin America, South America and the U.S. including Hawaii.
US Airways and United will remain separate corporate entities. The two airlines will independently set prices and establish schedules, according to US Airways, and they will continue to compete on all routes served by one another.
United and US Airways attempted to merge in 1995 in a deal that failed after United's pilot's lobby exerted pressure. In 2000, United announced it planned to purchase US Airways for $4.3 billion. That deal also fell apart because of concerns that it would reduce competition and therefore raise prices for the consumer.
US Airways lost nearly $2 billion in 2001 and another $517 million through the first six months of 2002, according to published reports. United lost $341 million in this year's second quarter alone. US Airways is trying to avoid filing for Chapter 11 bankruptcy protection by implementing a comprehensive restructuring plan.
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