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Continental Airlines
and United Airlines have signed a framework agreement to cooperate extensively, linking their
networks and services worldwide. In addition, Continental plans to join United in the Star Alliance,
one of the most comprehensive airline alliances in the world.
“Continental's plan to partner with United and join the Star Alliance will provide substantial new opportunities for all of our customers,” said
Larry Kellner, chairman and CEO of Continental. “In a network business, there is significant value gained from linking with larger networks
to provide truly national coverage and expanded global reach, and exploring new ways to reduce costs and improve efficiencies. As we
experience some of the most challenging conditions airlines have ever faced, we look forward to the benefits of a new relationship with
United and the other Star Alliance members.”
Over
the past few weeks, teams from the two airlines explored how the two companies
could achieve efficiencies and synergies that expand beyond the well-established benefits of
codesharing. They focused on plans for
significant cooperation on frequent flier programs, lounges, facility utilization, information technology and procurement.
“The teams worked well together to identify opportunities to create a unique and competitive partnership extending well beyond a
traditional codeshare agreement,” said Glenn Tilton, chairman, president and CEO of United. “On behalf of the Star Alliance, I am very
pleased to invite Continental to join as a member. Continental will bring significant new assets to our global alliance, and our two
companies will work together effectively with our partners to provide the best overall network in America and the world.”
Through this new partnership, Continental and United plan to establish joint ventures allowing them to cooperate with each other and with
other Star Alliance airlines in international regions and compete more effectively in an increasingly global air travel market.
Initially, Continental will request the U.S. Department of Transportation (DOT) to allow it to join United
- along with Lufthansa, Air Canada
and six other carriers - in their already established antitrust immunized alliance. This will enable Continental, United, Lufthansa, Air Canada
and other immunized Star Alliance carriers to work closely together as other antitrust immunized alliances do, and to establish
trans-Atlantic and other international joint ventures so they can deliver highly competitive flight schedules, fares and service.
The planned
trans-Atlantic joint venture, in which Continental, United, Lufthansa and Air Canada will pool revenue, will permit the carriers to compete
more effectively with the proposed joint venture involving certain SkyTeam members that was recently granted antitrust immunity. The
trans-Atlantic joint venture will combine the strength of the carriers to create a more efficient and comprehensive trans-Atlantic network for
the carriers' customers.
Joint ventures are also planned for the Latin America and
Asia Pacific regions, involving Continental, United and other members of the Star
Alliance. Both antitrust immunity and code-sharing are subject to receipt of approvals from applicable national authorities.
Domestic Codesharing and Frequent Flier/Lounge Reciprocity
Continental’s and United’s route networks are highly complementary, with little overlap, so they add value to each other and to customers
who are planning domestic and international itineraries.
In the United States domestic market, where antitrust immunity for solely domestic travel would not apply, the two airlines plan to begin
broad code-sharing, which facilitates the creation of itineraries using both carriers, as well as frequent flier program, elite customer
recognition and airport lounge reciprocity. These cooperative activities are subject to regulatory notice to applicable authorities and
Continental exiting certain of its current alliance relationships. Under
codesharing, customers will benefit from a coordinated process for
reservations/ticketing, check-in, flight connections and baggage transfer.
Frequent flier reciprocity will allow members of Continental’s OnePass program and United’s Mileage Plus program to earn miles in their
accounts when flying on either partner airline and redeem awards on both carriers. Travel on either carrier will count toward elite customer
recognition. Similarly, each carrier’s customers will have access to both Continental’s Presidents Club network and United’s Red Carpet
Club network of airport lounges.
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