A320 EOW
Jun 27, 02, 3:27 pm
No major news announcement yet, just posting an article from the _Charlotte Observer_.
http://www.charlotte.com/mld/observer/business/3552471.htm
S Airways partnership would increase choices
TED REED
Staff Writer
Within weeks, US Airways could be touting a partnership with United Airlines, a key step in the troubled airline's effort to restructure.
While US Airways has been focused recently on efforts to cut $1.3 billion from its annual costs as part of a restructuring plan intended to assure approval of federal loan guarantees, the second piece of the plan is to add $600 million annually in profits -- much of it from a partnership.
US Airways says it is talking to potential partners besides United. However, most signs point to the nation's second-largest carrier as the likely choice.
US Airways carries more than 90 percent of Charlotte's airline passengers, including about two-thirds of the passengers who begin travel in Charlotte. For them, a US Airways/United partnership would mean:
? A code share that would allow the two carriers to sell tickets on one another's flights, so passengers could buy a single ticket for travel using both airlines.
? US Airways passengers would get more access to areas where United is strong and US Airways is weak or absent, including the Western United States, Asia and Latin America.
? On international flights with connections, a code share would mean passengers only have to go through immigration and customs once, since they wouldn't be transferring between carriers.
? Frequent flier benefits would expand. In most code shares, passengers can choose which carrier's frequent flier plan they want to use. In some cases, they can use their miles on either airline.
? A second step -- joining United in the Star Alliance of 14 airlines from around the world -- would bring the ability to use US Airways frequent flier miles on Lufthansa, SAS, Varig and others.
? No change in Charlotte's high fares for business fliers. United and US Airways are traditional, hub airlines that typically charge relatively high fares for flying during the work week.
Mooresville resident Neil Goodman, who flies weekly as vice president of sales for an Asian importer, said fares are his major concern when he selects flights, but direct routing is also a consideration.
"I've never, ever considered United, and I don't think many people in Charlotte have," he said. " It's not part of our routine. So this would open up a new world."
Despite the limited effect on fares, code shares are generally thought to benefit airline passengers as well as airlines, although some experts worry that they can limit competition.
"It has pretty well been shown that code shares allow people to travel on one airline to more places than they used to be able to," said Ed Perkins, a syndicated travel columnist and former editor of Consumer Reports Travel.
"That can benefit consumers who would have to buy two separate tickets to go somewhere, which is usually more expensive than buying one ticket," he said.
For instance, a passenger from Asheville to Medford, Ore., would have to buy two tickets because none of the airlines that serves Asheville serves Medford.
For Charlotte travelers, the advantages are less dramatic. Because all six major U.S. hub airlines and British Airways serve Charlotte/Douglas International Airport, passengers can fly to most major destinations in the world without changing airlines.
However, Charlotte passengers who want to accrue US Airways frequent flier miles would clearly benefit from a code share.
Historically, code shares have been considered beneficial to both participating airlines.
Continental Airlines derived $140 million in 2001 revenue from its code-share deal with Northwest Airlines, said Continental spokesman Rahsaan Johnson.
The code share began in 1998 and is the country's biggest. A Northwest spokesman did not return phone calls.
US Airways Chief Executive David Siegel hasn't specified how much revenue a deal could bring US Airways. But Siegel said recently the Continental/Northwest deal brought each carrier a 4 percent increase in the number of passengers on its planes.
Siegel also said that after selecting a domestic partner, US Airways would likely join that partner's international alliance.
This week, United Airlines pilot negotiators approved a code share with US Airways. The next step would be for United to present the deal to the pilots' executive committee, said pilot spokesman Steve Derebey. A United spokeswoman said the deal would be presented soon but would not specify a date.
US Airways pilots approved the terms of a code share deal on Tuesday. Unlike United pilots, they did not specify what carrier a deal could be with.
Pilots typically have contract provisions limiting code share deals, which have the potential to cause airlines to cut back on flying when they can sell tickets on another carrier flying the same route.
That could hurt pilots, as well as consumers. Said Perkins: "In effect, code shares remove a certain amount of competition, but given the state of US Airways, it's not something I would worry about."
Code share deals require approval from the Transportation Department but not from the antitrust division of the Justice Department. Last year, the Justice Department rejected a proposed full-scale merger between US Airways and United as anti-competitive.
Jamie Baker, airline analyst for JP Morgan Securities, said it's difficult to measure how much an airline benefits from a code share, since success involves gaining passengers who would otherwise fly on another airline.
"Code shares succeed by expanding a carrier's offering in a given city," Baker said. "They don't create new demand. They redistribute existing demand."
http://www.charlotte.com/mld/observer/business/3552471.htm
S Airways partnership would increase choices
TED REED
Staff Writer
Within weeks, US Airways could be touting a partnership with United Airlines, a key step in the troubled airline's effort to restructure.
While US Airways has been focused recently on efforts to cut $1.3 billion from its annual costs as part of a restructuring plan intended to assure approval of federal loan guarantees, the second piece of the plan is to add $600 million annually in profits -- much of it from a partnership.
US Airways says it is talking to potential partners besides United. However, most signs point to the nation's second-largest carrier as the likely choice.
US Airways carries more than 90 percent of Charlotte's airline passengers, including about two-thirds of the passengers who begin travel in Charlotte. For them, a US Airways/United partnership would mean:
? A code share that would allow the two carriers to sell tickets on one another's flights, so passengers could buy a single ticket for travel using both airlines.
? US Airways passengers would get more access to areas where United is strong and US Airways is weak or absent, including the Western United States, Asia and Latin America.
? On international flights with connections, a code share would mean passengers only have to go through immigration and customs once, since they wouldn't be transferring between carriers.
? Frequent flier benefits would expand. In most code shares, passengers can choose which carrier's frequent flier plan they want to use. In some cases, they can use their miles on either airline.
? A second step -- joining United in the Star Alliance of 14 airlines from around the world -- would bring the ability to use US Airways frequent flier miles on Lufthansa, SAS, Varig and others.
? No change in Charlotte's high fares for business fliers. United and US Airways are traditional, hub airlines that typically charge relatively high fares for flying during the work week.
Mooresville resident Neil Goodman, who flies weekly as vice president of sales for an Asian importer, said fares are his major concern when he selects flights, but direct routing is also a consideration.
"I've never, ever considered United, and I don't think many people in Charlotte have," he said. " It's not part of our routine. So this would open up a new world."
Despite the limited effect on fares, code shares are generally thought to benefit airline passengers as well as airlines, although some experts worry that they can limit competition.
"It has pretty well been shown that code shares allow people to travel on one airline to more places than they used to be able to," said Ed Perkins, a syndicated travel columnist and former editor of Consumer Reports Travel.
"That can benefit consumers who would have to buy two separate tickets to go somewhere, which is usually more expensive than buying one ticket," he said.
For instance, a passenger from Asheville to Medford, Ore., would have to buy two tickets because none of the airlines that serves Asheville serves Medford.
For Charlotte travelers, the advantages are less dramatic. Because all six major U.S. hub airlines and British Airways serve Charlotte/Douglas International Airport, passengers can fly to most major destinations in the world without changing airlines.
However, Charlotte passengers who want to accrue US Airways frequent flier miles would clearly benefit from a code share.
Historically, code shares have been considered beneficial to both participating airlines.
Continental Airlines derived $140 million in 2001 revenue from its code-share deal with Northwest Airlines, said Continental spokesman Rahsaan Johnson.
The code share began in 1998 and is the country's biggest. A Northwest spokesman did not return phone calls.
US Airways Chief Executive David Siegel hasn't specified how much revenue a deal could bring US Airways. But Siegel said recently the Continental/Northwest deal brought each carrier a 4 percent increase in the number of passengers on its planes.
Siegel also said that after selecting a domestic partner, US Airways would likely join that partner's international alliance.
This week, United Airlines pilot negotiators approved a code share with US Airways. The next step would be for United to present the deal to the pilots' executive committee, said pilot spokesman Steve Derebey. A United spokeswoman said the deal would be presented soon but would not specify a date.
US Airways pilots approved the terms of a code share deal on Tuesday. Unlike United pilots, they did not specify what carrier a deal could be with.
Pilots typically have contract provisions limiting code share deals, which have the potential to cause airlines to cut back on flying when they can sell tickets on another carrier flying the same route.
That could hurt pilots, as well as consumers. Said Perkins: "In effect, code shares remove a certain amount of competition, but given the state of US Airways, it's not something I would worry about."
Code share deals require approval from the Transportation Department but not from the antitrust division of the Justice Department. Last year, the Justice Department rejected a proposed full-scale merger between US Airways and United as anti-competitive.
Jamie Baker, airline analyst for JP Morgan Securities, said it's difficult to measure how much an airline benefits from a code share, since success involves gaining passengers who would otherwise fly on another airline.
"Code shares succeed by expanding a carrier's offering in a given city," Baker said. "They don't create new demand. They redistribute existing demand."