Less A Marriage... More 'Friends, With Benefits'
The unlikely pairing of United Airlines with Continental may
redefine the very notion of an airline partnership, and analysts
are curious to see what 2009 has in store for the two carriers.
As ANN reported, the two carriers announced in
June a framework agreement to cooperate "extensively," linking
their networks and services worldwide to generate revenue
opportunities, and cost savings and other efficiencies. In
addition, Continental plans to join United in Star Alliance -- the
largest global airline alliance by far -- ending its membership
with the Delta/Northwest-headlined SkyTeam.
The agreement isn't a full-fledged merger;
Continental soundly rejected that idea in
April. However, the Chicago Tribune reports the
proposed pairing is looking less and less like a traditional
alliance by the day.
"What we're doing with Continental is new and going to a place
we haven't gone before with any of our partners," said Michael
Whitaker, United's senior vice president for alliances,
international and regulatory affairs, who's leading that carrier's
efforts to join with Continental.
Analysts say both carriers want greater leeway in establishing
cost-saving partnerships on shared routes... right up to the point
anti-trust regulators would become concerned, and without formally
merging the two companies. Both sides point to the lack of
available funds at either carrier to accomplish that, adding the
current political climate probably wouldn't be the best time to
approach lawmakers for a $1 billion helping hand.
"Financing a transaction in this credit environment would be
very difficult," admits United CEO and merger advocate Glenn
Tilton.
What might result from the pairing of United and
Continental, says consultant Robert Mann, could be the
framework for an eventual merger down the line.
Mann notes the alliance proposed by United and Continental would
result in shared frequent flier programs, reservation systems and
airport lounges... many of the same benefits Delta netted with its
acqusition of Northwest Airlines this year, but without the need
for renegotiated labor contracts and other messy
formalities.
"If the carriers get comfortable over time, who knows what it
might lead to?" Mann says. "It's kind of like the dating
process."
Perhaps the better analogy would be living together... or even
"friends with benefits," as both parties appear to want all
the perks of a full-fledged merger, while retaining the
ability to walk away at any time.
Moreover, this could be a precedent for future airline
"alliances," notes analyst and former airline pilot Vaughn
Cordle... as the ability for passengers to fly on several carriers
on a common ticket could negate the need for true mergers.
"At that point, it becomes irrelevant whose logo is on the
plane," he said.
We dunno... that sounds a lot like "planeswapping." What
would their parents think?
ANN FAQ: Submit a News Story!
See All