Thursday, June 19, 2008

Continental Airlines Joining Star Alliance

As a frequent flyer of United Airlines and a past frequent flyer of Continental I was so glad to hear that Continental was joining the Star Alliance with United. Before moving to Virginia where I had to switch to United from Continental, I have to say I have missed the service of Continental quite a bit.

I fly routinely to Asia where Continental is my airline of choice over United or the other Star Alliance airlines that fly there. Now I will be able to codeshare on both airlines and get frequent flyer points and elite qualifications for my U.S. to Malaysia and Philippine trips which is very exciting.

Continental and United Airlines, which failed to complete consolidation talks this spring, said Thursday they would work together in an alliance they hope will boost revenue to offset rising fuel costs.

In striking a deal with United, Continental ended alliance negotiations with American Airlines, the nation's biggest carrier, and British Airways.

Under alliances, airlines typically work together to sell tickets on each other's flights, which can result in increased revenue.

Alliances have their limits. Without antitrust immunity from regulators, airlines are barred from working together on prices and schedules.

Continental said it would seek antitrust immunity from the Transportation Department to form joint ventures on trans-Atlantic flying with United and Lufthansa, and eventually on flights to Latin America and Asia.

But in the U.S., the Continental-United deal will be limited to code-sharing — selling tickets on each other's flights and reciprocal frequent-flier programs.

Continental and United said they also hope to reduce costs by working together. Airlines have reduced capacity and raised fares and fees as fuel costs surged.

Continental Airlines and UAL's United Airlines said they will link their networks and join the Star Alliance, one of three competing teams of airlines around the world.

Continental will leave the SkyTeam alliance, which includes Delta Air Lines and the carrier Delta plans to buy, Northwest Airlines.

American, a unit of AMR, and British Airways tried to lure Continental to its team, called oneworld. But a three-way deal grew less likely as Continental resumed its flirtation with United.

Earlier this year, Continental and United were in advanced talks to become a single carrier. But Continental walked away from the deal after UAL reported a huge loss for the first quarter. Continental Chief Executive Lawrence Kellner said the Houston-based carrier preferred to remain independent.

Kellner said Thursday that as the industry faces "some of the most challenging conditions airlines have ever faced," linking with another carrier gives Continental a larger network with expanded global reach and new ways of cost reductions.

United CEO Glenn Tilton said Continental, which has a valuable hub in Newark, N.J., serving New York, "would bring significant new assets to our global alliance."

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