Code Share Part II

Code Share Part II

After months of reviews, the government approved a deal on Oct. 2 that allows United Airlines and US Airways to sell seats on one another’s airlines, link flight routes and offer reciprocal frequent flyer program perks — effective Nov. 1.

The Department of Transportation said it gave the struggling airlines the go-ahead because such an agreement would increase competition and be a boon for travelers.

Frequent flyers were poised to pocket the first tangible benefit of the agreement on Oct. 14, when each carrier planned to open its airport club lounges to both Dividend Miles and Mileage Plus members. Mileage accrual, including class-of-service bonuses, is scheduled to begin Nov. 1. Members of each program will begin earning preferred/elite bonuses and will see their flights on either airline count toward status beginning Jan. 1. The code sharing and ability to redeem awards on both airlines is expected to be phased-in during the first quarter of 2003. According to Mike Isom, Senior Manager — Marketing Programs, US Airways Dividend Miles, the airlines have not yet determined how upgrades will be handled.

Glenn Tilton, United’s chairman, president and CEO, said the agreement should provide customers with expanded service options and frequent flyer benefits.

What this means to the Delta Air Lines and United partnership remains to be seen, but we expect each airline to announce shortly.

It also could pave the way for a code sharing agreement between Delta, Continental and Northwest. The trio announced in August that it was forming a partnership, which, like the United and US Airways deal, would allow airlines to sell one another’s tickets and would allow passengers to accrue and redeem frequent flyer miles with each other.

The deal is currently in the review process and isn’t expected to wrap up for at few more months. If approved, the trio would tower in size over the United/US Airways partnership.

The code shares have their share of critics. AirTran Chairman Joseph Leonard told the Detroit Free Press the proposal would reduce competition in the airline industry by consolidating the masses into a small handful of mega carriers. He said this would make prices go up, stifle competition and increase the likelihood that mid and small-sized communities would lose transportation options all together.

Richard Anderson, CEO for Northwest, said Leonard is way off base because the transactions are not mergers, and that Northwest, Continental and Delta would remain competitive.

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