United Airlines 2008 Annual Report Download - page 8

Alliances. United has a number of bilateral and multilateral alliances with other airlines, which
enhance travel options for customers seeking access to markets that United does not serve directly.
These marketing alliances typically include one or more of the following features: joint frequent flyer
program participation; codesharing of flight operations (whereby seats on one carrier’s selected flights
can be marketed under the brand name of another carrier); coordination of reservations, ticketing,
passenger check-in, baggage handling and flight schedules; and other resource-sharing activities.
The most significant of these arrangements is the Star Alliance, a global integrated airline network
co-founded by United in 1997. As of February 1, 2009, Star Alliance carriers serve approximately 900
destinations in 159 countries with over 16,500 average daily flights. Current Star Alliance partners, in
addition to United, are Air Canada, Air China, Air New Zealand, All Nippon Airways, Asiana, the
Austrian Airlines Group, bmi, EgyptAir, LOT Polish Airlines, Lufthansa, SAS, Shanghai Airlines,
Singapore Airlines, South African Airways, Spanair, Swiss, TAP Portugal, THAI, Turkish Airlines and
US Airways. Regional member carriers are Adria Airways (Slovenia), Blue1 (Finland) and Croatia
Airlines. Air India, Brussels Airlines, Continental Airlines and TAM Airlines are expected to become
future members of the Star Alliance.
United also has independent marketing agreements with other air carriers including Aer Lingus, Air
One, Great Lakes Aviation, Gulfstream International, Hawaiian, Island Air, Qatar Airways, TACA
Group and Virgin Blue.
Continental Alliance. In 2008, United and Continental announced their plan to form a new alliance
partnership that will link the airlines’ networks and services worldwide to the benefit of customers,
employees and shareholders, creating new revenue opportunities, cost savings and other efficiencies. In
addition, Continental plans to join United and its 20 other partners in the Star Alliance, the most
comprehensive airline alliance in the world. During 2008, United, Continental and eight other airlines
submitted a request to the DOT and applicable foreign authorities to allow Continental to join United,
Air Canada, Lufthansa and six other carriers in their already established anti-trust immunized alliance.
If approved, the immunity will enable United, Air Canada, Continental and Lufthansa to implement a
joint venture covering transatlantic routings that would deliver highly competitive flight schedules, fares
and service. In the U.S. market, where antitrust immunity would not apply, customers will benefit as
United and Continental plan to begin broad codesharing, which eases travel for customers flying on
itineraries using both carriers, and cooperation on frequent flyer programs and airport lounges, subject
to regulatory notice and Continental exiting certain of its current alliance relationships. In addition,
United and Continental are also exploring opportunities to capture important cost savings in the areas
of information technology, frequent flyer programs, airport operations, lounges, procurement and sales
and marketing.
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 travel. Under
codesharing, customers will benefit from a coordinated process for reservations/ticketing, check-in, flight
connections and baggage transfer. Frequent flyer 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. Continental’s plans to join the Star Alliance
and other planned cooperation are subject to certain regulatory and other approvals and the termination
of certain contractual relationships, including Continental’s existing agreements with SkyTeam members
that restrict its participation in another global alliance.
Mileage Plus. Mileage Plus builds customer loyalty by offering awards and services to frequent
travelers. Mileage Plus members can earn mileage credit for flights on United, United Express, Ted,
members of the Star Alliance and certain other airlines that participate in the program. Miles can also
be earned by purchasing the goods and services of our non-airline partners, such as hotels, car rental
companies and credit card issuers. Mileage credits can be redeemed for free, discounted or upgraded
travel and non-travel awards. There are more than 54 million members enrolled in Mileage Plus. In
2008, 2.3 million Mileage Plus travel awards were used on United, as compared to 2.2 million in 2007
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