United Airlines 2012 Annual Report Download - page 7

Table of Contents
United, Continental and All Nippon Airways participate in a joint venture agreement covering certain trans-Pacific routes between the United States and Japan,
and other destinations in Asia. The joint venture, which enables the carriers to integrate the services they operate between the United States and Asia and to
capture revenue synergies, delivers highly competitive flight schedules, fares and services. The joint venture has a revenue-sharing structure that results in
payments among participants based on a formula that compares current period unit revenue performance on certain trans-Pacific routes to a historic period, or
“baseline”. The payments will be calculated on a quarterly basis and are subject to an annual cap.
In 2010, United, Continental and Air Canada entered into a memorandum of understanding to establish a revenue sharing trans-border joint venture. The
parties subsequently drafted a joint venture agreement based on the trans-Atlantic joint venture agreement among United, Continental, Air Canada and the
Lufthansa Group. On October 24, 2012, United, Continental and Air Canada reached a Consent Agreement with the Canadian Competition Bureau settling
litigation related to the proposed joint venture which will allow its implementation and full coordination among the parties, with certain exceptions on a limited
number of non-stop routes. United, Continental and Air Canada already have U.S. antitrust immunity. A definitive joint venture agreement has not yet been
finalized.
United and Continental currently maintain independent marketing agreements with other air carriers including Aeromar, Aer Lingus, Cape Air, EVA Air,
Great Lakes Airlines, Silver, Hawaiian Airlines, Island Air, and Jet Airways. In addition, United offers a train-to-plane alliance with Amtrak from Newark
Liberty to select regional destinations.
Loyalty Program. United’s MileagePlus program builds customer loyalty by offering awards and services to program participants. Members in this program
earn mileage credit for flights on United, Continental, United Express, airlines in Star Alliance and certain other airlines that participate in the program.
Members can also earn miles by purchasing the goods and services of our network of non-airline partners, such as credit card issuers, retail merchants, hotels
and car rental companies. Members can redeem mileage credits for free, discounted or upgraded travel and non-travel awards.
Under the Company’s Consolidated Amended and Restated Co-Branded Card Marketing Services Agreement dated June 9, 2011 (the “Co-Brand Agreement”)
with Chase Bank USA, N.A. (“Chase”), loyalty program members accrue frequent flyer miles for making purchases using co-branded credit cards issued
by Chase. The Co-Brand Agreement provides for joint marketing of the Company’s credit card program and provides Chase with other benefits such as
permission to market to the Company’s customer database.
In 2012, 4.7 million MileagePlus travel awards were used on United and Continental. These awards represented 7.4% and 6.8% of United’s and Continental’s
total revenue passenger miles in 2012, respectively.
Total miles redeemed for travel on United and Continental in 2012, including class-of-service upgrades, represented 83% of the total miles redeemed. In
addition, excluding miles redeemed for travel on United and Continental, MileagePlus members redeemed miles for approximately 1.6 million awards in 2012
as compared to 1.8 million in 2011. These non-United and non-Continental travel awards include United Club memberships, car and hotel awards,
merchandise and travel on another air carrier. The decrease in the number of non-United and non-Continental travel awards redeemed in 2012 compared to
2011 was due to a decrease in hotel, car and United Club redemptions.
Fuel. Aircraft fuel has been the Company’s single largest and most volatile operating expense for the last several years. The table below summarizes UAL’s
aircraft fuel consumption and expense during the last three years.
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









 4,016 $ 13,138 $ 3.27 37%
 4,038 $ 12,375 $ 3.06 36%
 2,798 $ 6,687 $ 2.39 30%
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