United Airlines 2013 Annual Report Download - page 5

Table of Contents
day coverage to common destinations, additional mileage accrual and redemption opportunities, and expanded global network access. These marketing
alliances typically include one or more of the following features: loyalty program reciprocity; 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,
airport lounge access and flight schedules, and other resource-sharing activities that include joint sales and marketing.
United is a member of Star Alliance, a global integrated airline network co-founded by United in 1997 and the largest and most comprehensive airline alliance
in the world. As of January 1, 2014, Star Alliance carriers served 1,328 airports in 195 countries with over 21,900 daily flights. Current Star Alliance
members, in addition to United, are Adria Airways, Aegean Airlines, Air Canada, Air China, Air New Zealand, All Nippon Airways (“ANA”), Asiana
Airlines, Austrian Airlines, Avianca, Brussels Airlines, Copa Airlines, Croatia Airlines, EGYPTAIR, Ethiopian Airlines, EVA Air, LOT Polish Airlines,
Lufthansa, SAS Scandinavian Airlines, Shenzhen Airlines, Singapore Airlines, South African Airways, SWISS, TAM Airlines (“TAM”), TAP Portugal,
THAI Airways International, Turkish Airlines and US Airways. On December 9, 2013, US Airways and American Airlines closed their merger transaction
and, as a result, we anticipate US Airways will exit Star Alliance on March 30, 2014. LATAM Airlines Group, the parent company of TAM following TAM’s
merger with LAN Airlines, announced that TAM would exit Star Alliance at a future date, expected in early 2014. In addition, in late 2013, Star Alliance
announced it would recommence integration activities with Air India following the cessation of such activities in July 2011. A joining date for Air India has yet
to be determined.
United has a variety of bilateral commercial alliance agreements and obligations with Star Alliance members, addressing, among other things, reciprocal
earning, redemption of frequent flyer miles and access to airport lounges and, with certain Star Alliance members, codesharing of flight operations. In addition
to the alliance agreements with Star Alliance members, United currently maintains independent marketing alliance agreements with other air carriers currently
unaffiliated with a global alliance, including Aeromar, Aer Lingus, Cape Air, Great Lakes Airlines, Silver, Hawaiian Airlines, Island Air, and Jet Airways.
United also offers a train-to-plane alliance with Amtrak from Newark Liberty to select regional destinations.
United also participates in joint ventures, one with Air Canada and the Lufthansa Group (which includes Lufthansa and its affiliates Austrian Airlines,
Brussels Airlines and SWISS) covering transatlantic routes, and another with ANA covering certain transpacific routes. These joint ventures enable the
participating carriers to integrate the services they provide in the respective regions, capturing revenue synergies and delivering highly competitive flight
schedules, fares and services. The European Commission conducted a standard review of the competitive effects of United’s transatlantic joint venture and
closed its review in May 2013.
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, 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 (other than taxes and government imposed fees), discounted or upgraded travel and non-travel awards.
Under the Company’s Consolidated Amended and Restated Co-Branded Card Marketing Services Agreement (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.
Five million and 4.7 million MileagePlus flight awards were used on United in 2013 and 2012, respectively. These awards represented 7.7% and 7.1% of
United’s total revenue passenger miles in 2013 and 2012, respectively. Total miles redeemed for flights on United in 2013, including class-of-service upgrades,
represented approximately 80% of the total miles redeemed.
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