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CO Flies To A New Alliance

CaptJax

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Oct 27, 5:30 PM EDT

Continental flies to a new airline alliance

By DAVID KOENIG
AP Airlines Writer


DALLAS (AP) -- Continental Airlines has changed teams in the battle among three large alliances of global airlines.

The move gets Continental out from under the shadow of Delta Air Lines and could mean a bigger piece of international revenue that is shared among team members.

It will also pull Continental closer to United Airlines. The two talked extensively about combining last year before Continental walked away. Now they will work together on marketing and pricing in the next closest thing to a merger.

Continental customers will get more flights to choose from, and its frequent fliers will get a new roster of international airlines on which to earn and spend miles.

Houston-based Continental officially switched Tuesday from SkyTeam, which is led by Delta and Air France-KLM, to the Star Alliance, which includes United, US Airways and Lufthansa. The move was set in motion last year, when Delta bought Northwest, another SkyTeam member, and became the world's largest airline company.

Being part of SkyTeam "worked for us when there were three equal airlines," said Continental President Jeff Smisek, referring to Delta, Northwest and Continental. But when Delta and Northwest combined, "it relegated us, in effect, to junior-partner status."

Airline alliances have grown over the past decades as carriers looked to expand their networks with partners while avoiding the need to hire more pilots and flight attendants to operate more flights themselves.

Continental's switch to Star was more than a year in the making, and was marked Tuesday with a lavishly produced ceremony at Newark Liberty International Airport, Continental's hub in the New York City area. The CEOs from many other Star members attended the event.

Glenn Tilton, the CEO of United parent UAL, called it "a great day for Continental; it's a great day for my company."

Continental CEO Larry Kellner said the day after his airline broke off merger talks with United, Tilton called him and lobbied for Continental to join the Star Alliance.

Continental will bolster Star's presence in New York and its service to Central and South America. Continental, in turn, will benefit from United's lineup of flights to the West Coast and Lufthansa's strength in Europe.

"We are strong where they are weak, and we are weak where they are strong," said Smisek, who is set to become Continental's CEO on Jan. 1.

In July, Continental won approval from regulators for immunity from antitrust laws, which will let the airline work with its new Star partners on setting prices and schedules for many international routes. However, Continental and United won't be allowed to cooperate on pricing of flights within the U.S.

Darryl Jenkins, a consultant who has worked for major carriers including United, said there is "a strong likelihood" that Continental and United will move from alliance partners to an eventual merger. Delta and Northwest worked together on SkyTeam for several years, learning about each other, before their deal last year.

Jenkins said Continental's move will make it easier for United customers to earn miles while flying to secondary cities in Europe on Continental jets. And he said Continental customers will have more travel options to Asia on United.

Continental's elite customers might notice hiccups with the change to a new set of partner airlines, said Randy Petersen, publisher of InsideFlyer magazine.

Petersen warned that some Star members, such as Singapore Airlines, sell economy-class tickets that don't earn miles - read the fine print, he advised. And he said United may be reluctant to offer certain upgrades to Continental One Pass members after charging its own customers for the upgrades.

There are three major alliances of global airlines. Besides Star, now with 25 carriers, and SkyTeam, the oneworld team is led by American Airlines and British Airways.

It's rare for airlines to switch teams, and it takes more than paperwork to make it happen.

To make connections with partner airlines easier, Continental is moving its gates at 11 airports in cities including Chicago, Frankfurt, Tokyo and Beijing. And it's changing signs in airports and on aircraft to replace SkyTeam references with plugs for the Star Alliance.
 

lookin4better

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Full blown merger is only a matter of time.... and more likely sooner than later.

They will sit back and watch the Delta merger and see how it goes, once they see the increased market share being enjoyed by the new/larger Delta...... its all but done.
 

cybourg10

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Full blown merger is only a matter of time.... and more likely sooner than later.

They will sit back and watch the Delta merger and see how it goes, once they see the increased market share being enjoyed by the new/larger Delta...... its all but done.

A year ago I would have agreed with you 100%, but now I am not so sure that they will merge. They can get most of the merger synergies from this alliance.

Although LK did not want to merge and now he is on the way out and JS is a merger/acquisition lawyer. I still do not think they will attempt to merge unless the have horrible loses in 2010 (which could be manufactured loses). Next year will be interesting.....
 

whatitdoing?

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I have no clue if they're going to merge. Nothing we can do about it. I don't think it'll happen because they're going to do a "virtual" merger without a SOC. They're getting that with this alliance. Who knows..........
 
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