Continental Airlines’ snub of suitor United Airlines this week has propelled Continental to seek a new alliance with other airlines — a deal that could change the way you travel, especially if you fly often with Continental or its newest potential allies, American Airlines and British Airways.
Continental’s drift away from United came after United lost a bruising $537 million in the first quarter of this year. United and Continental had been talking about fully merging their operations into one big super-airline, but United’s frighteningly turbulent finances scared Continental off.
Now, Continental is talking to American and BA about something short of a merger — a deal that would allow the carriers to sell tickets on each other’s flights, provide worldwide access to each other’s airport lounges for premium passengers and allow travelers to use frequent-flier miles on any of the three airlines for flights on either of the other two carriers’ global route networks.
Such an arrangement would allow the partners to clear regulatory hurdles and duck criticisms from politicians and labor unions that full mergers typically trigger — as seen in the proposed merger of Delta Air Lines and Northwest Airlines. An alliance short of a merger could also permit Continental, American and BA to fight the record-high fuel prices that are hammering the airline industry, by operating on a larger scale and generating higher revenue.
If Continental strikes a deal with American and/or BA, it could come under the aegis of the oneworld alliance, a joint marketing association that BA and American already belong to, along with eight other airlines, among them Japan Airlines and Cathay Pacific Airways. Continental is presently a member of a rival alliance, SkyTeam, which includes Air France/KLM, Delta and Northwest. The third and largest airline alliance is Star Alliance, led by United and Lufthansa Airways, with 20 members.
Should Continental pull out of one alliance to join another, it could trigger a broad restructuring of the three global airline alliances. While this may sound esoteric to the average flier, it could have practical consequences that go well beyond the board room.
Say you are a frequent flier on Continental. You are used to seeing code-share flights on fellow SkyTeam member airlines Air France/KLM, Delta or Northwest. If Continental joins oneworld, those arrangements will go away. Then, you will have to get used to code-shares — and shared lounges and frequent flier programs — with American, BA and other oneworld members. Flight schedules, routes and hub airports will change — not necessarily for the worse, but they will change.
Other airlines could also switch alliances, or join for the first time. Lufthansa, which recently bought a stake in JetBlue Airways, could lure JetBlue into Star Alliance. Or an unaffiliated niche carrier such as Virgin America, a nimble San Francisco start-up, could decide it needs to hook up with an alliance, too.
It’s far from certain what the new order in the sky is going to look like. But it’s going to be different.