United, US Airways Announce Alliance

Revenue-starved United Airlines and US Airways yesterday announced a new marketing alliance that will include codesharing, frequent flyer reciprocity, joint airport lounge access and other customer benefits. The agreement, expected for weeks, is a huge step forward for the one-time merger hopefuls and represents a crucial cog in their respective strategic recovery plans.

A United/US Airways partnership, once activated, will become the second such agreement between two major U.S. carriers, following Continental/Northwest, and could present new contracting opportunities for corporate travel buyers. US Airways, which would gain access to United's Midwestern and Western network, certain international markets and a potential seat at United's Star Alliance table, plans to proceed even if it files for bankruptcy. For its part, United would tap into US Airways' strong East Coast feeder system. Though the two carriers have not yet identified specific routes on which they propose to cooperate, announcements are expected soon.

A US Airways official said the alliance will be phased in, with frequent flyer and airport lounge reciprocity first on the agenda. The first wave of codesharing is expected to follow before year-end. "We are looking ultimately at codesharing in a majority of our domestic markets," the official said. "In the second year of the agreement, we will pursue the Star Alliance portion."

Last summer, the two carriers abandoned plans to merge after U.S. Department of Justice regulators voiced anticompetition concerns. This second attempt to coordinate operations, however, does not involve any equity stakes and keeps the two airlines as separate, competitive entities.

Though labor unions oftentimes disrupt plans for cooperation between two airlines, the United Airlines pilots' Master Executive Council of the Air Line Pilots Association yesterday said it already ratified an agreement allowing the US Airways partnership to proceed.