The Flying Critic

Mileage Award Changes at Alaska, Continental, and Delta

This week Alaska, Continental, and Delta announced changes to their mileage awards.  Gary from View from the Wing posts about the changes:

Alaska Increases Award Prices and Introduces Partner Fees.

More on Delta’s 3-Tiered Award Pricing.

Continental to Restrict “EasyPass” (aka RuleBuster/Standard) Awards for Non-Elites.

Continental To Partner With United & Join Star Alliance

Big news from Continental today.  They hope to leave SkyTeam and join the Star Alliance.  Continental will also create code-share agreements with United.

From Continental's press release:

Announcement:

Continental Airlines (NYSE: CAL) and United Airlines (Nasdaq: UAUA) today announced a framework agreement to cooperate extensively, linking their networks and services worldwide to the benefit of customers, and creating revenue opportunities and cost savings and other efficiencies. In addition, Continental plans to join United in the Star Alliance, the most comprehensive airline alliance in the world.

How they made the decision:

Teams from the two organizations worked intensively over the last several weeks exploring creative solutions for how the two companies could achieve efficiencies and synergies that expand beyond the well-established benefits of codesharing. Their work focused on plans for significant cooperation on frequent flier programs, lounges, facility utilization, information technology and procurement. This work was assisted by the efficiency opportunities identified and relationships developed during the parties' earlier merger discussions.

"The teams worked well together to identify opportunities to create a unique and competitive partnership extending well beyond a traditional code share agreement," said Glenn Tilton, chairman, president and CEO of United. "On behalf of the Star Alliance, I am very pleased to invite Continental to join as a member. Continental will bring significant new assets to our global alliance, and our two companies will work together effectively with our partners to provide the best overall network in America and the world."

Creating a Revenue Sharing Agreement:

Initially, Continental will request the U.S. Department of Transportation (DOT) to allow it to join United -- along with Lufthansa, Air Canada and six other carriers -- in their already established antitrust immunized alliance. This will enable Continental, United, Lufthansa, Air Canada and other immunized Star Alliance carriers to work closely together as other antitrust immunized alliances do, and to establish trans-Atlantic and other international joint ventures so they can deliver highly competitive flight schedules, fares and service. The planned trans-Atlantic joint venture, in which Continental, United, Lufthansa and Air Canada will pool revenue, will permit the carriers to compete more effectively with the proposed joint venture involving certain SkyTeam members that was recently granted antitrust immunity. The trans-Atlantic joint venture will combine the strength of the carriers to create a more efficient and comprehensive trans-Atlantic network for the carriers' customers.

Joint ventures are also planned for the Latin America and Asia/Pacific regions, involving Continental, United and other members of the Star Alliance. Both antitrust immunity and code-sharing are subject to receipt of approvals from applicable national authorities.

Creating Codeshare and Sharing of Frequent Flyer Program Reciprocity

In the United States domestic market, where antitrust immunity for solely domestic travel would not apply, the two airlines plan to begin broad code-sharing, which facilitates the creation of itineraries using both carriers, as well as frequent Flier program, elite customer recognition and airport lounge reciprocity. These cooperative activities are subject to regulatory notice to applicable authorities and Continental exiting certain of its current alliance relationships. Under code-sharing, customers will benefit from a coordinated process for reservations/ticketing, check-in, flight connections and baggage transfer.

Frequent flier reciprocity will allow members of Continental's OnePass program and United's Mileage Plus program to earn miles in their accounts when flying on either partner airline and redeem awards on both carriers. Travel on either carrier will count toward elite customer recognition. Similarly, each carrier's customers will have access to both Continental's Presidents Club network and United's Red Carpet Club network of airport lounges.

Continental Must Wait 9 Months After Delta/Northwest Merger to Leave SkyTeam:

Continental's plans to join the Star Alliance and the other planned cooperation are subject to receipt of certain regulatory and other approvals and the termination of certain contractual relationships, including Continental's existing agreements with SkyTeam members that restrict its participation in another global alliance. Continental intends to terminate its existing agreements with SkyTeam members and obtain the necessary approvals to enter the Star Alliance, although Continental may not be successful, and the time period for doing so may be out of Continental's control. For example, a principal contractual restriction will not terminate until nine months after the closing of the proposed Delta/Northwest merger. Continental intends to transition out of SkyTeam and into the Star Alliance in a customer friendly manner.

Tunnel Between LAX Terminal 5 and Terminals 6, 7 and 8 - Travel Tip

Want to get between terminal 5 and terminals 6, 7 and 8 at Los Angeles International Airport (LAX) quickly and without needing to go through security?  Take the tunnel between terminal 5 and terminal 6.  Once you are in terminal 6 you can get to terminal 7 and 8 because they are connected.

I use the tunnel when flying United Airlines out of terminal 6 or 7 to walk over to the Delta Crown Room Club in terminal 5 to take a shower.  If you didn't know, the Delta Crown Room Club has two showers inside their LAX club.  One-visit passes are available for $30 if you don't already have access.

Here are the airlines in terminal 5, 6, 7 and 8:

Terminal 5
Aerolitoral
Aeromexico
Air Jamacia
Alitalia
Delta Air Lines

Terminal 6
Continental Airlines
Copa Airlines (Panama)
Delta Air Lines
United Airlines
Virgin America

Terminal 7
United Airlines

Terminal 8
United Express

How to find the tunnel in terminal 5

To find the tunnel in terminal 5 go to the middle of the terminal between gates 53 and 54.  Take the escalator next to the McDonald's:

How to find the tunnel in terminal 6

To find the tunnel in terminal 6 go to the middle of the terminal between gates 65 and 66 near the Hudson News and the Ruby's Diner:

The Tunnel

Take the escalator down to the tunnel level:

Walk to the other side of the long tunnel:

Follow the signs to terminal 5 or 6/7/8:

Flying Continental from Phoenix to Houston

In January I flew from Phoenix (PHX) to Geneva (GVA) via Houston (IAH) and Amsterdam (AMS).

I used Northwest miles for a business class award ticket.

When you book international business class tickets you typically get to fly in first class on domestic segments of the same ticket in the USA.  Don't let the first class name trick you though.  International business class is better than domestic first class.  Domestic first class usually just means a bigger seat, no middle seat, more drink refills, and the chance for a meal.

The first flight of my trip was in first class on Continental Airlines from Phoenix to Houston.

Continental doesn't have a lounge in Phoenix.  They operate out of Terminal 2.  The only lounge in Terminal 2 is a United Red Carpet Club.  I don't have a membership.  So I got to wait with everyone else in the overcrowded terminal:

Phoenix airport provides free wifi.  So I spent most of the time waiting for my flight on the internet.  Boarding started on-time with first class and elites boarding first.  I boarded third.

The seat pitch provided enough legroom to be comfortable for the short flight:

The flight attendant quickly offered a pre-departure beverage of my choice.  On United you usually need to ask specifically for a pre-departure Diet Coke as you are usually offered just water or orange juice.  I don't know if this is the norm for Continental or not, but I appreciated it.  The flight attendant even offered a pre-departure refill as I finished the first cup quickly:

Besides the seat, one of the main differences between first class and coach is the meals.  But meals aren't served on every flight.  Only flights during narrow hour ranges are considered meal flights. 

The only flight that worked with my schedule and made my connection in Houston was not a meal flight.

But Continental still served food on this flight because it was during their designated snack time.  For a snack Continental did a good job:

After an uneventful flight I made my way through Houston to the KLM and Air France lounges.

I found the Continental flight attendants professional.  So were the pilots and ground staff.  The only problem I encountered was the crowded gate area at Phoenix. 

Tomorrow, I will continue telling about this trip when I post about the PrivatAir flight from Houston to Amsterdam on a Boeing Business Jet.

Fare Alert: Cheap Flights to Hawaii (~$250 all-in)

United (UA) and Continental (CO) are in a little fare war over flights to Hawaii. 

From LAX (on CO), EWR (on UA), CLT (on CO), IAH (on UA), PHL (on CO), and PIT (on CO) you can get to Hawaii for ~250 round trip all-in after taxes and fees. 

This is for travel starting in mid August and going through the end of the schedule. 

Follow the link above for some more details.  This deal has been running most of the weekend so it likely won't last long.

Continental Airlines begins nonstop service from Cleveland to Paris

Continental Airlines nonstop service from Cleveland to Paris starts tomorrow.

Continental (CO) will NOT merge with anyone! What is United to do?

Great news for United flyers - Continental's board decided today to pull out of merger talks and has issued a long statement explaining their decision to not merge with anyone at this time:

We want you to know that our Board of Directors met today and has unanimously supported management’s recommendation that, in the current industry environment, the best course for Continental is to not merge with another airline at this time.
...
The Board very carefully considered all the risks and benefits of a merger with another airline, and determined that the risks of a merger at this time outweigh the potential rewards, as compared to Continental’s prospects on a standalone basis.
...
Most importantly, we have our Working Together culture, and we will ensure it remains intact.

As I recently said, Continental and United's corporate cultures do not match and a merger would have been a disaster both for the companies and their frequent flyers.  I'm glad they finally realized this. 

United's huge reported losses last week certainly helped make the decision easier for Continental.  United does not have great long term prospects in its current state and Continental's management would rather keep improving Continental than trying to salvage United.  I don't blame them.

Now what for United?

This will certainly cause a panic at United. Their CEO's plan has been to merge so that he can get out.  Now what?  My bet is that they quickly pick between US Airways (US) or American Airlines (AA). 

Why some people will flock to a United and US Airways merger

US may seem like the easy choice for a few reasons:

• United and US are both already in the Star Alliance, which means they already have essentially the same codeshare partnerships with other international airlines and each other and it would therefore be easy to facilitate the merger from the international alliance standpoint
• US is smaller than AA so presumably it will be easier to justify the merger to the DOJ
• US and UA tried to merge in 2001... now a lot has changed in 7 years, but they still have that prior history to consider
• US adds a Southeast hub (CLT) and lots of Northeast airport slots that United is currently missing

But really, US doesn't add much for United. They overlap on most of their routes and US doesn't bring any large number of new lucrative routes for United.  The overlap would allow them to reduce a lot of capacity but I'm not sure it brings enough value to the table to make it worth it. 

There differences are extensive. US flys 2 cabin international where United flys 3 cabin.  US' frequently flyer program doesn't match up with United's in for most of the reasons that Continental's didn't.   And US is still in a mess from the America West/US Airways merger. 

Why United and American are the best match for each other

AA makes more sense and is my recommendation for United:

• American is in trouble like United and needs to find a way to deal with the rising fuel costs.  A merger with UA creates an opportunity for the combined company to benefit from each others strengths but also cut costs big time
• AA covers South American and India - a great addition to UA's Asia routes - this would make the combined American United have equivalent global coverage as the new Delta and is the only combination that creates an equal competitor to the new Delta
• AA's frequent flyer program operates almost exactly like United's
• AA flys 3 cabin planes internationally on most of their routes like United
• and a merger with UA would allow AA to get rid of their fuel hogging MD80s to save money and reduce capacity in a huge but also fiscally responsible way

The cost savings from reducing capacity and the lower fuel costs by dropping the MD80s may just be enough to keep the new combined American United flying. 

I also tend to think that it could make it through regulatory approval assuming the Delta/Northwest deal happens also.  An American United merger would provide an equal global competitor to the new Delta and with the MD80s grounded the new American United probably wouldn't be too big to pass the DOJ in this environment.

The big merger problem that doesn't have an easy solution

The biggest issue with an American United merger (and even a United / US Airways merger) is dealing with the labor fight.  The only way a merger between United and US or AA will save money and make sense is to eliminate a lot of domestic overlapping capacity. 

They won't be able to accomplish the PR spin that Delta/Northwest have been getting away with by claiming there won't be big layoffs after their merger.  Make no mistake, a merger between American, United and US Airways - whichever way it goes will mean layoffs.  Lots of them.  Labor will not be happy.  Expect a big fight.

Rumors are going to be flying every which way.  This is going to be an interesting week.

United & Continental merger next week? ... and how to merge their frequent flyer perks and operations

UPDATE (April 27th): Continental announces that they won't merge with anyone!  Read The Flying Critic's analysis and commentary on what United needs to do next.

Merger Rumors

The New York Times reports that Continental and United are said to be close to announcing a merger:

United Airlines and Continental Airlines are getting closer to a merger agreement and would like to wrap up a deal by the end of next week, people with direct knowledge of the discussions said Friday.

Earlier today I heard rumors that UA and US were talking - but they were not from any reliable sources.  This report by the New York Times carries more weight. 

Continental and United have been involved in substantial discussions for months. I hoped that both companies would realize they are not a great match for each other. It is an understatement to say that their corporate cultures and strategy differ.  Total opposites maybe.

A Poor Match For Each Other

United flys 3 cabin international but Continental flys 2.  United has economy plus (several extra inches of legroom for frequent flyers and those who pay extra).  Continental doesn't.  Their frequent flyer schemes are also incompatible.  Continental is stingy with miles and awards and United is generous.  Continental provides free unlimited domestic upgrades.  United requires vouchers for upgrades.  United offers free international upgrades and Continental doesn't.  I prefer United over Continental because of these differences. Many people prefer Continental for these same differences.

Yet many flyers I talk to are excited about a Continental and United merger.  They see it as merging the two best domestic airlines.  Ideal, right?  They imagine a merger utopia where the new airline combines the best features of each airline: economy plus, 3 cabin service, lots of free international upgrades, free booze in the lounges, consistent service, affordable first class prices, meals in coach, free domestic upgrades, more extensive route network, easy mileage award redemption, engaged management, good labor relations and more!

Frequent Flyer Perks And Operations Must Change

There is no way the new company can afford to offer the best of both airlines and be competitive in the current environment.  The new management - likely to be most of Continental's current team - will have to decide what features to keep and what to toss.

Because of the incompatible differences between United and Continental's current programs there are certain to be many frustrated frequent flyers whose perks will be changing with the new merged airline.

If the new United/Continental removes too many benefits and features that their prior customers want those customers may decide to look at alternatives.  And unfortunately for United/Continental, American and the new Delta will both look like good alternatives.  Routes aside, the new Delta features benefits similar to the old Continental and American similar to the old United.  This will make the new management's decision about which perks to keep and which to drop critical. 

No Merger Fan Here

I'm not a fan of United/Continental merging.  The culture differences will be maddening to all involved.  If mergers have to happen, and I'm not convinced they do, I'd rather see UA/AA (with some trimming and immediate grounding of the fuel-hogging MD80s) and CO/AS (buying the leftovers from UA/AA). 

Unfortunately it sounds like UA/CO is set.  Assuming for a moment that it is, what will the fall out be for frequent flyers?  There isn't any practical way for the new management to make everyone happy.  Only time will tell how bad it will be for the customers. 

How The Flying Critic Would Advise The New Management Team

They need to find a way to provide enough benefits to keep customers loyal and happy but they also have to deal with the current and future cost environment.  If they hired me to advise them on the impossible decisions that matter most to frequent flyers I would suggest that the new company:

• Drop 3 cabin first class and adopt the 2 cabin BusinessFirst approach used by Continental
• Abandon Ted
• Keep Economy Plus and add it to the Continental planes
• Add first and Economy Plus to all regional jet
• Adopt Mileage Plus over OnePass (but with changes noted below)
• Keep the international system wide upgrade scheme from United for top tier frequent flyers but add a variable cash co-pay based on fare class
• Change the Red Carpet Clubs to be like Continental's President's Clubs
• Make top tier (1K/Platinum) require 125,000 miles
• Adopt free domestic elite upgrades like Continental's current system over the e500s upgrade coupons used by United
• Keep the confirmed region 1 upgrades that United gives to top tier frequent flyers but add a variable cash co-pay based on fare class
• Add variable co-pays based on fare class for mileage upgrades
• Abandon the elite boarding process of United (where 1K/GS/First/Business board before other elites) and allow elites of any level to pre-board like on Continental
• Fire United's web team and keep Continental's
• Stop providing Continental's free coach meals but start providing more substantial (and expensive) buy on board meal options

Not happy with my proposals?  Unfortunately, my bet is that the real changes will be worse.  I hope I'm wrong. 

If the new management asked you for help what would you advise?

Inflight WiFi? Several airlines have announced plans to start testing

The San Francisco Chronicle published an article today on the status the testing of inflight WiFi on airplanes in the USA.  It's an interesting read.   Here is their list of the status of WiFi testing by US domestic airlines:

-- Alaska Airlines: Testing wireless Internet access this summer

-- American Airlines: Testing service on 15 planes by mid-year

-- Continental: Testing limited wireless next year

-- JetBlue: Currently testing one plane offering limited Yahoo e-mail, IM chat and BlackBerry e-mail service

-- Southwest Airlines: Testing service on four planes in late summer

-- Virgin America: Testing service late this year

I question the reality of AirCell's claim regarding speed and network capacity:

The company said the setup can deliver 3 Mbps to the plane, which is compressed and allows travelers to share the equivalent of a 15 Mbps connection.

I have a hard time believing that they can deliver network capacity that is equivalent to a 15Mbps connection when the plane only will have 3Mbps of bandwidth.  Most pictures and other components of web pages are already highly compressed.  Compressing an already compressed file doesn't generally make it any smaller.

This service will work great when there are only a couple of people using it - but the more popular it becomes the worse it will be.  Don't get me wrong, I think inflight WiFi is a great idea and should be pursued.  I just don't like vendors who make promises they can't keep.

Delta and Northwest merger to be announced shortly

According to a post by Joe Sharkey at Large, Delta and Northwest have finally decided to announce their merger plan.  It looks like the announcement should come any time in the next day or two. 

It is too early to know what the consequences to their frequent flyer programs will be.  Delta and Northwest are currently members of the SkyTeam alliance and so their systems are already somewhat integrated.  They both have similar upgrade schemes, however there upgrade systems are not currently integrated like Northwest and Continentals are.

Speaking of Continental, the thought by many is that this forthcoming announcement by Delta and Northwest will trigger United and Continental to go forward with their own merger. 

The rest of this year is going to be a bumpy time for travelers as the airlines that decide to merge try and work out the merging of their routes, employees, policies and IT systems.

Continental and Delta match United's fare increase

The question is will American also raise their fares? If so this latest increase is probably here to stay.