SF Gate: Delta considers options in face of United-US Airways partnership

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This article was sent to you by someone who found it on SF Gate.
The original article can be found on SFGate.com here:
http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2002/07/26/f=
inancial1713EDT0289.DTL
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Friday, July 26, 2002 (AP)
Delta considers options in face of United-US Airways partnership
JUSTIN BACHMAN, AP Business Writer


   (07-26) 14:13 PDT ATLANTA (AP) --
   Delta Air Lines, long a stalwart of East Coast air travel, may face
another threat to its already decimated revenues from a proposed alliance
between United and US Airways.
   Financially struggling US Airways and United want to sell seats on each
other's flights in a code-share deal that also would offer frequent-flier
mileage on either carrier.
   The new alliance, announced Wednesday, is far more limited than United's
bid two years ago to buy the airline, based in Arlington, Va.
   But the prospect of passenger siphoning remains a threat to Atlanta-based
Delta -- especially since United has a broad network in the West, where US
Airways offers little service.
   The new agreement also offers United access to cities in the Southeast a=
nd
New England, where its service is sparse.
   "Today, if someone wanted to go from Charlotte to Tucson, some of those
people are sitting on Delta," said Michael Boyd, an aviation consultant in
Evergreen, Colo. "So with this (United deal) US Airways is going to retain
some of those people."
   Moreover, Delta officials contend the deal would come at their expense.
   "The objective of a code share is take revenue from someone else," Delta
chairman and chief executive Leo F. Mullin said in an interview with the
Chicago Tribune. "Whatever revenue is diverted will be diverted from
Delta."
   Delta officials declined to discuss any response to the US Airways deal.
The carrier also has been formulating a new strategy, presented to its
board Thursday, to respond to lower-cost carriers such as AirTran Airways,
Southwest and JetBlue. No details of that effort have been released.
   "We're going to look at all our options," Delta spokeswoman Peggy Estes
said.
   Last week, as the company announced a $186 million quarterly loss and
warned of weak revenue throughout the year, Mullin said a market-share
shuffle will not go unanswered.
   "Either through alliances of our own or through marketing actions, we wi=
ll
ensure and stabilize our competitive position and make it stronger," he
said.
   "I think Delta right now appears to be running scared," Boyd said.
   United, the No. 2 U.S. carrier, and third-place Delta, have had an
intense, but cordial, rivalry for years.
   Delta has largely avoided adding flights at United's Chicago, Denver,
Washington D.C. and California hubs, while United keeps its distance in
Delta-dominated Atlanta, Cincinnati, Dallas and Salt Lake City.
   The carriers also allow passengers to earn mileage credits on each other=
's
domestic flights and access to their airport lounges.
   United spokesman Joe Hopkins said Friday that no decisions have been made
on how the carrier's US Airways alliance would affect its partnership with
Delta.

On the Net:
   www.delta.com
   www.usairways.com

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Copyright 2002 AP

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