This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx 3 Airlines Approved for Sharing Agreement April 1, 2003 By MICHELINE MAYNARD The Transportation Department gave its approval yesterday to a marketing partnership among Continental Airlines, Delta Air Lines and Northwest Airlines after the carriers proposed a compromise intended to make the arrangement more competitive. The agreement, which is called a code-sharing alliance, would be the largest such arrangement in the industry. Code-sharing alliances allow airlines to sell tickets on one another's flights, and let passengers use the other airlines' airport lounges. Passengers can select which carrier's frequent- flier program to use. The Transportation Department expressed concerns about the agreement among the three carriers when it was proposed last summer, warning that the linking of the airlines might reduce competition in the industry. The airlines might limit flights to one another's hubs in an effort to protect their turf, thus preventing passengers from obtaining reasonable air fares, the agency said. That fear was based on the airlines' control of 35 percent of industry revenue, as measured in passenger miles, and their more than 3,000 overlapping flights. United Airlines and US Airways have their own code-sharing agreement, which took effect earlier this year, but the department said it was less of a threat because the airlines control just 23 percent of industry revenue and had only 544 overlapping flights. In January, the Transportation Department said it would approve the three-way code-sharing arrangement if the airlines would modify their plans to reduce the amount of sharing in the initial years and forfeit certain gates. The airlines countered that the restrictions suggested by the department were too tight. They vowed to go ahead with the arrangement anyway, which could have forced the Transportation Department to sue them to block the marketing agreement. But the airlines recently came forward with some alternative suggestions, which the government adopted yesterday. Under the modified plan, the three airlines will limit the flights on which they share information to 2,600 in the first year, or slightly less than 900 per pair of airlines. The Transportation Department had originally proposed that the carriers be allowed to share information on only about 650 per pairing. The department also agreed that the airlines could share information on 5,200 flights in the second year, or about 1,700 per pairing. The airlines also agreed to give up gates at La Guardia Airport and at Logan Airport in Boston, at the request of the airports' governing bodies, so that other competitors could claim them. The three airlines have said that the plan will generate $475 million in annual revenue, by streamlining their operations and making it easier for passengers to choose flights. But Kevin Mitchell, president of the Business Travel Coalition, which represents corporate travel departments and business travelers, said the new arrangement might not yield that much for the carriers given the dismal conditions the industry faces. "Any time you make a public policy decision at the bottom of an industry cycle, you run the risk of overlooking factors that could be harmful over the long term," he said. Mr. Mitchell also said that the arrangement could damage the operations of low-fare carriers like Southwest and JetBlue, which do not have similar deals. "The three of these guys being able to team up and leverage their assets is a threat" to the smaller carriers, Mr. Mitchell said. http://www.nytimes.com/2003/04/01/business/01CODE.html?ex=1050210415&ei=1&en=a13db81baca96c76 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@xxxxxxxxxxx or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@xxxxxxxxxxxx Copyright 2003 The New York Times Company