Airline venture adds convenience, but few extra fliers

Daily Record, The (Baltimore), Aug 26, 2002 by Andrea Cecil

The planned partnership between Continental, Delta and Northwest airlines will have little effect on Baltimore-Washington International Airport, though it may offer more convenience to passengers, sources in the industry said.

The joint venture, which must be approved by federal regulators and pilots' unions, was announced Friday. It broadens an existing, yet-to-be-approved partnership between the world's No. 5 carrier, Continental Airlines, and the world's No. 4, Northwest Airlines Inc., by adding the world's No. 2, Delta Air Lines.

The three airlines combined have little of BWI's passenger share. The market is dominated by Southwest, and US Airways is a distant second.

The airlines said they intend to sell seats on each other's flights and coordinate schedules and frequent-flier benefits under the agreement, which is not a merger, by spring 2003.

"It does not seem like it would have a significant impact on BWI," Mary Ellen Wriedt, airport analyst with Standard & Poor's in San Francisco, said Friday. She said it would have little impact on most of the country's airports because the move, while helpful to the airlines, would be unlikely to make more people use air travel.

BWI spokeswoman Melanie Miller said she could not comment on unapproved partnerships between airlines.

During the 2002 fiscal year, which ended June 30, Delta saw its passenger number increase by 12 percent at BWI, Miller said. Meanwhile, Continental saw a 3.13 percent increase during the same period, and Northwest's number of passengers was down 8.23 percent, she said.

Julie King, spokeswoman for Houston-based Continental, said travelers would reap the most benefits if the partnership were approved.

The affiliation would allow fliers increased frequent-flier miles, the use of more travel lounges inside airports and "more seamless flights to cities that the ... partners travel," she said.

Additionally, sources in the industry said airport gates for the three airlines might move closer together.

The move by Atlanta-based Delta, Houston-based Continental and Eagan, Minn.-based Northwest is a reaction to last month's announcement that United Airlines and US Airways would form an alliance, Leo F. Mullin, Delta chairman and CEO, said in a prepared statement.

"The initiative ... is strongly pro-competitive on two fronts," he said in the statement. "First, it will allow the participating carriers to compete for additional passengers and revenues in markets not otherwise accessible to them. Second, the proposal will enable Delta, Continental and Northwest to compete on a more equal footing with United Airlines and US Airways."

United saw a 3.43 percent rise in its passenger number at BWI during the 2002 fiscal year, while US Airways passengers dropped 45 percent, largely because of the elimination of MetroJet service, Miller said.

She also said recent airline bankruptcy filings and cutbacks would not affect BWI, one of the nation's fastest growing airports. In 2000, the airport boasted 19.6 million fliers -- a 12 percent increase over 1999 -- and generated $6.5 billion in annual revenue during 2000, according to airport officials and the governor's office.

One analyst said BWI outpaces most airports nationwide during a time of industry turmoil because Southwest Airlines holds 41 percent of the airport's market.

Joseph Pezzimenti, an airport analyst for Standard & Poor's in New York, said Southwest has the highest credit rating of all the airlines.

The Continental-Delta-Northwest partnership would be implemented first in the United States, Canada and the Caribbean, then later on routes in Europe, Asia and Latin American, according to Delta.

The alliance also provides for discussions to bring Continental and Northwest into the SkyTeam, an agreement between Delta, Aeromexico, Alitalia, Air France, CSA Czech Airlines and Korean Air.

Philip Baggaley, an airline analyst with Standard & Poor's in New York, said in a written report that it is likely the U.S. Department of Transportation and the pilots' unions will approve the alliance. He also said the same about the U.S. Department of Justice and authorities in other countries approving antitrust immunity on international routes.