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UAL CEO: Alliances Under Threat

Sat Oct 21, 2006 3:42 pm

UAL head says alliances are threatened

The head of United Airlines yesterday suggested the industry's network of global alliances may be breaking down, prompting the US carrier to examine overseas investments to support its international strategy.

"Air France-KLM and Cathay Pacific are sending signals that the alliance structure is under threat," Mr Tilton told an aviation symposium organised by the Chicago Council on Global Affairs.

He said "something is going to replace the existing alliance structure" if the system continues to be challenged by consolidation in Europe and Asia, and suggested United could seek equity stakes overseas.

More at the Financial Times (subscription)




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SLCUT2777
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RE: UAL CEO: Alliances Under Threat

Sat Oct 21, 2006 3:58 pm

How is Star Alliance threatened by this? If any of the big three are under the gun now I'd have to say SkyTeam with both DL and NW still in Chapter 11. Star Alliance with all their players I would have to argue is the most powerful of the three. Is Glenn Tilton becoming paranoid his carrier (UA) now can't survive more than a year outside of court protection?  pessimist   scratchchin   twocents 
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ClassicLover
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RE: UAL CEO: Alliances Under Threat

Sat Oct 21, 2006 7:06 pm

Quoting Singapore_Air (Thread starter):
"Air France-KLM and Cathay Pacific are sending signals that the alliance structure is under threat," Mr Tilton told an aviation symposium organised by the Chicago Council on Global Affairs.

Really? What kind of signals are these? Have these airlines made any statements?
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SInGAPORE_AIR
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RE: UAL CEO: Alliances Under Threat

Sat Oct 21, 2006 7:14 pm

He doesn't elaborate. He just says "signals".

Helpful.
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DAL767400ER
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 2:22 am

Brilliant talking by Tilton, really  Yeah sure .
Tilton:"AF and CX sen signals that alliances are under threat."
Reporter:"What exactly are those signals?"
Tilton:"I'm not telling you."*inser evil laugh*
 
piercey
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 3:05 am

Quoting SLCUT2777 (Reply 1):
How is Star Alliance threatened by this? If any of the big three are under the gun now I'd have to say SkyTeam with both DL and NW still in Chapter 11

If that is your reasoning, I believe you need to remind yourself who *A's South America member is  Wink
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Stitch
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 3:13 am

Tilton's comments about "(the) system continues to be challenged by consolidation in Europe and Asia" could be informative.

UA is very weak in Europe as it relies on LH and the other European Star partners to handle most of their traffic via LHR and FRA. And while they continue to expand in Asia, they still need NH for intra-Japan and SQ for SE Asia. And LH and SQ are critical to service Africa and India. And with VG in tatters and MX out of the Alliance, that leaves Central and South America very lightly covered.

So UA is very dependent on Star to both bring passengers into their North American network as well as carry North American passengers around the world. And with their domestic competitors like AA, CO, and DL expanding in Europe, Africa, and the Americas, plus all of them and NW starting to slowly expand in UA's stronghold - Asia - I can see where UA feels they need to become more active in controlling their own destiny.

TED's expansion in Central America and the new IAD-FCO service look to be the opening stages...
 
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 3:25 am

Quoting Piercey (Reply 5):
If that is your reasoning, I believe you need to remind yourself who *A's South America member is

As sad as it would be, losing RG completely will have a minimal effect on STAR. Losing DL or NW however would have a huge impact on Skyteam


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SLCUT2777
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 3:29 am

Quoting Piercey (Reply 5):
If that is your reasoning, I believe you need to remind yourself who *A's South America member is

Yes, VG is essentially FUBAR, but the growth areas are China, India and Africa. Who is strongest there?; Star Alliance. For Latin America, OneWorld will hold an edge with "some" competition from SkyTeam and DL.
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dutchjet
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 5:59 am

To be honest, I have no idea what UA's CEO meant by the statement....but one thing is for sure, UA has become too comfortable relying on its alliance partners with respect to longhaul services, especially to Europe, and it is time for UA to re-assert itself in the marketplace. UA is an airline, not a ticketing service for LH and other STAR members, and its necessary and important that UA take more control over it routes, not simply put its codeshare on flights operated by other carriers. Some of UA's recent route announcements are encouraging and seem to indicate UA is moving in the correct direction.

What KL, AF and CX have to do with any of this is beyond me.
 
bobnwa
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 6:05 am

Quoting Stitch (Reply 6):
plus all of them and NW starting to slowly expand in UA's stronghold - Asia -

I think it may be the other way around. United its slowly expanding in NW's stronghold-Asia!!!!
 
worldtraveler
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 8:11 am

AF-KL is threatened because all of its US partners are growing to Europe and beyond - and not to CDG or AMS. Not sure what CX is concerned...

This is just one more statement in Tilton's parade trying to find a future for UA. See the post on UA's future. Whether UA is weak in Europe doesn't change the fact that foreign carriers cannot acquire a large enough stake in US airlines to justify their investment. On the other hand, UA is turning in the weakest performance among the US network airlines. It is not going to happen for investors to give UA to acquire stakes in other airlines.
 
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 8:16 am

Quoting Bobnwa (Reply 10):
United its slowly expanding in NW's stronghold-Asia!!!!

This is somewhat of a truth, yet United is the strongest US carrier in Asia in terms of ASM and RPM, yet NW carries more passengers than United.

It's the respective stronghold for both carriers.
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atlaaron
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 9:22 am

United stands as my favorite carrier, however everything I read including this just says to me that they are in trouble.
 
jacobin777
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 9:25 am

Oddly enough, AA has stated that their One World Alliance codesharing alliance is one of their fastest growing revenue segments (IIRC..it was 20%)...
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baw716
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 11:18 am

Tilton is sending a signal...

What signal is open to discussion, but one thing I've learned about Tilton: If he says something, he is sending a message. Case in point: Exactly one week after Gordon Bethune was very open about a CO/UA merger being a good thing, Tilton states that UA is ready to "discuss" merging with another airline. Coincidence?

Now, Tilton is saying that the alliance relationships are threatened, citing AF and CX as examples of consolidation...consolidation being the word he uses to state that alliances are under threat. Frankly, these are pretty poor examples if this is the point he is making. AF/KL has actually strengthened SkyTeam, CXs acquision of Dragonair brings one of the largest Asian regional carriers into OneWorld. Unless I'm missing something, what he is saying seems to be rather counterintuitive.

Unless, of course, he is sending a signal...

If UA and CO merge (which is frankly what I think will be proposed at some point), then Star Alliance would be in very deep trouble. SkyTeam would be hurt, because I can't see the US government not intervening to force someone out in the event that a CO/UA merger happen and it goes to SkyTeam.

USAirways isn't large enough to fill the void should UA decide to leave and go the way of SkyTeam should CO be the surviving carrier or UA move to SkyTeam; SkyTeam would be a huge force in the US, since with DL, CO(UA) or NW, it would be game over for Star and OneWorld would have a competitor which could hurt it badly. NW holds the ace, since any CO/UA merger would have to be approved by NW (as I recall the arrangement...please correct me if wrong), and NW would want a CO/UA entity to be in SkyTeam.

We do have to remember that the US market is still the single largest airline market in the world, even though the industry is as screwed up as it is (in the US). Would the DOT allow this? Hmm...depends on who controls Congress in 2008 or beyond.

Of course, what I have just said should be taken as an opinion, since UAs departure from Star would come with significant financial costs to the airline...and Star would have to find another partner in the US to fill UAs shoes (which would be next to impossible at this stage). However, if the costs were spread around between the other members of SkyTeam, who knows?

OK..here's the disclaimer: This is a theory...my theory. It has no basis in fact, yet...just some lining up of public comments that creates an interesting scenario.

Now that I've stirred it up a little, anyone have a comment? (all comments welcome, just don't flame me please...I got hit by a car this week...I've been sufficiently bruised up).

My best to all,
baw716
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 11:31 am

While UA has huge *volumes* of transatlantic traffic, they have until now completely missed the boat on the "long-thin" trend of non-stop service from the US to more and more European destinations, instead relying almost solely on huge amounts of LH connecting feed through FRA.

I have little doubt that UA is feeling a yield-squeeze because of the CO, DL and US expansion into smaller European markets like BHX, ARN and TXL.

Oh yeah, and why is it that every time people mention airlines expanding into Europe, they somehow forget that US Airways is third in the number of European destinations offered, behind only DL and CO? US is a player.
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 11:33 am

Quoting Baw716 (Reply 15):
USAirways isn't large enough to fill the void should UA decide to leave and go the way of SkyTeam should CO be the surviving carrier or UA move to SkyTeam; SkyTeam would be a huge force in the US, since with DL, CO(UA) or NW, it would be game over for Star and OneWorld would have a competitor which could hurt it badly. NW holds the ace, since any CO/UA merger would have to be approved by NW (as I recall the arrangement...please correct me if wrong), and NW would want a CO/UA entity to be in SkyTeam.

Why not go the other way?? Surely US joining Skyteam and the merged CO/UA in Star makes more sense. In that way Star gets what it is currently lacking in the Northeast of the US at the moment and that is a major international hub presence in New York. Skyteam gets US which delivers it a large Western US domestic system along with PHL & CLT as a spillover for DL's New York and Atlanta ops plus US can feed Asia flights through Northwest in Detroit.
 
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Stitch
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 11:39 am

Quoting Baw716 (Reply 15):
SkyTeam would be a huge force in the US, since with DL, CO(UA) or NW, it would be game over for Star and OneWorld would have a competitor which could hurt it badly. NW holds the ace, since any CO/UA merger would have to be approved by NW (as I recall the arrangement...please correct me if wrong), and NW would want a CO/UA entity to be in SkyTeam.

Would NW want that? With a combined UA/CO in SkyTeam, that would put pressure on NW where they're strongest - Asia. And then with CO and UA's complimentary route schedules, that could hurt NW's own traffic.

Mind you, a CO/UA Star Alliance member would be a tough competitor for NW, but it would allow NW to better coordinate with DL, if not outright merge with them, and become the single Sky Team member in the US, enjoying all the traffic (much as UA did before US joined Star and still does, even afterwards).
 
Max Q
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 11:47 am

I think this, unfortunately is a posturing statement in support of the CO/UA
potential merger.

Hope I am wrong
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tockeyhockey
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 12:13 pm

i don't know what the "signals" are either. but i do know what UA is pushing really hard really fast to turn IAD into a major competitor for european traffic from the US east coast. could this be part of a strategy to reduce their reliance on LH and OS for traffic to europe?

one thing that has never made sense to me is why US and UA are both in it. perhaps one will drop out.
 
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 12:13 pm

I read the whole ariticle in the FT, he specifically talks about CX taking an equity stake in CA. Since they belong to 2 different alliances, one of them is going to switch. I'd think that since CX now effectively also controls KA that they would be a very interesting partner for China market access and can name their price. If I were Star Alliance, I'd dump Thai and do the necessary to get CX in the fold, or keep them both if it makes sense.

I think that in the event of a merger with CO, UA/CO would be crazy to leave STAR and stay with SKY. I don't see why they would want to do that.
 
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 12:36 pm

Quoting Tockeyhockey (Reply 20):
one thing that has never made sense to me is why US and UA are both in it. perhaps one will drop out.

Because they complement each other's strengths and weaknesses. UA is very weak in the Southeast, Caribbean and Northeast, while US was very weak in the Midwest and West and has no Asian or South American presence.

The HP merger brought US back to the West in a big way, and there's now some significant new head-to-head competition for West Coast connecting traffic. But US is still dependent on UA for Asian access, at least until they get the A332.

Doug Parker has remarked in CrewNews that while UA has the unilateral power to terminate the codeshare and with it, the US Star Alliance membership... he doubted they would, and followed up by saying that even if they did, they would be able to quickly secure another alliance relationship.

You will not see any of the major US airlines "drop out" of alliances entirely, because frequent flyers here now expect internationally-coordinated benefits. If, for example, US was to lose its Star membership and not immediately replace it with OW or ST, there would be a mass exodus of high-revenue Preferred members.

[Edited 2006-10-22 05:42:43]
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kanebear
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 1:15 pm

Unless something's changed, a UA/CO merger will need NW's blessing and there's a snowball's chance in hell that's going to happen. NW holds a special class of CO stock that gives them the right to block change of control transactions, etc.
 
atlaaron
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 1:22 pm

Quoting Kanebear (Reply 23):
Unless something's changed, a UA/CO merger will need NW's blessing and there's a snowball's chance in hell that's going to happen. NW holds a special class of CO stock that gives them the right to block change of control transactions, etc.

Would a three way merger simply be too big?

I would think if you throw enough cash in NW's face they would cave.

I am also though confused as to why UA would be setting IAD up if they were looking to merge with CO as CO already has their east coast/transatlantic fortress at EWR.
 
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SLCUT2777
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 1:28 pm

Quoting Baw716 (Reply 15):
If UA and CO merge (which is frankly what I think will be proposed at some point), then Star Alliance would be in very deep trouble. SkyTeam would be hurt, because I can't see the US government not intervening to force someone out in the event that a CO/UA merger happen and it goes to SkyTeam.

More than likely, and if any of them leave SkyTeam I wouldn't put it past DL. But NW as I recall does have a trump card in that possibility, so the whole thing might be moot. In Star alignment it would be interesting to see who AC would want should UA be out, since AC is the other big player in Star. As I understand it, AC originally wanted DL, but had US pushed off on them by UA to cover the southeast and east coast where UA has a weaker presence.

Quoting PVG (Reply 21):
I think that in the event of a merger with CO, UA/CO would be crazy to leave STAR and stay with SKY. I don't see why they would want to do that.

This I agree with. But at the very least if another significant merger occurs on the USA airlines landscape (CO/UA), there will be a likely game of musical chairs in alliances, involving the big players
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kanebear
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 2:16 pm

Quoting ATLAaron (Reply 24):
Would a three way merger simply be too big?

I would think if you throw enough cash in NW's face they would cave.

I am also though confused as to why UA would be setting IAD up if they were looking to merge with CO as CO already has their east coast/transatlantic fortress at EWR.

You'd never get it past the DOJ. Even UA/NW would violate all sorts of anti-trust regulations. UA/CO/NW would combine the two US carriers with NRT hubs and and reduce or eliminate competition on quite a few routes. F'rinstance, instead of 3 US carriers flying to HKG, you'd only have one.
 
baw716
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 4:03 pm

Kanebear,
Snowball's chance in hell? Not sure about that...
NW does hold the chip, this much is certain. However, if CO/UA merge, NW will put conditions on it that will allow it to compete on a more even footing, and a condition of that would have to be (I believe) dropping Star in favor of SkyTeam.

Sydscott,
Yes, an argument could be made the other way around; however, if we are talking about CO/UA, NW holds the preferred stock that can veto the deal. So, I cannot see a CO/UA merger happening that keeps the combined airline in Star Alliance. Plus, any deal that involves UA will have the DOJ asking for concessions...even though they are a smaller carrier, they still have the strongest network of all the US carriers (worldwide, that is).

Stitch,
NW would absolutely want CO/UA in SkyTeam. That and some concessions regarding Pacific routes (which I think the DOJ will demand anyway because the only two US carriers with beyond rights ex Tokyo are NW and UA). A NW/DL merger would be a very smart idea if CO goes with UA; two strong carriers from four in the same alliance would be an ideal situation. The only question is if a) UA/CO is something that is in the works and b) NW has a very global view of things. This all remains to be seen. Right now, this is all crystal ball stuff.

baw716
David L. Lamb, fmr Area Mgr Alitalia SFO 1998-2002, fmr Regional Analyst SFO-UAL 1992-1998
 
bobnwa
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 10:38 pm

Quoting UnitedNRT (Reply 12):
This is somewhat of a truth, yet United is the strongest US carrier in Asia in terms of ASM and RPM, yet NW carries more passengers than United.

United trans-pacific numbers include Australia which is not Asia. Taking those numbers out, I believe NW is larger in all categories.
 
jacobin777
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RE: UAL CEO: Alliances Under Threat

Sun Oct 22, 2006 11:07 pm

Quoting PVG (Reply 21):
If I were Star Alliance, I'd dump Thai and do the necessary to get CX in the fold, or keep them both if it makes sense.

With CX being a founder (and integral part) of OneWorld, I doubt they will leave OneWorld for Star Alliance...especially given how strong their relation is with AA
"Up the Irons!"
 
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Stitch
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RE: UAL CEO: Alliances Under Threat

Mon Oct 23, 2006 1:07 am

Quoting BAW716 (Reply 27):
NW would absolutely want CO/UA in SkyTeam.

Well that might be the deal-breaker, then. Seeing UA's tightness with LH on trans-Atlantic revenue sharing, I imagine UA does not want to leave Star. While I imagine SQ could care less about such an arrangement with UA (it always looked to me that SQ sees Star as a convenience, not a necessity), perhaps UA and NH could "tie the knot" on revenue-sharing since UA and NH codeshare out of SFO and IAD (to NGO and NRT on UA) and JFK (to NRT on NH).

Also, losing UA to SkyTeam would hurt Star in the North American market. No disrespect to AC or US, but they'd both have to seriously raise their game in terms of North American and International (FRA, LHR, NRT, SFO) destinations served to soak up the UA vaccum. Plus a lot of UA premium fliers will not be pleased to lose SQ and LH for international travel.

If UA merges, I would expect (and, frankly, hope) that remaining in Star Alliance was a pre-requisite and requirement.
 
UAL777UK
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RE: UAL CEO: Alliances Under Threat

Mon Oct 23, 2006 1:37 am

UA IMHO is looking to be the leading player in the merger as opposed to being taken over itself. And assuming that UA does merge, whoever that might be again IMHO I cannot believe for one minute UA will leave Star, a founding member.
Tilton would love to see the Foreigh Ownership restrictions withdrawn and then dangle a very big carrot to LH for a considerable investment.
 
Mcmax
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RE: UAL CEO: Alliances Under Threat

Mon Oct 23, 2006 5:10 am

Quoting Dutchjet (Reply 9):
What KL, AF and CX have to do with any of this is beyond me.

I think what he may be referring to is CX's acquisition of a 10% share (correct me, if I'm wrong with the actual percentage) of Air China, a soon-to-be Star Alliance member. While CA has indicated it continues to seek Star Alliance membership, I think the rumors are still swirling that CA may move its alliance intentions over to oneworld, so as to better coordinate with CX.

Quoting PVG (Reply 21):
If I were Star Alliance, I'd dump Thai and do the necessary to get CX in the fold, or keep them both if it makes sense.

I doubt CX will switch over to Star Alliance. While I may be clouded by my elite loyalty to AA and oneworld, it wouldn't make a lot of sense for CX to move over to Star Alliance. Right now, in oneworld, CX is the only Asian airline feeding Southern and Southeast Asia. Even when JL joins, CX will still capture a lot of the traffic feed from AA. If CX were to join Star Alilance, CX would be losing this high amount of traffic feed to ANA and Singapore (a major rival), and not to mention Thai.

--Max
De minimis non curat lex tamen ego curao
 
N1120A
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RE: UAL CEO: Alliances Under Threat

Mon Oct 23, 2006 5:33 am

Quoting Singapore_Air (Thread starter):
Singapore Airlines Limited is a Member of Star Alliance

They should act like it

Quoting SLCUT2777 (Reply 8):
Yes, VG is essentially FUBAR

I think you mean RG, because VLM has nothing to do with the Star Alliance

Quoting SLCUT2777 (Reply 25):
But NW as I recall does have a trump card in that possibility

NW is the carrier most stuck to SkyTeam at this point because of their special ATI with KLM.
Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
 
kanebear
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RE: UAL CEO: Alliances Under Threat

Mon Oct 23, 2006 6:27 am

Quoting BAW716 (Reply 27):


Kanebear,
Snowball's chance in hell? Not sure about that...
NW does hold the chip, this much is certain. However, if CO/UA merge, NW will put conditions on it that will allow it to compete on a more even footing, and a condition of that would have to be (I believe) dropping Star in favor of SkyTeam.

So the DOJ is going to allow the second and fifth largest carriers to merge AND allow the second, third, fifth and sixth largest carriers to remain in an alliance together?? You think the DOJ had problems with AA/BA? You ain't seen nothin' yet...

Not that I know for certain but I have this sneaking suspicion that either NW or UA would have to divest the NRT hub/5th freedom rights to remain in an alliance (if they even could, aren't there restrictions to transferring those rights?). I seriously doubt either will do that. If they don't, that would mean UA/CO would have to go to *A, which NW doesn't want and wouldn't permit. UA is nothing without it's Asian network (they're weak to Europe, nonexistent in South America) so outside of Australia which NW or CO could serve if they wanted to, what's left???

[Edited 2006-10-22 23:30:10]
 
United777atGU
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RE: UAL CEO: Alliances Under Threat

Mon Oct 23, 2006 3:15 pm

Quoting N1120A (Reply 33):
Quoting Singapore_Air (Thread starter):Singapore Airlines Limited is a Member of Star Alliance
They should act like it

 rotfl   rotfl 

They have a reason to act non-chalant: they're the mature older (brother or sister, your choice) in the Alliance. They know what to do and how to do it.
Speechless
 
changyou
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RE: UAL CEO: Alliances Under Threat

Mon Oct 23, 2006 3:46 pm

What makes you thing SQ is not involve deeply with Star Alliance? We are a major player in connecting from Europe to Australia and New Zealandvv. We might not have many code share flights with SA)">UA but we have very close ties with LH who happened to be one of the founder. All our flights to Japan are code shared with NH. All our flights to Australia and Frankfurt we code share with LH. And now with NZ pulling out from Singapore our flights to New Zealand have NZ code on them. Even all our flight to Seoul we code share with OZ. And soon we'll see SA/SQ codesharing on SIN-JNBvv flights. So what part are we missing here that SQ is not acting up like a Star Alliance member? Just because SQ/TG relationships are more like rivals than partners doesn't make SQ less involve in Star Alliance.

[Edited 2006-10-23 08:51:04]

[Edited 2006-10-23 08:51:33]
 
N1120A
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RE: UAL CEO: Alliances Under Threat

Mon Oct 23, 2006 3:56 pm

Quoting United777atGU (Reply 35):
They have a reason to act non-chalant: they're the mature older (brother or sister, your choice) in the Alliance.

Except that they are one of the younger carriers in the Alliance

Quoting United777atGU (Reply 35):
They know what to do and how to do it.

You mean how to be handed an advantageous situation, and be a quasi-government carrier in a dictatorship that has egregious employment laws?

Quoting CHANGYOU (Reply 36):
We might not have many code share flights with SA)">UA but we have very close ties with LH who happened to be one of the founder.

United is also a founding carrier and beyond the lack of codesharing, the reciprocation of frequent flyer benefits is a joke.
Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
 
SInGAPORE_AIR
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RE: UAL CEO: Alliances Under Threat

Mon Oct 23, 2006 4:00 pm

Quoting N1120A (Reply 37):
United is also a founding carrier and beyond the lack of codesharing, the reciprocation of frequent flyer benefits is a joke.

It's no joke. SIA doesn't codeshare with UA
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changyou
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RE: UAL CEO: Alliances Under Threat

Mon Oct 23, 2006 4:03 pm

Check on the arrival screen in Changi airport...I was surprised they List SQ21 with UA code on it. And that is a non-stop EWR-SIN leg.
 
N1120A
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RE: UAL CEO: Alliances Under Threat

Mon Oct 23, 2006 4:13 pm

Quoting Singapore_Air (Reply 38):
It's no joke. SIA doesn't codeshare with UA

That was the point, or did you miss the coloquialism?

Quoting CHANGYOU (Reply 39):
Check on the arrival screen in Changi airport...I was surprised they List SQ21 with UA code on it. And that is a non-stop EWR-SIN leg.

That has to be a mistake. Amadeus doesn't have a UA codeshare listed on that.
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baw716
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RE: UAL CEO: Alliances Under Threat

Mon Oct 23, 2006 4:30 pm

Kanebear,
About the DOJ...I didn't say anything about the DOJ, I spoke about NW. That said, I think you are absolutely right about one thing...the DOJ will have trouble with NW and UA in one alliance holding all the slots beyond Tokyo. Problem is, I don't think they have the legal right to make them divest something overseas that does not originate here. The traffic rights that NW and UA hold beyond Japan were granted by the Japanese government (albeit as part of an agreement with the US), but I wonder if the DOJ has the legal footing to make them divest something that is flying completely outside the USA (this is a question, not a statement).

There is no way that NW would permit UA to remain in Star Alliance. With CO, Air Mike and UA together in Star, plus the Asian alliances, UA would be in a position to dessimate NW and the guys in MSP know that.

I do think, however, your point is the key to the whole deal getting done or not.

As to UA being the lead carrier in any merger...no other airline in the US is so dumb to get into bed with UA and allow their existing management to run that combined airline. All UAs management did with their Ch 11 filing was downsize and buy time with a deferred loan program. They did not fundamentally change the way they do business, in my opinion, and that is the problem.

Bethune was right...a CO/UA merger would make a lot of sense...with CO management at the helm.

To my UAL friends, I am not critical of the airline, just its current senior management. UA is, operationally, an A+ outfit. I really do hope that you can find a way out of the predicament with which you are now faced. It's really worse than a lot of people realize.

baw716
David L. Lamb, fmr Area Mgr Alitalia SFO 1998-2002, fmr Regional Analyst SFO-UAL 1992-1998
 
COSPN
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RE: UAL CEO: Alliances Under Threat

Mon Oct 23, 2006 6:46 pm

"Unless something's changed, a UA/CO merger will need NW's blessing and there's a snowball's chance in hell that's going to happen. NW holds a special class of CO stock that gives them the right to block change of control transactions, etc."

Thats is true but does not appy if CO takes over UA wich would make more sense..

But really CO is not interested Let UA and CO find their own way in the world
 
SInGAPORE_AIR
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RE: UAL CEO: Alliances Under Threat

Mon Oct 23, 2006 6:59 pm

Quoting N1120A (Reply 40):
That was the point, or did you miss the coloquialism?

It must have been so bad I missed it. Sorry.
Anyone can fly, only the best Soar.
 
bobnwa
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RE: UAL CEO: Alliances Under Threat

Mon Oct 23, 2006 8:17 pm

Quoting Kanebear (Reply 34):
UA is nothing without it's Asian network (they're weak to Europe, nonexistent in South America) so outside of Australia which NW or CO could serve if they wanted to, what's left???

They are the second largest US domestic carrier measured in RPK's. That seems fairly significant to me.
 
UAL777UK
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RE: UAL CEO: Alliances Under Threat

Mon Oct 23, 2006 11:58 pm

Quoting Bobnwa (Reply 44):
They are the second largest US domestic carrier measured in RPK's. That seems fairly significant to me.

 checkmark 
 
Nimish
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RE: UAL CEO: Alliances Under Threat

Tue Oct 24, 2006 12:17 am

Quoting Stitch (Reply 6):
UA is very weak in Europe as it relies on LH and the other European Star partners to handle most of their traffic via LHR and FRA.... And LH and SQ are critical to service Africa and India.

Indeed, while CO, DL, AA have all been starting services to India - UA is happy to rely on the code shares on LH through FRA.

Quoting Dutchjet (Reply 9):
UA has become too comfortable relying on its alliance partners with respect to longhaul services, especially to Europe, and it is time for UA to re-assert itself in the marketplace. UA is an airline, not a ticketing service for LH and other STAR members, and its necessary and important that UA take more control over it routes, not simply put its codeshare on flights operated by other carriers



Quoting FCYTravis (Reply 16):
they have until now completely missed the boat on the "long-thin" trend of non-stop service from the US to more and more European destinations, instead relying almost solely on huge amounts of LH connecting feed through FRA.

Exactly - similar to my earlier response - while AA, CO, DL have non-stop services from their hubs to points in India, UA does not have any presence in India (save their code share with LH). The code share with LH is extremely tilted towards LH (LH in India repeatedly refuse flights on UA metal ex-FRA, insisting intead that all pax fly only on LH metal where there's service).

Quoting N1120A (Reply 33):
They should act like it



Quoting CHANGYOU (Reply 36):
What makes you thing SQ is not involve deeply with Star Alliance?

For instance none of their flights to India code share with other *A carriers at SIN. Hence I can't fly SQ+UA on the India-SIN-USWest coast combination.
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travelin man
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RE: UAL CEO: Alliances Under Threat

Tue Oct 24, 2006 12:33 am

Quoting UAL777UK (Reply 31):
Tilton would love to see the Foreigh Ownership restrictions withdrawn and then dangle a very big carrot to LH for a considerable investment.

THAT is what this is all about. Tilton sees foreign carriers buying each other (with alliance implications, of course), and also knows that UA currently does not have access to that foreign capital.

Tilton is angling for the ownership restrictions to be lifted (a very good idea in my opinion -- If Chrysler can be bought by Daimler, why shouldn't UA be purchased by LH?).

I think the alliance discussion is really just masking the true intent of Tilton's comments.
 
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coronado
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RE: UAL CEO: Alliances Under Threat

Tue Oct 24, 2006 7:22 am

I think Mr. Tilton by by suggesting that alliances are perhaps not the best and are 'under threat' , is trying to get people to start discussions on opening up US carriers to foreign investors. Clearly there is no appetite among domestic investors, airline or otherwise to take over United, much less pay a premium for their stock price. I think by starting to bad mouth alliances it means the alternative to be presented for public consumption is that US carriers need to be investing in overseas carriers, rather than rely on alliance partners, which is short-speak for saying that this will need the reciprocity for foreign carriers to invest in and take over US carriers. His actual objective is to create a greater pool of bidders by adding Asian and European investors so he can sell United for more than it is really worth.
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baw716
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RE: UAL CEO: Alliances Under Threat

Tue Oct 24, 2006 11:55 am

Coronado,
You may have a point...for UA to be saved and stay in Star Alliance, it will need a foreign carrier with lots of money (LH) to come to the rescue.

There are a couple of problems with this however: a) DOJ will never approve it...if they won't give it to Branson to operate Virgin America, why should they give it to LH to buy UA? LH would continue its buying spree and suck up SAS (which has also been rumored) and whala, you have LH controling about 1/2 of the airline seats in Europe, plus about 1/4 of the seats across the Atlantic and about 1/5 of the Pacific. b) It would take more money than LH could afford to spend to get UA out of the debt fix they are in and what they will get back for it is not a great deal more than they have now. It's an awfully high price to pay just to keep the status quo across the Atlantic...

The problem with our respective crystal balls is that they are exceptionally murky. It's hard to know what Tilton is up to; but one thing is for sure...
They have to do something SOON...otherwise, the debt load will be so high that noone will be able to save them. Then we won't have to worry about United's "inflated value", since it will have no value to inflate.

baw716
David L. Lamb, fmr Area Mgr Alitalia SFO 1998-2002, fmr Regional Analyst SFO-UAL 1992-1998