DOT allows US/UA code-share
The proposed marketing agreement between US Airways and United Airlines has been given the go-ahead by the US authorities.
The US Department of Transportation (DOT) has passed the code-sharing agreement, which will allow the airlines to sell seats on each other’s flights. The agreement will provide an essential boost in revenues for both carriers, suffering financially in the wake of September 11 and the downturn in the economy. US Airways filed for Chapter 11 bankruptcy in August, and United has applied to the Air Transportation Stabilization Board (ATSB) for a $1.8 billion loan guarantee.
The code-sharing agreement will give the airlines a 23 percent market share of the US domestic market, 14 percent from United, and 9 percent from US Airways. In order to maintain the agreement, the airlines must abide by certain conditions set by the DOT, which are designed to ensure the carriers compete independently on fares and service levels.
The DOT stipulated that US Airways and United cannot code-share on local traffic on non-stop services operated to the same endpoint from either Dulles International Airport or Reagan Washington National Airport, except for flights between Washington DC and La Guardia/Boston. The DOT added that although there was some overlap between route networks, the agreement would allow the carriers to offer more integrated connecting services, which would benefit the consumer in the long run.
The DOT is yet to make a decision on the proposed marketing agreement between Delta Air Lines, Continental Airlines and Northwest Airlines. If it does give that agreement the green light, it would pose stiff competition to the United/US Airways code-share.
Read our previous stories:
23-September-2002 US airlines seeking government support
27-August-2002 US airlines propose marketing triad
20-August-2002 Analyst predicts US airline failure
12-August-2002 US Airways files for bankruptcy
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