Posted on: Saturday, August 24, 2002

Delta, Continental, Northwest announce new partnership

Associated Press

The code-sharing agreement expands an existing partnership between No. 4 carrier Northwest and No. 5 Continental by bringing No. 3 Delta into the mix. Industry analysts say consumers will benefit generally but the downside is that the arrangement could suppress competition by low-fare carriers, which could cause ticket prices to rise. Associated Press

ATLANTA (AP) — Delta Air Lines, the nation's third biggest airline, plans to join Continental and Northwest in a broad new partnership aimed at protecting revenue from a proposed rival alliance.

The plan announced Friday expands an existing partnership between No. 4 carrier Northwest and No. 5 Continental by bringing Atlanta-based Delta into the mix.

The airlines plan to sell seats on each other's flights and coordinate schedules and frequent-flier benefits under a "code-share" agreement. The term comes from the practice of putting an airline's two-letter industry code onto another's flights.

The proposal, which still must be approved by federal regulators and pilots' unions, is not a merger. All three airlines remain competitors in pricing and scheduling.

"When fully implemented, this effort will allow our customers to travel more conveniently to more destinations around the world," said Leo F. Mullin, Delta's chairman and chief executive.

Delta, Houston-based Continental and Northwest, based in Eagan, Minn., hope to have the agreement in place by spring 2003.

The partnership comes in response to a similar relationship between United Airlines and US Airways that was announced last month. On Thursday, the Justice Department said it would need another 30 days to review that proposal.

Mullin has said the United-US Airways alliance would pose a direct assault on Delta's revenue because of its heavy concentration on the East Coast, where US Airways' flights are concentrated.

The new partnership would be implemented first in the United States, Canada and the Caribbean, and then later on routes in Europe, Asia and Latin America, Delta announced.

The agreement also provides for discussions to bring Continental and Northwest into the SkyTeam alliance, a code-sharing arrangement that already includes Delta, Aeromexico, Alitalia, Air France, CSA Czech Airlines and Korean Air.

A code-share agreement involving Delta and Northwest also would require the approval of their pilots, who have contract language detailing how much flying can be done with "permitted aircraft."