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United: We’ll Leave Star Alliance If It Helps Merger

Although it’s still pretty unlikely, United would consider dropping out of the Star Alliance if it was necessary to complete a merger, according to this article

United also would consider withdrawing from the Star Alliance, the
global marketing consortium it co-founded, if needed to close a deal.
"You can assume that absolutely everything goes into the mix of
consideration," (CEO Glenn) Tilton said.

I guess they’re serious. 

Other changes are already happening, with the airline announcing plans to sell off its Mileage Plus program, as well as a maintenance base at San Francisco.

They announced yesterday that they would cut about 4% of domestic capacity, while Delta also announced about a 5% drop in domestic capacity for 2008 (while at the same time increasing international flights, where they already do 1/3 of their flying). 

The shrinkage in the number of available seats domestically will be a (the?) big story for the year, as airlines try to figure out the correct mix of flying.  Remember — too little domestic capacity and you’re not feeding enough traffic to your hubs, which leads to fewer international passengers.  It’s an enormously tricky balance, and one that will lead to higher fares for consumers.  At least until a lowfare carrier sees an opportunity in these now thinner routes with high fares.  An AirTran (or whoever) will jump in, lower fares and increase the number of flights.  Which will, of course, be met be the incumbent with lower fares and more flights, which will cause them to lose money.  Rinse.  Repeat.

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  1. jared, what is a good public source for looking at passenger figures?

    Can’t you count on passengers from overseas taking some of the capacity from the lowered hub traffic. And most US based international passengers looking at other factors — the business class passengers you want are not going to care so much about a reduction in domestic capacity (unless you have a really disastrous situation like in Newark, where you have to schedule 5+ hours of lay over time to make an international flight)

  2. Hi Charlie,

    Public airlines publish passenger figures in aggregate with their financial results.

    The government also has a website with some of the figures here:
    http://www.bts.gov/programs/airline_information/air_carrier_traffic_statistics/

    To your point about business class passengers not caring about reduced capacity — they will care if there are fewer connecting flights to international flights (I suppose they also may care if there are fewer biz class seats on the domestic portion, but that’s probably not a huge issue.) My biggest fear would be the reduction in feeder traffic meeting the international flights, which would put fewer people on the more profitable international legs. It hasn’t happened yet, but it’s something to watch for.

  3. well this is useful… (at least for me)

    very thanks

    ——————————–
    vacation world

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