Originally created 08/24/02

Delta joins airline alliance



ATLANTA - Passengers on Delta, Northwest and Continental could seamlessly transfer flights between airlines to get to Asia, Europe and Latin America under an agreement announced Friday.

The partnership expands an existing arrangement between No. 4 carrier Northwest and No. 5 Continental by adding Atlanta-based Delta, the third-largest airline in the country.

The airlines would sell seats on one another's flights, and travelers would be able to get frequent-flier miles on any of the airlines under the "code share" agreement - a term that comes from the practice of putting an airline's two-letter industry code onto another's flights.

Delta, Continental and Northwest hope to have the agreement in place by spring.

The 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.

Leo F. Mullin, Delta's chairman and chief executive, said the agreement will allow each airline to add at least 650 daily domestic flights to their current totals.

"Delta's customers will benefit from expanded travel options through ... additional domestic service to the Southwest and Midwest and internationally," Mr. Mullin wrote in an internal memo.

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

The U.S. Department of Transportation will consider over the next 30 days whether the deal decreases competition or drives up prices, spokesman Bill Mosley said.

The agreement is meant to counter a similar proposed alliance between No. 2 United Airlines and No. 7 US Airways announced last month.

Delta 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 Justice Department said Thursday it would need 30 days to review the code-sharing deal between United Airlines and US Airways.

Major airlines have been looking for a new revenue source since Sept. 11 and after losing $1.4 billion in the second quarter. US Airways recently filed for bankruptcy protection, and Continental has said it would reduce capacity.

"Code-sharing is a very inexpensive and efficient way to extend your route network," said Rich Bittenbender, an airline analyst with Moody's Investor Service. "When someone calls up Continental ... they can now say, 'We have a flight going there, it's not a problem.' That creates better customer satisfaction and the ability to serve more passengers."

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.

The Delta chapter of the Air Line Pilots Association will discuss whether to approve the arrangement at its meeting Monday in Cincinnati, spokeswoman Karen Miller said.

"We want to make sure that the other airlines ... are not growing at the expense of Delta," she said.

CODE SHARING: HOW IT WORKS

The airlines offer seats on selected flights to other carriers at wholesale prices. The prices can be raised or reduced by the booking airline. Scheduling, booking, baggage claim and flight routes are coordinated so the only difference customers will notice is the logo on the plane when they transfer.