• Q&A's on US Airways and United Marketing Agreement

Corporate Communications Special Bulletin To All Employees

US Airways and United Marketing Agreement Q&A's 

US Airways and United Airlines have entered into a comprehensive marketing agreement, combining the carriers' complementary capabilities to offer more competitive air travel services in the U.S. and around the world. This agreement is a critical piece of US Airways' restructuring plan that received preliminary approval from the Air Transportation Stabilization Board (ATSB). 

While both airlines will remain independent and continue to compete aggressively, this marketing agreement will offer several benefits for customers of both airlines. The agreements include network expansion through reciprocal code share service -- the ability to sell tickets on each others' flights -- frequent flyer programs, airport lounge access and systems development to support a
convenient travel experience for both airline's customers.

US Airways travelers will be able to earn Dividend Miles credit when flying on United, and members of United Airlines' frequent flyer program, Mileage Plus, may earn credit when flying on US Airways. Dividend Miles award destinations will expand to include destinations served by United, including new access to Asia, Latin America and Hawaii, while members of the United program
gain access to US Airways' service, including new access to points in the Caribbean. 

Members of the US Airways Club and the United Red Carpet Club will enjoy access to facilities of both airlines.

A later phase of the agreement also includes provisions for US Airways to seek to join United in the Star Alliance. This will further enhance the value of US Airways' domestic and international route network allowing our customers access to the global marketplace. 

The following are answers to commonly asked questions:

Customer Issues 

Q: What is a "code share?"  

A: Code share involves the use of one airline's two-letter designator (for example, 'US' for US Airways) on flights operated by the other airline. It is the code used by US Airways' reservations department and travel agents when booking a US Airways flight. It also is the designator for airline schedule displays in the computer reservations systems. 

Q: What benefits are there for US Airways' customers with this agreement?  

A: US Airways provides customers with convenient access throughout the eastern U.S., to major markets in Europe and Canada, and to a greatly expanded list of destinations in the Caribbean. By combining with United, our customers will gain new access to markets throughout the world, while retaining the convenience of single-ticket pricing, one-stop check-in, and Dividend Miles members will have greatly enhanced mileage earning opportunities and new award destinations including Hawaii, Asia, and Latin America. 

Q: How will connections between US Airways and United be more convenient?

A: The two airlines will coordinate facilities and systems to allow convenient connections between flights operated by US Airways and flights operated by United. Systems coordination will allow the use of e- tickets, issuance of connecting boarding passes, and automated bag tag issuance that improves efficiency. Facilities will be improved and staff will be trained to assist passengers making connections between US Airways and United. 

Q: When will code share service begin?  

A: US Airways' 'US' code on United flights, and United's 'UA' code on US Airways flights, will be introduced in phases. An announcement will be made soon regarding the first phase of code share, with subsequent phases to be introduced shortly thereafter. 

Relationship with United 

Q: How is this alliance different from a merger?  

A: In a merger, two airlines integrate all aspects of their operations, resulting in a loss of brand identity, integration of organized labor under a single contract, and other changes ultimately resulting in a single airline. Moreover, in a merger, the single surviving company makes all of the competitively sensitive decisions, like pricing and capacity, for the combined firm. A code share alliance aligns the independent products of two airlines to make customer travel more convenient, but the two airlines otherwise remain independent in their operations and their competitive decision-making.

Q: Will this alliance lead to a merger between US Airways and United?  

A: This alliance is not a merger and the parties remain independent competitors. The purpose of this alliance is to strengthen US Airways' ability to compete in our core markets, including where we compete with United, and to become a more competitive independent airline.

Q: Is United making any equity investment in US Airways? Will United have control over us in any way?  

A: No. This is purely a marketing alliance. There is no equity investment by either US Airways or United and no change of control possibilities of any kind are written into this agreement. Both airlines will remain independent and continue to compete aggressively.
We will remain separate companies with separate schedules, pricing and sales forces. 

Q: Will the frequency of flights, destinations and type of equipment change?  

A: US Airways will continue to make independent decisions concerning the routes served, pricing, and equipment. There will not be any reduction of service as a result of the alliance with United, although some schedule adjustments may occur in the future. Over time, we believe the additional benefits to customers will translate into new revenues for US Airways and provide growth opportunities. 

Q: Will US Airways be paid to provide passengers to United?  

A: We only receive revenue from the customer for the segments flown on US Airways, not the United segments.

Q: How does US Airways extract value from the alliance, and how much will it be worth?  

A: First, through code sharing, we will expand the network of US Airways, increasing traffic on flights that connect to United flights serving these new destinations. Similarly, United will feed traffic to US Airways' flights to destinations not otherwise served by United.

Second, reciprocal frequent flyer program participation and other alliance features will allow us to provide seamless services.  

Third, both airlines will be able to better compete in the industry because of our greater combined U.S. and global coverage. 

The exact value from each of these aspects is difficult to separate. However, we anticipate annual revenue increases to exceed approximately $150 million for US Airways once implementation is complete. 

Q: Will US Airways flights be replaced by flights operated by United?  

A: No. For US Airways, the alliance is designed to generate more passengers on US Airways flights, supporting existing flights with improved load factors and building an environment to support new flights in existing or new markets. US Airways earns no revenue for passengers flown on United segments, other than a minor administrative fee, and only earns revenue for the segments flown by customers on US Airways. 

Q: Will US Airways be moving from any of its current airport locations? Will United move from any of its current airport locations? 

A: Airport gate and ticket counter locations play an important role in delivering customer convenience for connections between our two airlines. We will attempt to address airports where the two airlines are not located in close proximity, though airport moves are
often complex, involving many parties. Where airport moves are not possible, we will determine if customer service can be improved through other means. 

We have specifically identified Los Angeles, San Francisco, Boston, and New York La Guardia airports as presenting facilities challenges. 

Q: Why did US Airways choose to work with United? 

A: United is the perfect fit for US Airways. The marketing agreement provides route synergies for both airlines. US Airways will gain broader reach in some parts of the U.S., particularly in the west, as well as new access to parts of Europe, Asia and Latin America.
In turn, United will gain better access to our extensive East Coast network, as well as to our expanding route system in the Caribbean. 

Employee Issues 

Q: Will United employees begin to handle US Airways' flights at cities where they have a large operation, such as Denver, Chicago, Washington Dulles, San Francisco or Los Angeles? 

A: US Airways will continue to handle its own ground operations. 

Q: How will employees be prepared to assist customers with travel on our alliance partners? 

A: As a result of this announcement, work will begin immediately to create a training plan for frontline employees to familiarize them with the new procedures. Employees in the reservations offices, airports, and other public contact positions will receive additional
training specific to their areas of expertise. US Airways' sales personnel will be trained on the various aspects of the alliance, and will jointly develop, with United counterparts, opportunities for our key corporate and agency accounts to maximize their benefit from our alliance. 

As with previous marketing programs, flight attendant announcements will include reference to United as our new marketing partner and, as appropriate, make reference to the corresponding United flight number. No other inflight service changes are anticipated at this time.

Q: Will US Airways employees have flight benefits on United? 

A: Employees will eventually have access to a new ID95 travel discount on United. This will complement our previously announced travel program enhancements that go into effect on August 1. 

More on Alliances 

Q: Why has US Airways waited so long to enter into an alliance? 

A: We have been in discussions with several carriers, looking for the best partner for US Airways and our customers. These discussions were complicated because of the rapidly changing financial situation for the industry following September 11. Subsequently, both airlines concluded that this alliance would bring the greatest benefits. 

Q: Will US Airways be entering other alliance relationships? Will we be forced to end any of our existing relationships?

A: US Airways will retain its recently announced GoCaribbean network relationships, supporting our growth between the U.S. and the Caribbean. This network will be enhanced by our alliance with United, and we anticipate that United will benefit from our GoCaribbean network as well. We are reviewing our other current marketing relationships. We will not enter into any new marketing relationships with another major U.S. airline. 

Q: Does the alliance include benefits for freight shippers?

A: US Airways and United have agreed to explore ways of bringing alliance benefits to our respective cargo customers. We will be making future announcements regarding these opportunities. 

Q: Does our alliance with United, or our membership in the Star Alliance, require any government approval?

A: The U.S. Department of Transportation has the right to review our alliance plans with United. Other U.S. and foreign government filings are anticipated when US Airways begins the process to enter the Star Alliance.

Q: When will US Airways become a full member of the Star Alliance? 

A: US Airways' first priority is to implement a successful alliance with United, in both U.S. and international markets. Once this program is well under way, a process will begin to allow US Airways to become a member of the Star Alliance, which a number of carriers including, among others, Lufthansa, Singapore Airlines, Air New Zealand and Mexicana. This process should begin in the second year of our relationship with United. 

Dividend Miles/Club Benefits for Passengers 

Q: How will our Dividend Miles members benefit from this alliance? 

A: Dividend Miles members will be able to earn mileage credit for every flight operated by United, and its Express affiliates. Our members will also have the ability to redeem Dividend Miles awards for flights to any destination served by United. 

In addition: 

• Preferred members will receive their Preferred bonuses when traveling on United 
• Dividend Miles members will receive mileage and segment credit toward Preferred qualification when flying on United 
• Preferred members will be eligible to use Preferred ticketing lines and Preferred boarding when flying on United 
• Upgrades will be made available to members flying on United 

A: The two programs will remain independent. Each program has evolved in response to market conditions, and will continue to respond to market forces. 

Q: Will Dividend Miles members be allowed to use their upgrades on US Airways code share flights operated by United, or on flights operated and sold as United flights? 

A: Yes, upgrades will be available as a future enhancement to the program once the automation systems and processes are developed. 

Q: Will US Airways Club members have access to United clubs? 

A: Yes. Further details including the start date will be announced shortly.
 
 

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