Continental unsure of launch date for Star joint venture

Washington DC
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Members of the Star Alliance that recently gained final approval from US regulators to create a transatlantic joint venture have not firmed up a launch date for the arrangement.

Today during an earnings call Continental chief executive officer Larry Kellner explained that since his carrier, along with Air Canada, Lufthansa and United, only won endorsement from the US Transportation Department on 10 July, "last week we were able to have the first discussions about how we roll that [the joint venture] out".

While the airlines are pleased to have approval Kellner cautions that the carriers "aren't ready yet to project when we'll be up and running".

He explains the carriers have agreed on the structure of the agreement, but the framework for the joint venture needs to be developed. "There are a lot of details to work out, then you've got implementation issues as well," says Kellner.

Continental's chief executive explains to analysts that "hopefully by next quarter we'll have a handle on that".

The Houston-headquartered carrier plans to officially exit SkyTeam on 24 October. Kellner says Continental cannot market or book Star flights until after that date. The carrier is taking bookings for November and December, but cannot market flights for either alliance.

Continental's codeshares with Delta and Northwest largely drop off at the end of this month, Kellner explains. "So we do have a little revenue risk. I think we are managing that as effectively as we can."

In the long term Continental's entry eliminates some redundant connectivity created in the New York market as Delta grows its presence at JFK, says carrier chief marketing officer Jim Compton. Continental has a hub and is the largest carrier at Newark airport. "For Star, they don't have a New York player, we're excited about the connectivity we can offer Star partners through New York," Compton explains.

"Take that same logic into Houston," he notes, explaining Star doesn't currently have a partner to connect flights from Europe to destinations in Latin America, both Mexico and Central America and down into the Southern Cone.

"In SkyTeam as Delta's network in Atlanta has grown that has also become somewhat redundant," says Compton.