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Continental AirlinesCustomer Analysis
Chris Dwyer Meghan Murphy Kassonga Mwamba
Overviewbull Industry Trends
bull Product Markets
bull Domestic vs International
bull Types of Passengers
bull Market OpportunitiesStrategies
bull Potential Problems
bull Future
Trends ~ Airline Industrybull Rapid Growth in International Demand
bull Steady Growth in Domestic Demand
bull Increased On-Line Distribution
bull Decrease in Airline Capacity (due to bankruptcy)
bull Increase Price per Flight
bull Continued Pressure from LCCs in Domestic Market
bull Alliance Agreements
Positive Growth2
bull Continued Growth for 32 of the past 35 yearsndash 1991 ~ Desert Stormndash 2001-2002 ~ 911 Terrorist Attacks
bull Continued Economic Growth
bull Continued Increase in World Trade
See Source 2
Boeing Current Market Outlook 2005 Demand for Air Travel
Product Marketsbull Domestic
ndash Point to Point Routesndash Short-Haul Flightsndash Highly Price Sensitive customer segmentndash Increased Competition From LCCsndash Lower RASM
bull Internationalndash Network-Hub Routesndash Long-Haul Flightsndash Less Price Sensitive Customer Segmentndash Less Industry Competitionndash Higher RASM
Domestic vs Internationalbull 2004 International Growth
Increased 139 vs Domestic Growth 4812
bull ldquoMajorsrdquo Shifting to More Profitable International Segments
bull Typically Less Competition for International Travel
bull Growing Demand in Latin American Atlantic amp Pacific Segments
bull International Yields Higher RPSM
Revenue Percentage by Segment (Intl)
14172023262932353841
2001 2002 2003 2004 2005
American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines
Revenue Percentage by Segment (Domestic)
50545862667074788286
2001 2002 2003 2004 2005
American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines
Data taken from 05rsquo-02rsquo 10K reports See Sources 1561014
See Source 12
Types of Passengers
bull Leisure TravelerPreferences
Lower Price Willing to Sacrifice Service Limited Route Needs
bull Business Traveler34 of Domestic Revenue in 2000 (Only 10 of
Capacity)11
Preferences Price Sensitivity Driven by Economic Conditions Higher Class of Service Seeing Shift Towards LCCs
See Source 11
Frequent Flyer (FF) ~ Demographics
3
A person that takes AT LEAST 4 flights per year (17 Million Americans)
bull Average FF takes 9 flights per year
bull Only 18 of Total Airline Travelers BUT Account for 58 of ALL Flights Taken
bull 68 of FF have College or Graduate Degree
bull 75 are Employed Full or Part-time
bull Majority are Male ~ Accounting for 58 of all FFndash 61 of those are between the ages of 25-54 years of
age
See Source 3
Frequent Flyer Programs
bull American Airlinesndash AAdvantage Miles
bull Continental Airlinesndash OnePass
bull United Airlinesndash Mileage Plus
bull Southwest Airlinesndash Rapid Rewards
Market Opportunities
bull International Segmentsndash PacificAsiandash Latin Americandash AtlanticEurope
bull Frequent Flyer Programsndash Travel Industry Alliancesndash Miles Auctions
bull Higher Level of Servicendash Concierge
International Opportunitiesbull Continental Has More International Exposure
than any of the Other ldquoMajorsrdquo13
bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and
AsiaPacific
bull Purchasing Power Growth of US Hispanic and Latin American Market Segment
bull International Revenues Grew 29 in 200513
See Source 13
International Strategies
bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13
bull European Routes to Lower-Traffic European Airports8
bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market
bull Launch of Spanish-Language Web SiteSee Source 13
See Source 8
FF Opportunities11
bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments
bull Show High Level of Brand Loyalty
bull Focus on Online Booking
See Source 11
FF Strategies
bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network
bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities
bull Miles Auctions
Service Opportunities
bull Differentiation with High Service Levels
bull Adding Service When Other Airlines Cutting Service Costs
bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers
Service Strategies
bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers
bull Enhancing In-Flight Reports for Flight Attendants4
bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved
Service11
See Source 4
See Source 11
Potential Problems
bull Increased Globalization
bull Liberalization of International Regulation
bull Domestic LCCs
bull Potential Terrorists Attacks
Future Strategy
bull EnhanceExpand Transcontinental Routes
bull Continued Customer Service Focus
bull Strengthen Alliances for Customer Convenience
bull Focus on Top Revenue Producing Segments
References1 American Airlines February 24 2006 2005 Annual Report [on-line]
httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061
2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006
3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006
4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006
5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062
6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063
1 Same site used for 2003 Annual Report
2 Same site used for 2003 Annual Report
3 Same site used for 2003 Annual Report
References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines
Initialing with Outperform Due to Low Costs amp Strong International Presence
8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom
9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005
10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064
11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future
12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005
13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies
14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065
4 Same site used for 2002 Annual Report
5 Same site used for 2003 Annual Report
Overviewbull Industry Trends
bull Product Markets
bull Domestic vs International
bull Types of Passengers
bull Market OpportunitiesStrategies
bull Potential Problems
bull Future
Trends ~ Airline Industrybull Rapid Growth in International Demand
bull Steady Growth in Domestic Demand
bull Increased On-Line Distribution
bull Decrease in Airline Capacity (due to bankruptcy)
bull Increase Price per Flight
bull Continued Pressure from LCCs in Domestic Market
bull Alliance Agreements
Positive Growth2
bull Continued Growth for 32 of the past 35 yearsndash 1991 ~ Desert Stormndash 2001-2002 ~ 911 Terrorist Attacks
bull Continued Economic Growth
bull Continued Increase in World Trade
See Source 2
Boeing Current Market Outlook 2005 Demand for Air Travel
Product Marketsbull Domestic
ndash Point to Point Routesndash Short-Haul Flightsndash Highly Price Sensitive customer segmentndash Increased Competition From LCCsndash Lower RASM
bull Internationalndash Network-Hub Routesndash Long-Haul Flightsndash Less Price Sensitive Customer Segmentndash Less Industry Competitionndash Higher RASM
Domestic vs Internationalbull 2004 International Growth
Increased 139 vs Domestic Growth 4812
bull ldquoMajorsrdquo Shifting to More Profitable International Segments
bull Typically Less Competition for International Travel
bull Growing Demand in Latin American Atlantic amp Pacific Segments
bull International Yields Higher RPSM
Revenue Percentage by Segment (Intl)
14172023262932353841
2001 2002 2003 2004 2005
American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines
Revenue Percentage by Segment (Domestic)
50545862667074788286
2001 2002 2003 2004 2005
American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines
Data taken from 05rsquo-02rsquo 10K reports See Sources 1561014
See Source 12
Types of Passengers
bull Leisure TravelerPreferences
Lower Price Willing to Sacrifice Service Limited Route Needs
bull Business Traveler34 of Domestic Revenue in 2000 (Only 10 of
Capacity)11
Preferences Price Sensitivity Driven by Economic Conditions Higher Class of Service Seeing Shift Towards LCCs
See Source 11
Frequent Flyer (FF) ~ Demographics
3
A person that takes AT LEAST 4 flights per year (17 Million Americans)
bull Average FF takes 9 flights per year
bull Only 18 of Total Airline Travelers BUT Account for 58 of ALL Flights Taken
bull 68 of FF have College or Graduate Degree
bull 75 are Employed Full or Part-time
bull Majority are Male ~ Accounting for 58 of all FFndash 61 of those are between the ages of 25-54 years of
age
See Source 3
Frequent Flyer Programs
bull American Airlinesndash AAdvantage Miles
bull Continental Airlinesndash OnePass
bull United Airlinesndash Mileage Plus
bull Southwest Airlinesndash Rapid Rewards
Market Opportunities
bull International Segmentsndash PacificAsiandash Latin Americandash AtlanticEurope
bull Frequent Flyer Programsndash Travel Industry Alliancesndash Miles Auctions
bull Higher Level of Servicendash Concierge
International Opportunitiesbull Continental Has More International Exposure
than any of the Other ldquoMajorsrdquo13
bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and
AsiaPacific
bull Purchasing Power Growth of US Hispanic and Latin American Market Segment
bull International Revenues Grew 29 in 200513
See Source 13
International Strategies
bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13
bull European Routes to Lower-Traffic European Airports8
bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market
bull Launch of Spanish-Language Web SiteSee Source 13
See Source 8
FF Opportunities11
bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments
bull Show High Level of Brand Loyalty
bull Focus on Online Booking
See Source 11
FF Strategies
bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network
bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities
bull Miles Auctions
Service Opportunities
bull Differentiation with High Service Levels
bull Adding Service When Other Airlines Cutting Service Costs
bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers
Service Strategies
bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers
bull Enhancing In-Flight Reports for Flight Attendants4
bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved
Service11
See Source 4
See Source 11
Potential Problems
bull Increased Globalization
bull Liberalization of International Regulation
bull Domestic LCCs
bull Potential Terrorists Attacks
Future Strategy
bull EnhanceExpand Transcontinental Routes
bull Continued Customer Service Focus
bull Strengthen Alliances for Customer Convenience
bull Focus on Top Revenue Producing Segments
References1 American Airlines February 24 2006 2005 Annual Report [on-line]
httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061
2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006
3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006
4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006
5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062
6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063
1 Same site used for 2003 Annual Report
2 Same site used for 2003 Annual Report
3 Same site used for 2003 Annual Report
References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines
Initialing with Outperform Due to Low Costs amp Strong International Presence
8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom
9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005
10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064
11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future
12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005
13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies
14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065
4 Same site used for 2002 Annual Report
5 Same site used for 2003 Annual Report
Trends ~ Airline Industrybull Rapid Growth in International Demand
bull Steady Growth in Domestic Demand
bull Increased On-Line Distribution
bull Decrease in Airline Capacity (due to bankruptcy)
bull Increase Price per Flight
bull Continued Pressure from LCCs in Domestic Market
bull Alliance Agreements
Positive Growth2
bull Continued Growth for 32 of the past 35 yearsndash 1991 ~ Desert Stormndash 2001-2002 ~ 911 Terrorist Attacks
bull Continued Economic Growth
bull Continued Increase in World Trade
See Source 2
Boeing Current Market Outlook 2005 Demand for Air Travel
Product Marketsbull Domestic
ndash Point to Point Routesndash Short-Haul Flightsndash Highly Price Sensitive customer segmentndash Increased Competition From LCCsndash Lower RASM
bull Internationalndash Network-Hub Routesndash Long-Haul Flightsndash Less Price Sensitive Customer Segmentndash Less Industry Competitionndash Higher RASM
Domestic vs Internationalbull 2004 International Growth
Increased 139 vs Domestic Growth 4812
bull ldquoMajorsrdquo Shifting to More Profitable International Segments
bull Typically Less Competition for International Travel
bull Growing Demand in Latin American Atlantic amp Pacific Segments
bull International Yields Higher RPSM
Revenue Percentage by Segment (Intl)
14172023262932353841
2001 2002 2003 2004 2005
American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines
Revenue Percentage by Segment (Domestic)
50545862667074788286
2001 2002 2003 2004 2005
American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines
Data taken from 05rsquo-02rsquo 10K reports See Sources 1561014
See Source 12
Types of Passengers
bull Leisure TravelerPreferences
Lower Price Willing to Sacrifice Service Limited Route Needs
bull Business Traveler34 of Domestic Revenue in 2000 (Only 10 of
Capacity)11
Preferences Price Sensitivity Driven by Economic Conditions Higher Class of Service Seeing Shift Towards LCCs
See Source 11
Frequent Flyer (FF) ~ Demographics
3
A person that takes AT LEAST 4 flights per year (17 Million Americans)
bull Average FF takes 9 flights per year
bull Only 18 of Total Airline Travelers BUT Account for 58 of ALL Flights Taken
bull 68 of FF have College or Graduate Degree
bull 75 are Employed Full or Part-time
bull Majority are Male ~ Accounting for 58 of all FFndash 61 of those are between the ages of 25-54 years of
age
See Source 3
Frequent Flyer Programs
bull American Airlinesndash AAdvantage Miles
bull Continental Airlinesndash OnePass
bull United Airlinesndash Mileage Plus
bull Southwest Airlinesndash Rapid Rewards
Market Opportunities
bull International Segmentsndash PacificAsiandash Latin Americandash AtlanticEurope
bull Frequent Flyer Programsndash Travel Industry Alliancesndash Miles Auctions
bull Higher Level of Servicendash Concierge
International Opportunitiesbull Continental Has More International Exposure
than any of the Other ldquoMajorsrdquo13
bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and
AsiaPacific
bull Purchasing Power Growth of US Hispanic and Latin American Market Segment
bull International Revenues Grew 29 in 200513
See Source 13
International Strategies
bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13
bull European Routes to Lower-Traffic European Airports8
bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market
bull Launch of Spanish-Language Web SiteSee Source 13
See Source 8
FF Opportunities11
bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments
bull Show High Level of Brand Loyalty
bull Focus on Online Booking
See Source 11
FF Strategies
bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network
bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities
bull Miles Auctions
Service Opportunities
bull Differentiation with High Service Levels
bull Adding Service When Other Airlines Cutting Service Costs
bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers
Service Strategies
bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers
bull Enhancing In-Flight Reports for Flight Attendants4
bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved
Service11
See Source 4
See Source 11
Potential Problems
bull Increased Globalization
bull Liberalization of International Regulation
bull Domestic LCCs
bull Potential Terrorists Attacks
Future Strategy
bull EnhanceExpand Transcontinental Routes
bull Continued Customer Service Focus
bull Strengthen Alliances for Customer Convenience
bull Focus on Top Revenue Producing Segments
References1 American Airlines February 24 2006 2005 Annual Report [on-line]
httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061
2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006
3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006
4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006
5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062
6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063
1 Same site used for 2003 Annual Report
2 Same site used for 2003 Annual Report
3 Same site used for 2003 Annual Report
References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines
Initialing with Outperform Due to Low Costs amp Strong International Presence
8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom
9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005
10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064
11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future
12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005
13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies
14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065
4 Same site used for 2002 Annual Report
5 Same site used for 2003 Annual Report
Positive Growth2
bull Continued Growth for 32 of the past 35 yearsndash 1991 ~ Desert Stormndash 2001-2002 ~ 911 Terrorist Attacks
bull Continued Economic Growth
bull Continued Increase in World Trade
See Source 2
Boeing Current Market Outlook 2005 Demand for Air Travel
Product Marketsbull Domestic
ndash Point to Point Routesndash Short-Haul Flightsndash Highly Price Sensitive customer segmentndash Increased Competition From LCCsndash Lower RASM
bull Internationalndash Network-Hub Routesndash Long-Haul Flightsndash Less Price Sensitive Customer Segmentndash Less Industry Competitionndash Higher RASM
Domestic vs Internationalbull 2004 International Growth
Increased 139 vs Domestic Growth 4812
bull ldquoMajorsrdquo Shifting to More Profitable International Segments
bull Typically Less Competition for International Travel
bull Growing Demand in Latin American Atlantic amp Pacific Segments
bull International Yields Higher RPSM
Revenue Percentage by Segment (Intl)
14172023262932353841
2001 2002 2003 2004 2005
American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines
Revenue Percentage by Segment (Domestic)
50545862667074788286
2001 2002 2003 2004 2005
American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines
Data taken from 05rsquo-02rsquo 10K reports See Sources 1561014
See Source 12
Types of Passengers
bull Leisure TravelerPreferences
Lower Price Willing to Sacrifice Service Limited Route Needs
bull Business Traveler34 of Domestic Revenue in 2000 (Only 10 of
Capacity)11
Preferences Price Sensitivity Driven by Economic Conditions Higher Class of Service Seeing Shift Towards LCCs
See Source 11
Frequent Flyer (FF) ~ Demographics
3
A person that takes AT LEAST 4 flights per year (17 Million Americans)
bull Average FF takes 9 flights per year
bull Only 18 of Total Airline Travelers BUT Account for 58 of ALL Flights Taken
bull 68 of FF have College or Graduate Degree
bull 75 are Employed Full or Part-time
bull Majority are Male ~ Accounting for 58 of all FFndash 61 of those are between the ages of 25-54 years of
age
See Source 3
Frequent Flyer Programs
bull American Airlinesndash AAdvantage Miles
bull Continental Airlinesndash OnePass
bull United Airlinesndash Mileage Plus
bull Southwest Airlinesndash Rapid Rewards
Market Opportunities
bull International Segmentsndash PacificAsiandash Latin Americandash AtlanticEurope
bull Frequent Flyer Programsndash Travel Industry Alliancesndash Miles Auctions
bull Higher Level of Servicendash Concierge
International Opportunitiesbull Continental Has More International Exposure
than any of the Other ldquoMajorsrdquo13
bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and
AsiaPacific
bull Purchasing Power Growth of US Hispanic and Latin American Market Segment
bull International Revenues Grew 29 in 200513
See Source 13
International Strategies
bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13
bull European Routes to Lower-Traffic European Airports8
bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market
bull Launch of Spanish-Language Web SiteSee Source 13
See Source 8
FF Opportunities11
bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments
bull Show High Level of Brand Loyalty
bull Focus on Online Booking
See Source 11
FF Strategies
bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network
bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities
bull Miles Auctions
Service Opportunities
bull Differentiation with High Service Levels
bull Adding Service When Other Airlines Cutting Service Costs
bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers
Service Strategies
bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers
bull Enhancing In-Flight Reports for Flight Attendants4
bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved
Service11
See Source 4
See Source 11
Potential Problems
bull Increased Globalization
bull Liberalization of International Regulation
bull Domestic LCCs
bull Potential Terrorists Attacks
Future Strategy
bull EnhanceExpand Transcontinental Routes
bull Continued Customer Service Focus
bull Strengthen Alliances for Customer Convenience
bull Focus on Top Revenue Producing Segments
References1 American Airlines February 24 2006 2005 Annual Report [on-line]
httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061
2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006
3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006
4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006
5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062
6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063
1 Same site used for 2003 Annual Report
2 Same site used for 2003 Annual Report
3 Same site used for 2003 Annual Report
References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines
Initialing with Outperform Due to Low Costs amp Strong International Presence
8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom
9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005
10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064
11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future
12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005
13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies
14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065
4 Same site used for 2002 Annual Report
5 Same site used for 2003 Annual Report
Product Marketsbull Domestic
ndash Point to Point Routesndash Short-Haul Flightsndash Highly Price Sensitive customer segmentndash Increased Competition From LCCsndash Lower RASM
bull Internationalndash Network-Hub Routesndash Long-Haul Flightsndash Less Price Sensitive Customer Segmentndash Less Industry Competitionndash Higher RASM
Domestic vs Internationalbull 2004 International Growth
Increased 139 vs Domestic Growth 4812
bull ldquoMajorsrdquo Shifting to More Profitable International Segments
bull Typically Less Competition for International Travel
bull Growing Demand in Latin American Atlantic amp Pacific Segments
bull International Yields Higher RPSM
Revenue Percentage by Segment (Intl)
14172023262932353841
2001 2002 2003 2004 2005
American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines
Revenue Percentage by Segment (Domestic)
50545862667074788286
2001 2002 2003 2004 2005
American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines
Data taken from 05rsquo-02rsquo 10K reports See Sources 1561014
See Source 12
Types of Passengers
bull Leisure TravelerPreferences
Lower Price Willing to Sacrifice Service Limited Route Needs
bull Business Traveler34 of Domestic Revenue in 2000 (Only 10 of
Capacity)11
Preferences Price Sensitivity Driven by Economic Conditions Higher Class of Service Seeing Shift Towards LCCs
See Source 11
Frequent Flyer (FF) ~ Demographics
3
A person that takes AT LEAST 4 flights per year (17 Million Americans)
bull Average FF takes 9 flights per year
bull Only 18 of Total Airline Travelers BUT Account for 58 of ALL Flights Taken
bull 68 of FF have College or Graduate Degree
bull 75 are Employed Full or Part-time
bull Majority are Male ~ Accounting for 58 of all FFndash 61 of those are between the ages of 25-54 years of
age
See Source 3
Frequent Flyer Programs
bull American Airlinesndash AAdvantage Miles
bull Continental Airlinesndash OnePass
bull United Airlinesndash Mileage Plus
bull Southwest Airlinesndash Rapid Rewards
Market Opportunities
bull International Segmentsndash PacificAsiandash Latin Americandash AtlanticEurope
bull Frequent Flyer Programsndash Travel Industry Alliancesndash Miles Auctions
bull Higher Level of Servicendash Concierge
International Opportunitiesbull Continental Has More International Exposure
than any of the Other ldquoMajorsrdquo13
bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and
AsiaPacific
bull Purchasing Power Growth of US Hispanic and Latin American Market Segment
bull International Revenues Grew 29 in 200513
See Source 13
International Strategies
bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13
bull European Routes to Lower-Traffic European Airports8
bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market
bull Launch of Spanish-Language Web SiteSee Source 13
See Source 8
FF Opportunities11
bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments
bull Show High Level of Brand Loyalty
bull Focus on Online Booking
See Source 11
FF Strategies
bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network
bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities
bull Miles Auctions
Service Opportunities
bull Differentiation with High Service Levels
bull Adding Service When Other Airlines Cutting Service Costs
bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers
Service Strategies
bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers
bull Enhancing In-Flight Reports for Flight Attendants4
bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved
Service11
See Source 4
See Source 11
Potential Problems
bull Increased Globalization
bull Liberalization of International Regulation
bull Domestic LCCs
bull Potential Terrorists Attacks
Future Strategy
bull EnhanceExpand Transcontinental Routes
bull Continued Customer Service Focus
bull Strengthen Alliances for Customer Convenience
bull Focus on Top Revenue Producing Segments
References1 American Airlines February 24 2006 2005 Annual Report [on-line]
httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061
2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006
3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006
4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006
5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062
6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063
1 Same site used for 2003 Annual Report
2 Same site used for 2003 Annual Report
3 Same site used for 2003 Annual Report
References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines
Initialing with Outperform Due to Low Costs amp Strong International Presence
8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom
9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005
10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064
11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future
12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005
13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies
14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065
4 Same site used for 2002 Annual Report
5 Same site used for 2003 Annual Report
Domestic vs Internationalbull 2004 International Growth
Increased 139 vs Domestic Growth 4812
bull ldquoMajorsrdquo Shifting to More Profitable International Segments
bull Typically Less Competition for International Travel
bull Growing Demand in Latin American Atlantic amp Pacific Segments
bull International Yields Higher RPSM
Revenue Percentage by Segment (Intl)
14172023262932353841
2001 2002 2003 2004 2005
American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines
Revenue Percentage by Segment (Domestic)
50545862667074788286
2001 2002 2003 2004 2005
American AirlinesContinental AirlinesUnited AirlinesDelta AirlinesNorthwest Airlines
Data taken from 05rsquo-02rsquo 10K reports See Sources 1561014
See Source 12
Types of Passengers
bull Leisure TravelerPreferences
Lower Price Willing to Sacrifice Service Limited Route Needs
bull Business Traveler34 of Domestic Revenue in 2000 (Only 10 of
Capacity)11
Preferences Price Sensitivity Driven by Economic Conditions Higher Class of Service Seeing Shift Towards LCCs
See Source 11
Frequent Flyer (FF) ~ Demographics
3
A person that takes AT LEAST 4 flights per year (17 Million Americans)
bull Average FF takes 9 flights per year
bull Only 18 of Total Airline Travelers BUT Account for 58 of ALL Flights Taken
bull 68 of FF have College or Graduate Degree
bull 75 are Employed Full or Part-time
bull Majority are Male ~ Accounting for 58 of all FFndash 61 of those are between the ages of 25-54 years of
age
See Source 3
Frequent Flyer Programs
bull American Airlinesndash AAdvantage Miles
bull Continental Airlinesndash OnePass
bull United Airlinesndash Mileage Plus
bull Southwest Airlinesndash Rapid Rewards
Market Opportunities
bull International Segmentsndash PacificAsiandash Latin Americandash AtlanticEurope
bull Frequent Flyer Programsndash Travel Industry Alliancesndash Miles Auctions
bull Higher Level of Servicendash Concierge
International Opportunitiesbull Continental Has More International Exposure
than any of the Other ldquoMajorsrdquo13
bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and
AsiaPacific
bull Purchasing Power Growth of US Hispanic and Latin American Market Segment
bull International Revenues Grew 29 in 200513
See Source 13
International Strategies
bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13
bull European Routes to Lower-Traffic European Airports8
bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market
bull Launch of Spanish-Language Web SiteSee Source 13
See Source 8
FF Opportunities11
bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments
bull Show High Level of Brand Loyalty
bull Focus on Online Booking
See Source 11
FF Strategies
bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network
bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities
bull Miles Auctions
Service Opportunities
bull Differentiation with High Service Levels
bull Adding Service When Other Airlines Cutting Service Costs
bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers
Service Strategies
bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers
bull Enhancing In-Flight Reports for Flight Attendants4
bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved
Service11
See Source 4
See Source 11
Potential Problems
bull Increased Globalization
bull Liberalization of International Regulation
bull Domestic LCCs
bull Potential Terrorists Attacks
Future Strategy
bull EnhanceExpand Transcontinental Routes
bull Continued Customer Service Focus
bull Strengthen Alliances for Customer Convenience
bull Focus on Top Revenue Producing Segments
References1 American Airlines February 24 2006 2005 Annual Report [on-line]
httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061
2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006
3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006
4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006
5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062
6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063
1 Same site used for 2003 Annual Report
2 Same site used for 2003 Annual Report
3 Same site used for 2003 Annual Report
References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines
Initialing with Outperform Due to Low Costs amp Strong International Presence
8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom
9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005
10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064
11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future
12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005
13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies
14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065
4 Same site used for 2002 Annual Report
5 Same site used for 2003 Annual Report
Types of Passengers
bull Leisure TravelerPreferences
Lower Price Willing to Sacrifice Service Limited Route Needs
bull Business Traveler34 of Domestic Revenue in 2000 (Only 10 of
Capacity)11
Preferences Price Sensitivity Driven by Economic Conditions Higher Class of Service Seeing Shift Towards LCCs
See Source 11
Frequent Flyer (FF) ~ Demographics
3
A person that takes AT LEAST 4 flights per year (17 Million Americans)
bull Average FF takes 9 flights per year
bull Only 18 of Total Airline Travelers BUT Account for 58 of ALL Flights Taken
bull 68 of FF have College or Graduate Degree
bull 75 are Employed Full or Part-time
bull Majority are Male ~ Accounting for 58 of all FFndash 61 of those are between the ages of 25-54 years of
age
See Source 3
Frequent Flyer Programs
bull American Airlinesndash AAdvantage Miles
bull Continental Airlinesndash OnePass
bull United Airlinesndash Mileage Plus
bull Southwest Airlinesndash Rapid Rewards
Market Opportunities
bull International Segmentsndash PacificAsiandash Latin Americandash AtlanticEurope
bull Frequent Flyer Programsndash Travel Industry Alliancesndash Miles Auctions
bull Higher Level of Servicendash Concierge
International Opportunitiesbull Continental Has More International Exposure
than any of the Other ldquoMajorsrdquo13
bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and
AsiaPacific
bull Purchasing Power Growth of US Hispanic and Latin American Market Segment
bull International Revenues Grew 29 in 200513
See Source 13
International Strategies
bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13
bull European Routes to Lower-Traffic European Airports8
bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market
bull Launch of Spanish-Language Web SiteSee Source 13
See Source 8
FF Opportunities11
bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments
bull Show High Level of Brand Loyalty
bull Focus on Online Booking
See Source 11
FF Strategies
bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network
bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities
bull Miles Auctions
Service Opportunities
bull Differentiation with High Service Levels
bull Adding Service When Other Airlines Cutting Service Costs
bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers
Service Strategies
bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers
bull Enhancing In-Flight Reports for Flight Attendants4
bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved
Service11
See Source 4
See Source 11
Potential Problems
bull Increased Globalization
bull Liberalization of International Regulation
bull Domestic LCCs
bull Potential Terrorists Attacks
Future Strategy
bull EnhanceExpand Transcontinental Routes
bull Continued Customer Service Focus
bull Strengthen Alliances for Customer Convenience
bull Focus on Top Revenue Producing Segments
References1 American Airlines February 24 2006 2005 Annual Report [on-line]
httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061
2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006
3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006
4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006
5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062
6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063
1 Same site used for 2003 Annual Report
2 Same site used for 2003 Annual Report
3 Same site used for 2003 Annual Report
References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines
Initialing with Outperform Due to Low Costs amp Strong International Presence
8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom
9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005
10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064
11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future
12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005
13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies
14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065
4 Same site used for 2002 Annual Report
5 Same site used for 2003 Annual Report
Frequent Flyer (FF) ~ Demographics
3
A person that takes AT LEAST 4 flights per year (17 Million Americans)
bull Average FF takes 9 flights per year
bull Only 18 of Total Airline Travelers BUT Account for 58 of ALL Flights Taken
bull 68 of FF have College or Graduate Degree
bull 75 are Employed Full or Part-time
bull Majority are Male ~ Accounting for 58 of all FFndash 61 of those are between the ages of 25-54 years of
age
See Source 3
Frequent Flyer Programs
bull American Airlinesndash AAdvantage Miles
bull Continental Airlinesndash OnePass
bull United Airlinesndash Mileage Plus
bull Southwest Airlinesndash Rapid Rewards
Market Opportunities
bull International Segmentsndash PacificAsiandash Latin Americandash AtlanticEurope
bull Frequent Flyer Programsndash Travel Industry Alliancesndash Miles Auctions
bull Higher Level of Servicendash Concierge
International Opportunitiesbull Continental Has More International Exposure
than any of the Other ldquoMajorsrdquo13
bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and
AsiaPacific
bull Purchasing Power Growth of US Hispanic and Latin American Market Segment
bull International Revenues Grew 29 in 200513
See Source 13
International Strategies
bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13
bull European Routes to Lower-Traffic European Airports8
bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market
bull Launch of Spanish-Language Web SiteSee Source 13
See Source 8
FF Opportunities11
bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments
bull Show High Level of Brand Loyalty
bull Focus on Online Booking
See Source 11
FF Strategies
bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network
bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities
bull Miles Auctions
Service Opportunities
bull Differentiation with High Service Levels
bull Adding Service When Other Airlines Cutting Service Costs
bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers
Service Strategies
bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers
bull Enhancing In-Flight Reports for Flight Attendants4
bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved
Service11
See Source 4
See Source 11
Potential Problems
bull Increased Globalization
bull Liberalization of International Regulation
bull Domestic LCCs
bull Potential Terrorists Attacks
Future Strategy
bull EnhanceExpand Transcontinental Routes
bull Continued Customer Service Focus
bull Strengthen Alliances for Customer Convenience
bull Focus on Top Revenue Producing Segments
References1 American Airlines February 24 2006 2005 Annual Report [on-line]
httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061
2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006
3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006
4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006
5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062
6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063
1 Same site used for 2003 Annual Report
2 Same site used for 2003 Annual Report
3 Same site used for 2003 Annual Report
References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines
Initialing with Outperform Due to Low Costs amp Strong International Presence
8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom
9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005
10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064
11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future
12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005
13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies
14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065
4 Same site used for 2002 Annual Report
5 Same site used for 2003 Annual Report
Frequent Flyer Programs
bull American Airlinesndash AAdvantage Miles
bull Continental Airlinesndash OnePass
bull United Airlinesndash Mileage Plus
bull Southwest Airlinesndash Rapid Rewards
Market Opportunities
bull International Segmentsndash PacificAsiandash Latin Americandash AtlanticEurope
bull Frequent Flyer Programsndash Travel Industry Alliancesndash Miles Auctions
bull Higher Level of Servicendash Concierge
International Opportunitiesbull Continental Has More International Exposure
than any of the Other ldquoMajorsrdquo13
bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and
AsiaPacific
bull Purchasing Power Growth of US Hispanic and Latin American Market Segment
bull International Revenues Grew 29 in 200513
See Source 13
International Strategies
bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13
bull European Routes to Lower-Traffic European Airports8
bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market
bull Launch of Spanish-Language Web SiteSee Source 13
See Source 8
FF Opportunities11
bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments
bull Show High Level of Brand Loyalty
bull Focus on Online Booking
See Source 11
FF Strategies
bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network
bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities
bull Miles Auctions
Service Opportunities
bull Differentiation with High Service Levels
bull Adding Service When Other Airlines Cutting Service Costs
bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers
Service Strategies
bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers
bull Enhancing In-Flight Reports for Flight Attendants4
bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved
Service11
See Source 4
See Source 11
Potential Problems
bull Increased Globalization
bull Liberalization of International Regulation
bull Domestic LCCs
bull Potential Terrorists Attacks
Future Strategy
bull EnhanceExpand Transcontinental Routes
bull Continued Customer Service Focus
bull Strengthen Alliances for Customer Convenience
bull Focus on Top Revenue Producing Segments
References1 American Airlines February 24 2006 2005 Annual Report [on-line]
httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061
2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006
3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006
4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006
5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062
6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063
1 Same site used for 2003 Annual Report
2 Same site used for 2003 Annual Report
3 Same site used for 2003 Annual Report
References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines
Initialing with Outperform Due to Low Costs amp Strong International Presence
8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom
9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005
10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064
11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future
12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005
13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies
14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065
4 Same site used for 2002 Annual Report
5 Same site used for 2003 Annual Report
Market Opportunities
bull International Segmentsndash PacificAsiandash Latin Americandash AtlanticEurope
bull Frequent Flyer Programsndash Travel Industry Alliancesndash Miles Auctions
bull Higher Level of Servicendash Concierge
International Opportunitiesbull Continental Has More International Exposure
than any of the Other ldquoMajorsrdquo13
bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and
AsiaPacific
bull Purchasing Power Growth of US Hispanic and Latin American Market Segment
bull International Revenues Grew 29 in 200513
See Source 13
International Strategies
bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13
bull European Routes to Lower-Traffic European Airports8
bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market
bull Launch of Spanish-Language Web SiteSee Source 13
See Source 8
FF Opportunities11
bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments
bull Show High Level of Brand Loyalty
bull Focus on Online Booking
See Source 11
FF Strategies
bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network
bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities
bull Miles Auctions
Service Opportunities
bull Differentiation with High Service Levels
bull Adding Service When Other Airlines Cutting Service Costs
bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers
Service Strategies
bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers
bull Enhancing In-Flight Reports for Flight Attendants4
bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved
Service11
See Source 4
See Source 11
Potential Problems
bull Increased Globalization
bull Liberalization of International Regulation
bull Domestic LCCs
bull Potential Terrorists Attacks
Future Strategy
bull EnhanceExpand Transcontinental Routes
bull Continued Customer Service Focus
bull Strengthen Alliances for Customer Convenience
bull Focus on Top Revenue Producing Segments
References1 American Airlines February 24 2006 2005 Annual Report [on-line]
httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061
2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006
3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006
4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006
5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062
6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063
1 Same site used for 2003 Annual Report
2 Same site used for 2003 Annual Report
3 Same site used for 2003 Annual Report
References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines
Initialing with Outperform Due to Low Costs amp Strong International Presence
8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom
9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005
10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064
11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future
12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005
13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies
14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065
4 Same site used for 2002 Annual Report
5 Same site used for 2003 Annual Report
International Opportunitiesbull Continental Has More International Exposure
than any of the Other ldquoMajorsrdquo13
bull Current Hub and Spoke System Ideal for International Expansionndash Houston ndash Latin Americandash Newark ~ Serving Richest DMA in the US ndash Europe and
AsiaPacific
bull Purchasing Power Growth of US Hispanic and Latin American Market Segment
bull International Revenues Grew 29 in 200513
See Source 13
International Strategies
bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13
bull European Routes to Lower-Traffic European Airports8
bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market
bull Launch of Spanish-Language Web SiteSee Source 13
See Source 8
FF Opportunities11
bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments
bull Show High Level of Brand Loyalty
bull Focus on Online Booking
See Source 11
FF Strategies
bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network
bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities
bull Miles Auctions
Service Opportunities
bull Differentiation with High Service Levels
bull Adding Service When Other Airlines Cutting Service Costs
bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers
Service Strategies
bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers
bull Enhancing In-Flight Reports for Flight Attendants4
bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved
Service11
See Source 4
See Source 11
Potential Problems
bull Increased Globalization
bull Liberalization of International Regulation
bull Domestic LCCs
bull Potential Terrorists Attacks
Future Strategy
bull EnhanceExpand Transcontinental Routes
bull Continued Customer Service Focus
bull Strengthen Alliances for Customer Convenience
bull Focus on Top Revenue Producing Segments
References1 American Airlines February 24 2006 2005 Annual Report [on-line]
httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061
2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006
3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006
4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006
5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062
6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063
1 Same site used for 2003 Annual Report
2 Same site used for 2003 Annual Report
3 Same site used for 2003 Annual Report
References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines
Initialing with Outperform Due to Low Costs amp Strong International Presence
8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom
9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005
10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064
11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future
12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005
13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies
14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065
4 Same site used for 2002 Annual Report
5 Same site used for 2003 Annual Report
International Strategies
bull Continental Plans to Expand International Routes by 15 Over the Next Several Years ~ vs 2-4 Expansion in Domestic Market13
bull European Routes to Lower-Traffic European Airports8
bull Chinese Routes to Beijing and Hong Kong Serving Economically Expanding China Market
bull Launch of Spanish-Language Web SiteSee Source 13
See Source 8
FF Opportunities11
bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments
bull Show High Level of Brand Loyalty
bull Focus on Online Booking
See Source 11
FF Strategies
bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network
bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities
bull Miles Auctions
Service Opportunities
bull Differentiation with High Service Levels
bull Adding Service When Other Airlines Cutting Service Costs
bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers
Service Strategies
bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers
bull Enhancing In-Flight Reports for Flight Attendants4
bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved
Service11
See Source 4
See Source 11
Potential Problems
bull Increased Globalization
bull Liberalization of International Regulation
bull Domestic LCCs
bull Potential Terrorists Attacks
Future Strategy
bull EnhanceExpand Transcontinental Routes
bull Continued Customer Service Focus
bull Strengthen Alliances for Customer Convenience
bull Focus on Top Revenue Producing Segments
References1 American Airlines February 24 2006 2005 Annual Report [on-line]
httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061
2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006
3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006
4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006
5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062
6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063
1 Same site used for 2003 Annual Report
2 Same site used for 2003 Annual Report
3 Same site used for 2003 Annual Report
References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines
Initialing with Outperform Due to Low Costs amp Strong International Presence
8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom
9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005
10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064
11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future
12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005
13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies
14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065
4 Same site used for 2002 Annual Report
5 Same site used for 2003 Annual Report
FF Opportunities11
bull Frequent Flyers Make Up Significantly Large Portion of Flight Segments
bull Show High Level of Brand Loyalty
bull Focus on Online Booking
See Source 11
FF Strategies
bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network
bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities
bull Miles Auctions
Service Opportunities
bull Differentiation with High Service Levels
bull Adding Service When Other Airlines Cutting Service Costs
bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers
Service Strategies
bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers
bull Enhancing In-Flight Reports for Flight Attendants4
bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved
Service11
See Source 4
See Source 11
Potential Problems
bull Increased Globalization
bull Liberalization of International Regulation
bull Domestic LCCs
bull Potential Terrorists Attacks
Future Strategy
bull EnhanceExpand Transcontinental Routes
bull Continued Customer Service Focus
bull Strengthen Alliances for Customer Convenience
bull Focus on Top Revenue Producing Segments
References1 American Airlines February 24 2006 2005 Annual Report [on-line]
httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061
2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006
3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006
4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006
5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062
6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063
1 Same site used for 2003 Annual Report
2 Same site used for 2003 Annual Report
3 Same site used for 2003 Annual Report
References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines
Initialing with Outperform Due to Low Costs amp Strong International Presence
8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom
9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005
10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064
11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future
12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005
13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies
14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065
4 Same site used for 2002 Annual Report
5 Same site used for 2003 Annual Report
FF Strategies
bull Forming Alliances with Other Airlinesbull Increase Route Availabilitybull Allow Usage of FF Miles in Networkbull Decreases Need for FF to Go Outside Network
bull Enhance Web Site Booking System for FFbull Checking PointsMiles Statusbull Booking Capabilities
bull Miles Auctions
Service Opportunities
bull Differentiation with High Service Levels
bull Adding Service When Other Airlines Cutting Service Costs
bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers
Service Strategies
bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers
bull Enhancing In-Flight Reports for Flight Attendants4
bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved
Service11
See Source 4
See Source 11
Potential Problems
bull Increased Globalization
bull Liberalization of International Regulation
bull Domestic LCCs
bull Potential Terrorists Attacks
Future Strategy
bull EnhanceExpand Transcontinental Routes
bull Continued Customer Service Focus
bull Strengthen Alliances for Customer Convenience
bull Focus on Top Revenue Producing Segments
References1 American Airlines February 24 2006 2005 Annual Report [on-line]
httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061
2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006
3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006
4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006
5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062
6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063
1 Same site used for 2003 Annual Report
2 Same site used for 2003 Annual Report
3 Same site used for 2003 Annual Report
References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines
Initialing with Outperform Due to Low Costs amp Strong International Presence
8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom
9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005
10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064
11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future
12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005
13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies
14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065
4 Same site used for 2002 Annual Report
5 Same site used for 2003 Annual Report
Service Opportunities
bull Differentiation with High Service Levels
bull Adding Service When Other Airlines Cutting Service Costs
bull US Economic Growth Trends Promising for Increased Service Requirements for Business Travelersndash Segmentation of ldquoTop-Tierrdquo passengers
Service Strategies
bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers
bull Enhancing In-Flight Reports for Flight Attendants4
bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved
Service11
See Source 4
See Source 11
Potential Problems
bull Increased Globalization
bull Liberalization of International Regulation
bull Domestic LCCs
bull Potential Terrorists Attacks
Future Strategy
bull EnhanceExpand Transcontinental Routes
bull Continued Customer Service Focus
bull Strengthen Alliances for Customer Convenience
bull Focus on Top Revenue Producing Segments
References1 American Airlines February 24 2006 2005 Annual Report [on-line]
httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061
2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006
3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006
4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006
5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062
6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063
1 Same site used for 2003 Annual Report
2 Same site used for 2003 Annual Report
3 Same site used for 2003 Annual Report
References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines
Initialing with Outperform Due to Low Costs amp Strong International Presence
8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom
9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005
10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064
11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future
12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005
13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies
14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065
4 Same site used for 2002 Annual Report
5 Same site used for 2003 Annual Report
Service Strategies
bull Additional Focus on ldquoTop-Tierrdquo Customers and Business Travelers
bull Enhancing In-Flight Reports for Flight Attendants4
bull Corporate Hosting of Discussion Groups for Frequent Travelers- Gathering Complaints and Suggestions for Improved
Service11
See Source 4
See Source 11
Potential Problems
bull Increased Globalization
bull Liberalization of International Regulation
bull Domestic LCCs
bull Potential Terrorists Attacks
Future Strategy
bull EnhanceExpand Transcontinental Routes
bull Continued Customer Service Focus
bull Strengthen Alliances for Customer Convenience
bull Focus on Top Revenue Producing Segments
References1 American Airlines February 24 2006 2005 Annual Report [on-line]
httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061
2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006
3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006
4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006
5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062
6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063
1 Same site used for 2003 Annual Report
2 Same site used for 2003 Annual Report
3 Same site used for 2003 Annual Report
References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines
Initialing with Outperform Due to Low Costs amp Strong International Presence
8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom
9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005
10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064
11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future
12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005
13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies
14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065
4 Same site used for 2002 Annual Report
5 Same site used for 2003 Annual Report
Potential Problems
bull Increased Globalization
bull Liberalization of International Regulation
bull Domestic LCCs
bull Potential Terrorists Attacks
Future Strategy
bull EnhanceExpand Transcontinental Routes
bull Continued Customer Service Focus
bull Strengthen Alliances for Customer Convenience
bull Focus on Top Revenue Producing Segments
References1 American Airlines February 24 2006 2005 Annual Report [on-line]
httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061
2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006
3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006
4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006
5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062
6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063
1 Same site used for 2003 Annual Report
2 Same site used for 2003 Annual Report
3 Same site used for 2003 Annual Report
References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines
Initialing with Outperform Due to Low Costs amp Strong International Presence
8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom
9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005
10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064
11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future
12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005
13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies
14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065
4 Same site used for 2002 Annual Report
5 Same site used for 2003 Annual Report
Future Strategy
bull EnhanceExpand Transcontinental Routes
bull Continued Customer Service Focus
bull Strengthen Alliances for Customer Convenience
bull Focus on Top Revenue Producing Segments
References1 American Airlines February 24 2006 2005 Annual Report [on-line]
httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061
2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006
3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006
4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006
5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062
6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063
1 Same site used for 2003 Annual Report
2 Same site used for 2003 Annual Report
3 Same site used for 2003 Annual Report
References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines
Initialing with Outperform Due to Low Costs amp Strong International Presence
8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom
9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005
10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064
11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future
12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005
13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies
14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065
4 Same site used for 2002 Annual Report
5 Same site used for 2003 Annual Report
References1 American Airlines February 24 2006 2005 Annual Report [on-line]
httpwwwshareholdercomaaedgarcfmDocType=AnnualampSECYear=All ~ citg April 2 20061
2 Boeing 2005 Current Market Outlook 2005 [on-line] httpwwwboeingcomcommercialcmopdfcmo2005_OutlookReportpdf ~ citg April 2 2006
3 Bouvard Pierre and Williams Diane August 2005 The Arbitron Airport Advertising Study [on-line] httpwwwarbitroncomdownloadsArbitron_Airport_Studypdf ~ citg March 21 2006
4 CIO Magazine February 15 2004 Getting To Know Them [on-line] httpwwwciocomarchive021504customershtml ~ citg April 3 2006
5 Continental Airlines February 24 2006 2005 Annual Report [on-line] httpwwwcontinentalcomcompanyinvestorreportsasp ~ citg April 2 20062
6 Delta Airlines March 27 2006 2005 Annual Report [on-line] httpinvestordeltacomedgarcfm ~ citg April 2 20063
1 Same site used for 2003 Annual Report
2 Same site used for 2003 Annual Report
3 Same site used for 2003 Annual Report
References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines
Initialing with Outperform Due to Low Costs amp Strong International Presence
8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom
9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005
10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064
11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future
12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005
13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies
14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065
4 Same site used for 2002 Annual Report
5 Same site used for 2003 Annual Report
References7 Donofrio Susan Cathay Financial January 27 2006 Continental Airlines
Initialing with Outperform Due to Low Costs amp Strong International Presence
8 Keeton Ann of Dow Jones Newswires March 31 2006 US Airlines Seek Revenue From More International Flights [on-line] MorningStarcom
9 Lindsay Greg ldquoAirworld Part 7 The lsquoDemon Customersrsquo Inside the ldquoFlyerTalkrdquo Communityrdquo Ad Age Magazine September 20 2005
10 Northwest Airlines March 16 2006 2005 Annual Report [on-line] httpirnwacomphoenixzhtmlc=111021ampp=irol-sec ~ citg April 2 20064
11 Standard amp Poorrsquos Industry Surveyrsquos Airlines March 28 2002 Cited from The Center for Hospitality Research at Cornell University case study Can Continental Airlines Continue to Work Hard Fly Right amp Fund the Future
12 Standard amp Poorrsquos Industry Surveyrsquos Airlines May 19 2005
13 Standard amp Poorrsquos Stock Report April 1 2006 Continental Airlines The McGraw-Hill Companies
14 United Arilines March 31 2006 2005 Annual Report [on-line] httpirunitedcomphoenixzhtmlc=83680ampp=irol-sec ~ citg April 2 20065
4 Same site used for 2002 Annual Report
5 Same site used for 2003 Annual Report