United Continental Holdings, Inc. is a holding company and its principal, wholly-owned
subsidiaries are United Air Lines, Inc. and Continental Airlines, Inc. United
and Continental transport people and cargo through their mainline operations,
which utilize full-sized jet aircraft, and regional operations, which utilize
smaller aircraft that are operated under contract by United Express, Continental
Express and Continental Connection carriers.
With key global air rights in the U.S., Pacific region, Europe, Middle East,
Africa, and Latin America, UAL has the world’s most comprehensive global
route network. UAL, through United and Continental and their regional carriers,
operates approximately 5,800 flights a day to more than 375 U.S. domestic and
international destinations from the Company’s hubs at A.B. Won Pat International
Airport (“Guam”), Chicago O’Hare International Airport (“Chicago
O’Hare”), Denver International Airport (“Denver”), George
Bush Intercontinental Airport (“Houston Bush”), Hopkins International
Airport (“Cleveland Hopkins”), Los Angeles International Airport
(“LAX”), Newark Liberty International Airport (“New York Liberty”),
San Francisco International Airport (“SFO”) and Washington Dulles
International Airport (“Washington Dulles”).
Including its regional operations, United operates approximately 3,350 flights
a day to more than 235 U.S. domestic and international destinations based on
its annual flight schedule.
All of the Company’s domestic hubs are located in large business and
population centers, contributing to a large amount of “origin and destination”
traffic. Our hub and spoke system allows us to transport passengers between
a large number of destinations with substantially more frequent service than
if each route were served directly. Our hub system also allows us to add service
to a new destination from a large number of cities using only one or a limited
number of aircraft.
Alliances. United and Continental have a number of bilateral and multilateral
alliances with other airlines, which enhance travel options for customers seeking
access to markets that United and Continental do not serve directly. These marketing
alliances typically include one or more of the following features: joint loyalty
program participation; codesharing of flight operations (whereby seats on one
carrier’s selected flights can be marketed under the brand name of another
carrier); coordination of reservations, ticketing, passenger check-in, baggage
handling and flight schedules; and other resource-sharing activities.
Loyalty Programs. United’s Mileage Plus program and Continental’s
OnePass program build customer loyalty by offering awards and services to program
participants. Members in these programs can earn mileage credit for flights
on United, United Express, Continental, Continental Express and Continental
Connection, members of Star Alliance and certain other airlines that participate
in the programs. Miles can also be earned by purchasing the goods and services
of our non-airline partners, such as retail merchants, hotels, car rental companies
and credit card issuers.
Distribution Channels. The majority of the Company’s airline seat inventory
continues to be distributed through the traditional channels of travel agencies
and global distribution systems (“GDS”). The growing use of internal
websites, such as www.united.com and www.continental.com, alternative distribution
systems and new GDS entrants provides the Company with an opportunity to de-commoditize
its services, better control its content, make more targeted offerings, retain
its customers, enhance its brand and lower its ticket distribution costs.
Domestic Competition. The domestic airline industry is highly competitive and
dynamic. In domestic markets, new and existing U.S. carriers are generally free
to initiate service between any two points within the United States. The Company’s
competitors consist primarily of other airlines and, to a lesser extent, other
forms of transportation and emerging technological substitutes such as videoconferencing.
Competition can be direct, in the form of another carrier flying the exact non-stop
route, or indirect where a carrier serves the same two cities non-stop from
an alternative airport in that city, or via an itinerary requiring a connection
at another airport.
Carriers that operate as low cost carriers or that have lower cost structures
achieved through reorganization may be more competitive with the rest of the
industry, resulting in lower fares for such carriers’ passengers with
a potential negative impact on the Company’s revenues. In addition, future
airline mergers or acquisitions may enable airlines to improve their revenue
and cost performance relative to peers and thus enhance their competitive position
within the industry.
International Competition. In international markets the Company competes not
only with U.S. airlines, but also with foreign carriers. Competition on specified
international routes is subject to varying degrees of governmental regulations.
The United States and European Union (“EU”) agreement in 2008 to
reduce restrictions on flight operations between the two regions has increased
competition for United’s transatlantic network from both U.S. and European
airlines. In our Pacific operations, competition is expected to increase as
the governments of the United States and China recently approved additional
U.S. and Chinese airlines to fly new routes between the two countries, although
the commencement of some new services to China was postponed due to the weak
global economy.
2.17% 
