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January 24, 2000

United Overhauls Web Site, Plans Dot-Com Subsidiary
Airline's E-Commerce Subsidiary plans to pursue major partnering effort

By Beth Bacheldor with Marguerite Reardon

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nited Airlines Corp. is stepping up its efforts in the Internet air-travel market. The airline last week began pushing a revamped Web site that's easier to use and offers an E-mail service with wireless technology to alert passengers of flight delays.

Earlier this month, United formed a partnership with other airlines to develop a Web portal that markets low-priced air fares. It's also launching a subsidiary to oversee E-commerce efforts.

The rapid growth of Web sites selling low-priced tickets is forcing airlines to be more aggressive about E-commerce. "Airlines have sat back and watched others pioneer the market," says Krista Pappas, senior analyst at consulting firm Gomez Advisors.

United is among the first airlines to create an E-commerce subsidiary-a significant change in strategy. A year ago, executives said they had no interest in mimicking the strategy of companies in other industries that have launched dot-com subsidiaries.

But the Internet's rapid transformation of the travel industry prompted United to take a greater interest in E-commerce, as did the fact that it earned $500 million from Internet sales last year. "People in our organization started to recognize there was greater potential for our E-commerce efforts," says Rick Collins, director of Internet marketing at United. "This has been an evolution, as opposed to a revolutionary process." United expects to earn 20% of its revenue from Internet sales by 2003.

The 100-employee Chicago subsidiary will debut this spring, led by Scott Praven, who is currently VP of revenue management. The subsidiary will pursue online partnerships with other airlines and dot-com companies. United has already developed relationships with sites involved in air-travel sales, including Alliance.com, Buy.com, and CollegeTravelNetwork.com

United has even aligned itself with rivals to compete with travel megasites such as Sabre's Travelocity.com. It is partnering with Continental, Delta, and Northwest to create a site that would let consumers shop for low-priced fares from more than 23 carriers.

Collins says United's site, which debuted Dec. 11, is proving a success. On Jan. 6, it reached $2 million in daily online ticket sales for the first time.

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