From NewsReal (Jan 29, 2004)

Companion Pass Fares Decrease for 90 Flight Segments and 25-Dollar Minimum Returns

Effective Feb. 1, 2004, the company will change the companion pass program in two ways. Companion pass fares will decrease for 90 flight segments and the company will reinstate the 25-dollar minimum fee.

The fare reduction is due to changes in pricing that allow Revenue Management to use a broader range of Fare Basis Codes (FBCs) to determine companion fares. In addition, international companion fares now will be based on the lowest unrestricted round-
trip FBC instead on the lowest unrestricted one-way FBC, when available.

"During the past year, we've heard from many employees who asked if we could lower companion fares," says Pete McDonald, executive vice president-Operations. "So we asked our Revenue Management folks to see what they could do within the U.S. tax guidelines, and they've come up with some real savings for companion fares."

On average, 74 U.S. flight segments will decrease their companion pass fee by 25 dollars and 16 international-segment fares will drop 58 dollars. Examples of one-way fare changes include San Francisco-New York from 113 to 56 dollars; Chicago-Phoenix from 85 to 60 dollars; and Washington D.C.-Amsterdam from 199 to 123 dollars. Taxes and fees will continue to be charged in addition to the base
companion fare.

Also on Feb. 1, United will reinstate the 25-dollar minimum for a base companion fare. This change will raise fares by an average of four dollars in 21 markets.

"We walk a difficult line with our companion fare policy," says McDonald. "We have to balance the employee benefit with requirements set out by the U.S. tax laws. Because this program is an employee benefit, we need to adhere to IRS regulations for
companion fares without leading to imputed income to the sponsoring employee."

To avoid this imputed income, the company needs to ensure companion fares are not perceived by the U.S. Internal Revenue Service as unjustifiably low, which is another reason for reinstating the 25-dollar minimum. At the same time, companions still can
upgrade to a higher class of service at no additional charge.

Human Resources regularly surveys other airlines to ensure that United's companion pass travel program is competitive. As before, United will review its companion fares quarterly and price them at 10 percent of the unrestricted walk-up economy fare.

Human Resources is sending a letter explaining these changes to employees through co-mail and to retirees' home addresses. The service charge calculator in SkyNet's Travel section and linked from WebList reflects fare changes as they become effective. SkyNet's Travel section also will include information about these changes on the Companion Travel Information web page.