UAL Names VP For Low-Cost Carrier; New Planned Operating Stats Emerge By Steve Lott United's new separate low-cost carrier, which yesterday named its first executive, plans to serve 37 U.S. cities with a fleet of 134 aircraft, according to a preliminary internal plan for the carrier obtained by The DAILY. As part of detailed presentations recently made to its union leaders and creditors committee, United defined its concept for its low-cost carrier, explained why it will be competitive, and tried to explain how United will avoid the failures of similar efforts by other U.S. major carriers. United begins the presentation by admitting it's uncompetitive in several low-yield markets. Even with yield growth and mainline cost reductions, "United will continue to be uncompetitive in these markets," the presentation said, so the airline needs to "develop a low-cost offering and achieve a cost structure competitive" with the existing low-cost carriers. The presentation declares all previous attempts by major airlines to operate low-cost carriers failed "due to a lack of competitive cost structure." To break that mold, United believes that a "truly separate operation is necessary" for its low-cost carrier -- currently code-named Starfish -- to be successful. Beyond lower costs and competitive labor costs, Starfish must have a unique brand and marketing to "reduce customer confusion" and boost "customer excitement." The operation must have a "distinct" employee culture and focus, as well as an "entrepreneurial environment." United wants the operation to be a separate legal entity, which will increase "credibility with capital markets and competitors" and allow funding of investment and growth independent of the mainline operation. Starfish will have a distinct management team, but the parent company will hold on to pricing, scheduling and marketing. Starfish will operate in what United calls the "commodity" market, where passenger mix and presence of low-cost carriers lead to below-average yields. It also will enter low-yield markets not currently served by the mainline. Starfish is expected to serve 37 domestic cities, or about 45% of the 81 domestic cities that will be served in the June schedule. The average stage length will be about 900 miles, compared to the 1,140 length slated for this summer. According to a DAILY review of the preliminary route map included with the presentation, Chicago O'Hare will have the most Starfish flights with services to as many as 25 cities including five Florida destinations, Baltimore, New Orleans, San Antonio, Reno and Phoenix. Denver and Los Angeles will have service to roughly 10 cities. The carrier will serve roughly six cities from San Francisco, including old Shuttle by United markets in California,plus Portland and Baltimore. Flights from Washington Dulles will largely be to Florida, in addition to Columbus and Indianapolis. The low-cost carrier hopes to have 85,000 daily available seat miles, about 35% of United's domestic summer schedule. To drive down costs, Starfish plans aircraft utilization of 11.25 hours, about one hour more than United's current system utilization rate. JetBlue last quarter had a utilization rate of 12.7 hours and Delta's new Song operation aims to fly its 757s an average of 13.2 hours per day. As United moves ahead with its plan for the new operation, the airline yesterday named Sean Donohue as VP-low-cost carrier. Donohue most recently was VP-North America sales-West and will share "joint accountability and leadership" for the operation with a second officer to be named soon. Donohue has served 19 years with the airline as a general manager in Boston, New York and has held several positions at headquarters. He will be based in Chicago during the startup phase, and will report to Pete McDonald, executive VP-operations. "His background from a station manager to a vice president will serve us well in establishing an efficient, reliable operation that can compete effectively with Southwest, JetBlue and other low-cost operators," CEO Glenn Tilton told employees yesterday. Roger EWROPS