NYTimes.com Article: United to Send 40 Jets to Start Low-Cost Unit

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United to Send 40 Jets to Start Low-Cost Unit

July 16, 2003
 By EDWARD WONG






The chief executive of United Airlines said yesterday that
the company would use about 40 planes from its existing
fleet to create a low-cost airline. That was United's first
clear indication of the initial size of the low-cost
operation, a business the company has been trumpeting since
it filed for bankruptcy protection last December.

In a recorded employee voice-mail message yesterday, the
chief executive, Glenn F. Tilton, also said that the planes
would be deployed in "key leisure markets." United
executives have said the low-cost airline will operate from
United's hubs, so a Denver-Las Vegas route seems to be the
kind of service the new airline will offer.

The new airline has no official name yet. Within United, a
unit of the UAL Corporation, the working name is Starfish.

The 40 jets for Starfish would be pulled from United's
fleet of 500 mainline planes, not from the company's
regional fleet. Some of the mainline planes sit parked in
the desert, but Jeff Green, a United spokesman, declined to
say how many.

On the voice-mail message, Mr. Tilton also said that Sean
Donohue, vice president in charge of Starfish, met with
United's executive council on Monday to discuss the
low-cost airline.

Starfish is United's second attempt at a low-cost unit
within the larger company. In the 1990's, it created
Shuttle by United in an effort to shove aside Southwest
Airlines in the low-cost market on the West Coast. But
Shuttle was never able to truly emulate the low-cost
operations that gave Southwest the leverage to charge lower
fares. United shut down Shuttle in 2001.

Many industry experts and analysts are skeptical of these
attempts by traditional airlines to create low-cost
carriers.

Even United seems less enthusiastic now. In May, company
executives began turning down the spotlight they initially
threw on Starfish, saying that while Starfish would remain
important to United's recovery plan, they were now
concentrating on getting revenue from business travelers on
their mainline operation. In his voice-mail message
yesterday, Mr. Tilton underscored that this was where
United was still focusing.



http://www.nytimes.com/2003/07/16/business/16UNIT.html?ex=1059363683&ei=1&en=2b2c659a41536662


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