NYTimes.com Article: United’s Discount Airline Will Fly From Dulles

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United’s Discount Airline Will Fly From Dulles

February 6, 2004
 By MICHELINE MAYNARD





Ted, the new low-fare carrier from United Airlines, will
begin flights from Washington Dulles International Airport
in April, two months after making its initial flight, out
of Denver, next Thursday, United officials said yesterday.

The announcement of new service for Ted came as Delta Air
Lines confirmed that its low-fare airline, Song, would pull
out of Dulles airport in April. Delta is scaling back its
plans for Song, an airline-within-an-airline that began
flying a year ago.

A third low-fare carrier, ATA, said it would start offering
business-class service this summer. ATA is making the move
as low-fare carriers increasingly embrace frills and other
features to win the business of bargain-seeking travelers.

Low-fare airlines flew 24 percent of domestic passengers
in 2003, according to the Department of Transportation,
their largest share to date. Some economists say that the
discount carriers could easily take 30 percent of the
market within a few years, at the rapid rate they are
expanding service.

United, the nation's second-largest carrier behind American
Airlines, plans to use Ted as an important part of its
effort to emerge from Chapter 11 bankruptcy protection.
Ted's flights will initially be focused on the West Coast
and Florida, using Airbus A320 jets configured in two
classes of service, economy and the slightly plusher
"economy plus."

Dulles is the only United hub on the East Coast. United
said Ted would fly from there to Fort Lauderdale, Orlando
and Tampa in Florida, and to Las Vegas. It expects to have
15 Ted flights a day by May from Dulles. Sean Donohue, the
United executive in charge of Ted, said more flights from
Dulles would be added if Ted proved successful with
passengers in the area.

In selecting Dulles, the airline is wading into a crowded
market for low-fare flights on the Eastern Seaboard.
JetBlue Airways already serves the airport, west of
Washington in northern Virginia, while Song had started
flights there in September.

Yet another new low-fare carrier, Independence Air, is to
begin flights from Dulles in November. Independence is
owned by Atlantic Coast Airlines, which serves as United's
regional carrier on the East Coast.

But Atlantic Coast is trying to get out of its contract
with United, which runs through 2010, and reconstitute
itself as a low-fare carrier on its own.

Just as Ted arrives at Dulles, Song will depart. It is
ending its three daily flights from there to Orlando. The
jet from that route will be used by Song to fly between New
York and Fort Myers, Fla.

Song, which cost Delta $65 million to develop, was meant to
appeal to passengers who had been defecting from major
carriers in search of cheaper tickets. Delta, the nation's
third-largest carrier, configured 36 Boeing 757 jets, with
199 seats each, to fly routes from New York to Florida and
elsewhere.

But under its new chief executive, Gerald Grinstein, Delta
is reviewing its operating structure and in the process has
scaled back some expansion plans it had for Song, company
officials said this week.

In an interview on Wednesday, Song's president, John N.
Selvaggio, said his airline could play an important role as
Delta battled low-fare airlines like Southwest and JetBlue
for passengers in the East and elsewhere in the United
States. Delta is striving to cut costs and is pushing its
pilots' union to grant concessions so it can keep pace with
the lower labor costs won in recent months by airlines like
American and United.

So Delta has postponed plans to expand Song's service from
Kennedy International Airport, its main hub. Delta said
last week that it would invest $300 million at Kennedy to
expand service there but announced only two new flights for
Song.

Mr. Selvaggio said Delta originally envisioned Song as a
defensive measure to keep from losing passengers to others.
But he said it could be an offensive weapon as well, aimed
at passengers who prefer direct flights over the
connections that are routine for travelers on Delta.

"What Mr. Grinstein wanted to do was undertake a strategic
review" of the kind of service the airline would provide,
Mr. Selvaggio said. From now on, he added, Delta would
examine its routes to determine whether to offer the
service instead on Song. "We want to have a strategy that
makes sense," he said.

ATA said yesterday that its business-class seats, which
will be introduced in August on its Boeing 737's and 757's,
would cost no more than $399 one way. It will also offer
upgrades to business class from coach for a modest fee on
the day of travel, but has not yet decided how much to
charge.

In providing business-class service, ATA, the 10th-largest
airline in the United States, will be following the lead of
AirTran, which has gotten a warm response to its business-
class service. John Happ, senior vice president for
marketing of ATA, said the airline expected most of its
business-class seats to be sold through the same-day
upgrades, a feature also offered by AirTran.

By contrast, Southwest, the largest low-fare carrier and
the nation's sixth-largest airline, has so far refused to
add features like seat assignments or the audio systems
available on Song, JetBlue, AirTran and soon on Ted. It has
said it is studying the idea.

Even though many corporations are trying to keep a tight
rein on travel budgets, Mr. Happ surmised that travelers
would be willing to pay slightly more for a little comfort.
"A bag of peanuts and all coach seats is one way to do it,
and they clearly have a recipe for success," he said of
Southwest.

But he added, "We believe there's a business traveler
looking for a very different experience."

http://www.nytimes.com/2004/02/06/business/06air.html?ex=1077078241&ei=1&en=9c4aabf80ed2add9


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