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Watch the trailer at: http://www.foxsearchlight.com/theclearing/index_nyt.html \----------------------------------------------------------/ United and Atlantic Coast Agree to a Split April 6, 2004 By MICHELINE MAYNARD United Airlines and Atlantic Coast Airlines, which operates as a regional carrier under the United Express name, agreed yesterday to sever their relationship by late summer, ending a long and bitter dispute. At the same time, Atlantic Coast said its new low-fare subsidiary, Independence Air, would begin flying June 16 using Dulles airport outside Washington as its hub. The airline will use the gates that now handle United Express flights, and will serve many of the same routes. With 300 Independence arrivals and departures a day planned by late summer, Dulles would become the busiest hub for a low-fare airline in the United States. Independence Air said it would buy 15 jets from Airbus - 10 small A319 jets and 5 larger A320 jets. It also plans to lease 10 A319 jets for a total of 25 Airbus planes. The airline said it would use those planes along with the 50-seat regional jets already in its fleet - a strategic departure from the common low-fare carrier practice of using a single aircraft type for all flights. United, which is part of the UAL Corporation and has been in Chapter 11 bankruptcy court protection since December 2002, is building its own facilities at Dulles. The settlement with Atlantic Coast, known as A.C.A., requires the approval of the United States Bankruptcy Court in Chicago, which is scheduled to consider the deal on April 16. Officials at A.C.A., based in Arlington, Va., said they would announce details of Independence's routes and fares later this spring. But they said the route map is sure to expand beyond the cities A.C.A. now serves with United Express flights, mainly on the East Coast. Once its new Airbus A319's go into service in November, the company said it intended to add service to Florida, the Midwest and the West Coast. A.C.A. displayed Independence's new logo - a lowercase white letter "i" with a dark blue dot inside an aqua-colored circle - and said that the airline would offer many of the amenities of other new low-fare carriers, like in-flight entertainment systems and online flight reservations. Its preview Web site is www.flyi.com. Michael Allen, chief operations officer of BACK Aviation Solutions, a consulting firm, said A.C.A.'s experience in working with United and with Delta - it operates those flights under the Delta Connection name - would give Independence Air an advantage in the hotly competitive low-fare market. Independence Air will start with a much larger fleet - 110 aircraft - than either Delta's Song unit or United's new low-fare subsidiary, Ted, which began flying with a handful of jets, Mr. Allen said. "Everyone's watching this, certainly, with great interest," Mr. Allen said of Independence Air. A.C.A. had been under contract to fly United Express routes through 2010, but last year United proposed a significant reduction in lease payments to A.C.A. for the use of its planes. If A.C.A. did not agree, United had the right under bankruptcy law to ask a judge to nullify the contract completely. The two carriers tried negotiating a new contract but the talks failed; A.C.A. then announced the creation of Independence and said it would proceed whether its relationship with United continued or not. Yesterday, the two airlines said that United would begin freeing A.C.A.'s planes from United Express duties in June, with all ties severed by Aug. 4. United has rounded up seven other small airlines, including Air Wisconsin, Chautauqua Airlines and Mesa Air Lines, to serve as United Express carriers in A.C.A.'s place. In addition, the Ted subsidiary will start flying from Dulles tomorrow. Late last year, Mesa made an unsolicited takeover bid for A.C.A., and signed a nonbinding agreement with United to serve as its regional carrier if the bid succeeded. The deal was abandoned in December after the Justice Department began an investigation into Mesa and United, and a judge found that the deal might have violated antitrust laws. Low-fare carriers now control about 25 percent of the domestic air travel market, up from just 4 percent a decade ago. http://www.nytimes.com/2004/04/06/business/06air.html?ex=1082260147&ei=1&en=750fe902e9812180 --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! 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