The aviation sector this week has been marked by a flurry of activity among established airlines touting development of separately branded, lower-cost operations. The latest came today from Atlantic Coast Airlines, which officially unveiled Independence Air, the moniker for the company's new lower-cost strategy.
If it can sever codeshare ties with United Airlines as intended and avert a hostile takeover bid by regional rival Mesa Air Group
(BTN, Oct. 27), ACA plans to launch the new entity in the first half of 2004 and eventually become the largest independent operator at Washington Dulles. The company has not released details, but indicated the low-fare network will serve roughly 50 destinations. It said the "backbone" of the Independence Air fleet will be 25 new Airbus A319s and A320s in one-class configurations, capable of serving transcontinental routes, though the fleet also will include 87 CRJ regional jets.
ACA's announcement followed yesterday's confirmation by Delta that its own lower-cost, East Coast-based operation, Song, will expand "significantly" in 2004. Speaking at the Wings Club in New York, Song president John Selvaggio said much of the planned growth will emanate from the New York market.
Song, which already operates from all three major New York-area airports, currently offers a total of 142 daily flights with a fleet of 36 dedicated Boeing 757s. Despite targeting the leisure market, the carrier has garnered an overwhelming positive response from elite-level frequent flyers and attracted more business travelers than initially expected, Selvaggio said. Delta officials would not divulge financial information nor marketshare numbers for Song, but cited as early indicators of success high aircraft utilization rates and load factors in the mid-70s.
Song this week also detailed the specifics of its inflight entertainment system, including live television programming, pay-per-view movies, audio programming, including MP3 selections, and interactive video games. The new touch-screen system has been in testing on one aircraft since last month and will be added to the entire fleet by mid-2004.
Selvaggio noted that Song is "an incubator" and that effective elements have been and will continue to be brought to the mainline Delta operation.
Meanwhile, United Airlines yesterday officially unveiled Ted, its lower-cost market entry. United intends to launch the operation with four Airbus A320s from its "first hub" in Denver in February and grow to a 45-plane fleet by late 2004, with flights to various western cities.
Insisting the new operation will succeed where similar initiatives failed, and using the same word as Delta in describing Song--"sustainable"--United said that Ted planes will be all one class, but also said six rows will be configured with Economy Plus seats featuring four extra inches of legroom. Economy Plus at first will be dedicated to elite frequent flyers, but United said it is "working on ways to make this section available for other passengers who are willing to pay a little more for extra legroom." There is no word on how that would impact what United termed as Ted's simplified, six-tier fare structure.
BTN, in comparing Ted's listed fares to those found today on rival Frontier Airlines' Web site, found some lower fares on Ted and some lower fares on Frontier, depending on the route and whether or not the tickets are advance purchase. On the one initial route where Ted overlaps with Southwest Airlines--Los Angeles-Las Vegas--Ted's one-way nonrefundable advance purchase fare, requiring a roundtrip, is $59, beating Southwest's refundable $89 fare that does not require a roundtrip purchase, according to the Southwest Web site. On the same route, Ted's refundable walk-up fare is $193, compared with Southwest's $89.