Air Transport World

Declaration of Independence: Atlantic Coast Airlines launches a revolution.(Profile)

Parliament and King George never intended to spark a revolution among the American colonials; they merely wanted them to recognize the sovereignty of the Crown and to pay what they considered to be a fair share of the cost of defending the place. Likewise, when United Airlines started putting the financial squeeze on Atlantic Coast Airlines, it had no wish to shed its codeshare partner, which provides valuable feed to UA's transatlantic hub at Washington Dulles International Airport. It simply wanted ACA to accept that the world had changed and that the current fee-per-departure contract, under which ACA enjoyed a 16% operating margin last year, no longer was tenable.

Instead, it got a revolution. Last July, frustrated at being held hostage to United's bankruptcy reorganization process, ACA announced its intention to withdraw from the United Express network and create its own low-fare airline using the aircraft and gates it currently employs to feed the Major. The name of the proposed carrier says it all: Independence Air.

It's a bold move. ACA currently generates 85% of its revenues from its flying on behalf of United, with the remainder coming from a similar but more limited relationship with Delta Air Lines that will continue. ACA not only must establish an identity in the community, it must resume the marketing, scheduling, pricing and revenue and inventory management functions largely handled by UA since 2000. Adding to the challenge is the fact that hitherto, no Regional has attempted to transform itself into a low-fare carrier nor has any airline tried to provide a low-cost product with large numbers of 50-seat regional jets, which are not known for their seat-mile economics. …

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