- The Washington Times - Thursday, February 5, 2004

United Airlines announced yesterday that it would operate a low-cost subsidiary out of Washington Dulles International Airport beginning April 7, while Delta Air Lines said it would stop Dulles flights by its low-cost subsidiary on April 30.

United already operates a hub at Dulles with 73 daily flights. The new Ted subsidiary will add another 15 daily flights, many of them for leisure passengers traveling to vacation sites in Florida or Las Vegas.

United officials said they can operate more efficiently with their subsidiary, Ted, than Delta could with its subsidiary, Song.

“It was an easy and natural choice,” Pete McDonald, United Airlines’ executive vice president for operations, said about the choice of Dulles for the Ted flights.

Ted is cutting expenses by sharing maintenance and gate facilities with the United hub, although it will be managed as a separate airline, said Sean Donohue, Ted vice president.

Song operates three round-trip flights daily out of Dulles.

After April 30, the Boeing 757 used for Song’s Dulles flights will be transferred to New York’s John F. Kennedy International Airport for flights to Fort Myers, Fla.

Song uses a “point-to-point” routing system in which it has no hub. Instead, it flies between any airports where its management thinks it can land the most passengers.

The end of Song flights at Dulles is part of a companywide re-evaluation of the subsidiary’s operations, Song officials said.

“We need to make the most of the assets we have,” Song spokeswoman Stacy Geagan said. “The flight will be much more successful and have much more market in the New York area.”

Low-fare airlines carried nearly a fourth of U.S. airline passengers last year, the U.S. Department of Transportation said.

Ted derives its name from the last three letters of the word United.

Whether a new marketing plan is enough to make Ted successful where Song has struggled depends on the management, said Leo Schefer, president of the Washington Airports Task Force, a nonprofit organization that promotes business with Washington-area airports.

“If they really look at it as though they’ve created a low-cost carrier instead of a low-cost division of an airline, then they’ll be successful,” Mr. Schefer said.

A common mistake of large airlines that start low-cost subsidiaries is that they maintain the same labor contracts and committee decision-making for the subsidiary, he said.

“That reduces your productivity,” Mr. Schefer said.

A better option is to develop new labor contracts specifically for the low-cost carrier and a more flexible management structure that responds to needs of a smaller organization, he said.

Dulles’ attractions for low-cost airlines include Northern Virginia suburbanites with annual income of about $75,000, which is a top customer base, Mr. Schefer said.

In addition, only about 30 percent of Washington-area residents were born in the region, meaning people from other regions often return home for visits, he said.

Ted “will add one more choice for the region’s air traveler,” said Mark Treadaway, air services vice president of the Metropolitan Washington Airports Authority, which manages Dulles and Ronald Reagan Washington National airports.

Ted will have no first-class seats. Instead, each Airbus A320 will have 90 economy seats and 66 “economy plus” seats.

Economy plus, which offers an extra 4 inches of legroom per seat, is reserved for regular customers who have amassed the most frequent-flier miles.

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