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Delta, UA try, try again: struggling full-service carriers resurrect low-cost strategy.

Article Excerpt
The low-cost carrier-within-a-carrier concept once again is in vogue in the U.S. aviation industry--despite doubts by analysts and other observers stemming from several failures during the past decade. Both Delta Air Lines and United Airlines in the past two weeks announced plans to operate subsidiaries offering lower airfares in an attempt to protect marketshare from prosperous low-cost competition, if they can get labor union support.

The trend had sputtered in the United States following the Sept. 11, 2001 attacks when Delta, United and US Airways each disbanded or sharply reduced poorly performing, in-house, low-fare operations. Recently terminated attempts by foreign carriers also discredit the model. Nevertheless, U.S. majors again are crafting alternatives to mainline service.

At the same time, some carriers are accelerating service transitions to smaller jets operated by regional partners, which offer more flexible scheduling as part of a larger effort to achieve operational efficiency while sustaining hub dominance.

This evolution away from mainline service in many domestic markets is a direct result of the growth of Southwest, JetBlue and AirTran airlines, which have proven that the flying public, including many business travelers and their managers, is satisfied with lower-price products.

"There is a new aviation model unfolding as it relates to...

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