Atlantic Coast Airlines (ACA) is moving slowly towards its target of becoming an independent low-fare carrier, and its plan is gaining support in various quarters.
While widespread scepticism about the plan continues, backers have emerged for ACA's intention to use its own name instead of flying as the main United Express feeder in the mid-Atlantic region.
Washington Airports Task Force director Leo Shefer notes that the Washington area has shown a voracious appetite for low fares, as demonstrated by the growth of AirTran and JetBlue Airways at Washington Dulles, as well as the strength of Southwest Airlines at Baltimore/Washington International (BWI). Some note that BWI is not as strong a contender as it may seem because highway gridlock makes Baltimore a long drive from Washington, especially for those wealthy suburban areas closest to Dulles, 70km (45 miles away).
Raymond James & Associates analyst James Parker says the ACA project, nicknamed Goldilocks, could be profitable after two or three quarters if it can demand fares that are on average about $20 higher than those of Southwest out of Baltimore. It may be able to do this because the low-fare ACA operation would face little direct competition; 77% of its planned city pairs do not offer low-fare services, while 95% of ACA's markets are now served by US Airways, hardly a low-cost contender.
The regional carrier stunned the industry in July when it announced it would end its United Airlines relationship and try to be the first successful low-fare carrier using 50-seat regional jets. However, ACA says that it is not planning to begin operations until sometime after United exits bankruptcy reorganisation.
United recently said it would not likely exit bankruptcy until March or April of 2004 despite earlier statements that it might do so by the end of 2003. This gives ACA more time to refine its plan and seek finance for the larger jets it says it wants. It is looking closely at smaller Airbus and Boeing models, including the 717 and the A319, to augment its Bombardier CRJ fleet, and it might consider the Boeing 757 because the model is readily available at attractive rates. Models from Brazilian aircraft maker Embraer's range are not under consideration.
Although the regional jet remains unproven as a low-fare player, ACA would start with a large number - 87 in total - and its average stage length of 550km should enable it to do four to eight trips a day in markets where a Boeing 737 would make only two.
United has announced it will begin its own as-yet unnamed low-fares operation from Denver in February using Airbus A320s. It will initially start with four aircraft, rising to 40 A320s by year-end, flying mainly to leisure destinations.
Source: Airline Business
