UAL and Delta make clean break from ACA

 - October 4, 2007, 9:47 AM

United Airlines earlier this month formally rejected its code-share contract with Atlantic Coast Airlines, freeing the Sterling, Va.-based regional to speed preparations for its launch of Independence Air–the planned new discount carrier slated to fly from Washington Dulles Airport. The long-time partners have agreed to begin the separation process on June 4 and complete the divorce by August 5.

ACA expects to pull 30 Bombardier CRJs and 17 Jetstream 41s from the United Express network upon completion of their June 3 schedules, then remove 30 more CRJs on June 6. Under the transition schedule, the last 26 CRJs and five J41s would end their service for United on August 4. ACA plans to retire all the J41s and transfer the CRJs to Independence Air.

Meanwhile, Atlantic Coast’s other code-share partner, Delta Air Lines, has decided to sever ties with ACA by invoking its right under their Delta Connection contract to dissolve their fee-per-departure arrangement without cause upon 180 days notice. ACA has served in partnership with Delta since August 2000, and now flies a fleet of 30 Fairchild Dornier 328Jets from Delta’s hubs in Cincinnati and Boston.

To prepare for the departure of ACA, Delta has decided to move ten Boston-based 328Jets to its Delta Connection operation in Cincinnati, and discontinue ACA flights from New York. The consolidation takes effect on July 1. Milwaukee-based 328Jet operator Skyway Airlines has entered talks with Delta to fly the ACA fleet
as Delta Connection. A wholly owned subsidiary of Midwest Airlines, Skyway flies seven 328Jets as Midwest Connect. However, Midwest Airlines stressed that it would establish a completely separate operation in Cincinnati for any new relationship with Delta.
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“We had anticipated Delta’s decision for some time and understand its reasons for ending our code share relationship,” said ACA chief executive Kerry Skeen. “Under the terms of our agreement, we now have the right to require Delta to assume the leases on some or all of the thirty 328Jets used in the Delta program. We plan to use at least some of the time we have during the notice period to review and evaluate our options for the 328Jets before finalizing any decisions. If we ultimately elect to require Delta to assume some or all of the leases, we would anticipate developing a transition plan similar to the one we just completed with United.”

However, ACA’s rights to the lease transfer hinge on certain assumptions that by no means appear assured. Under the terms of the deal with Delta, ACA cannot move the leases unless Delta or an assignee meet certain financial conditions. At press time Delta did not meet those financial conditions.

ACA has set a June 16 launch target for the low-fare airline, in time to execute a plan to build the operation to 300 daily departures by September. The airline said it would offer destination details and delivery plans for a new fleet of 25 Airbus A319s next month. Independence Air will have to compete against United’s new discount product, Ted, as well as a reinforced United and United Express presence at Dulles.

United plans to replace the ACA fleet with regional jets and turboprops flown by newly signed partners Chautauqua Airlines, Republic Airlines and Shuttle America.
Existing partners Air Wisconsin, Trans States and Mesa will continue to serve O’Hare and Dulles, while SkyWest adds to its share of O’Hare flying as well.