The Chicago Sun-Times has a piece today on the new low-cost “airlines-within-airlines” being started at United and Delta including a summary of failed past attempts by the major airlines to create low cost subsidiaries as a way of competing with Southwest and others.
It’s never worked before (e.g. Continental Lite, United Shuttle). The majors simply retain too high a cost structure and dilute their premium brands by trying to mimic Southwest or JetBlue. Smaller airlines pick and choose niche markets and clean the majors’ clocks.
United’s early concept was simply to re-introduce a low cost carrier with their older planes like they had with the United Shuttle on the West Coast (which they set up to compete with Southwest, but they shut down because it lost money). However, low cost carrier JetBlue offers leather seats and satellite television, and the new Delta carrier looks to offer a similar product. Unless United re-tools its plan, it will have higher costs and a poorer product than its competitors. And that’s not a recipe for success.