Why Major US Airlines Don't Have Low-Cost Carriers? - United Shuttle, MetroJet and Delta Express

Why doesn't the USA's big three have their own low-cost carriers?
But here's the thing, they actually did!

United, Delta, and American all had low-cost carriers that operated in the United States - this is their story!

The early 90s of the united states was a turbulent time for airlines; the recession plus deregulation had opened the floodgates for all sorts of new airlines to enter the market and seek their fortune. With falling prices and a market keeping pace, airlines needed to expand quickly into the new low-cost segment.

These airlines were Delta Express, United Shuttle, Contential Lite and Metrojet by US airways.

Our first on the list, Delta Express, was marketed as a no-frills airline within an airline. It would operate a fleet of Boeing 737-200 aircraft out of Orlando, and focus on the holiday travelers with an all-coach cabin - with no in-flight entertainment or meal services.

The airline was relatively successful from 1996 to 2003, but still had one problem - Delta did not manage to gain enough productivity out of the workers and planes, and so its costs remained high compared to its rivals.

Plus, the spartan Delta Express was linked so closely to the mainline operations at Delta, that it confused passengers.

Delta Express was eventually shut down in 2003 and replaced by another Delta low-cost carrier called Song.

United wasn't going to be left standing still, and in 1994, they made a deal with the pilot and mechanics union to start a new airline with the groups owning 55% of the carrier. This new airline would replicate the successful regional competitor Southwest Airlines model, a single fleet of all the same plane and no hot meals, frequent services, and a simple fare structure.

The airline would have 58 Boeing 737s and operate out Oakland airport in the bay area as a point to point airline and would offer flights to destinations such as LAX, Burbank, and Ontario for as little as $19 each way - with the new name, Shuttle By United, branded on the side of the plane.

Fast forward three years later and a change in management saw the airline turned into a hub and spoke model, feeding passengers to mainline United international flights from SFO and LAX.

But there is a problem with SFO. It gets foggy, gets worse weather than Oakland, and has a significantly higher canceled flight rate. By 1999, the airline operated solely as a feeder for international flights, and long gone was its quick turnaround and cheap fares. United no longer had any cost savings by not using the airline and folded it back into the mainline carrier.

United would go on to have a 2nd crack at the market with United Ted, but that's a topic for another video.

Continental Lite was a very short-lived subsidiary airline of Continental Airlines back in 1993 that only lasted slightly over 18 months, after losing over $300 million dollars.

The carrier used a mix of aircraft from Contential, from DC-9s to Boeing 737-500 aircraft, with all-economy cabins. The airline was based out of Cleveland and North Carolina, and at its peak, had over 80 daily flights to 45 cities.

Alas, they couldn't seem to make any money, and by 1995, the service was closed and turned back into standard Continental aircraft. If given a choice, passengers would choose the bright and bubbly southwest brand.

Metrojet. Developed as a way to stave off new low-cost competition in the US Northeast. The carrier would have a single class of service, operate a single type of aircraft, the Boeing 737-200 and fly a very limited network out of Baltimore.

The airline reportedly was actually quite nice, with 33 inches of legroom, allowing two bags with each passenger, low fares, and excellent customer service. In fact, the success of MetroJet would actually be its downfall, because it seems that no one was paying attention to the main airline US Airways.

That's right, it seems all the attention was on the wonderchild and that US Airways started to struggle. Passengers started to choose not only to not fly rival low-cost carriers but fly MetroJet over US Airways as well, cannibalizing higher paying customers. MetroJet also had the least fuel-efficient aircraft in the US Airways fleet and operated with incredibly high wages - US Airways didn't renegotiate like the other carriers but used staff from the mainline carrier.

If MetroJet was to keep growing, it would be at the cost of US Airways.

After the horrible tragedy that was the September 11th attacks, and the subsequent fall in airline demand, US Airways closed the operation swiftly and merged it back into the mainline carrier.

These airlines would not be the last time these carriers experimented with low-cost, airlines within airlines, but would be the only attempt at the magical optimistic 90s. Stay tuned for the next in the series where we look at the airlines of the 2000s that rose and fell in the blink of an eye.