Atlantic Coast Airlines, which operates out of Dulles International Airport as United Express, yesterday announced a 10-year agreement with Delta Airlines to operate Delta Connection flights in the Northeast.
The expansion, according to Atlantic Chairman Kerry Skeen, will double the size of the Dulles-based airline over the next three years, but will not involve any flights to Dulles, where the airline currently operates the largest number of daily flights.
"We think it's really good for Atlantic Coast," Skeen said. "You more than double the size of the company in terms of available-seat miles."
Atlantic had $289 million in revenue in 1998.
Delta and United are currently in a nationwide marketing agreement that allows passengers on either airlines to get frequent-flier miles on either carrier. Atlantic passengers will be able to do the same.
As part of the new accord, Atlantic said it also had agreed to purchase 45 new regional jets over the next three years to accommodate the Delta flights, which are scheduled to begin around April 2000. The company will purchase 20 of the 50-seat Canadair Regional Jets and 25 of the 32-passenger Fairchild Dornier 328 jets over the next three years. The agreement includes options to buy more aircraft.
Skeen emphasized that the new contract would have no effect on its current agreement with United Airlines to operate United Express flights throughout the Northeast and into the Midwest. Atlantic now operates 548 daily flights out of Dulles and Chicago's O'Hare International Airport. Skeen said none of the jets on order for United Express flights would be diverted for use in the new Delta Connection service.
There have been reports from Chicago that the Air Line Pilots Association has been pushing United to buy its regional carriers to resolve jurisdictional disputes over who gets to fly the new regional jets. The pilots' union fears United may use the regional carriers to get rid of unprofitable mainline flights at the cost of pilot jobs. Skeen would not comment on that speculation yesterday.
Atlantic has set up a separate business operating unit to handle the Delta business, which will not be based at Dulles, Skeen said. He would not say where the operations would be based or what routes it would fly. Delta Connection flights out of Dulles are currently flown by another regional carrier under the Delta banner.
Skeen said it was possible that some maintenance work on the new jets might be done on a contract basis at the company's Dulles-based repair terminal.
Unlike the United contract, the Delta agreement calls for a "fee for departure" arrangement in which Delta pays a fixed amount of money per departure and takes most of the financial risk, including any rise in fuel costs. Under the United Express contract, Atlantic gets most of the revenue, but takes most of the financial risk.
"We really think its good diversity," Skeen said.
CAPTION: Atlantic Coast Chairman Kerry Skeen