Independence Air, the newborn low-fare carrier of Dulles-based Atlantic Coast Airlines Holdings Inc., began selling tickets yesterday as it unveiled a 35-city system that will put it in direct competition with United Airlines on many routes.
United, Atlantic Coast's former marketing partner, immediately matched Independence fares on competing routes, marking the likely start of a fare war at Dulles -- a hub for both carriers.
Independence will fly mostly to mid-size cities in the eastern half of the United States that tend to have high fares. It had flown to many of those cities as a regional affiliate for United, which is reorganizing in bankruptcy. Independence now will fly those routes more frequently. It also will compete on a somewhat smaller scale with Arlington-based US Airways, which emerged from bankruptcy last year but again is seeking concessions from employees to survive.
Flights will begin June 16 between Dulles and Chicago O'Hare, Newark, Boston, Atlanta and Raleigh/Durham, N.C., using 50-seat regional jets. More cities will be added in intervals over the summer, until Sept. 1.
"Now come a whole bunch of other questions: Can they actually deliver?" said Adam M. Pilarski, senior vice president of Avitas Inc., a Chantilly aviation consulting firm. "What will be the service? Will they be on time? Will things flow the way they want to? . . . It's a blank page."
One of Independence Air's prime routes will be between Dulles and John F. Kennedy Airport in New York. The airline will have 13 departures a day, starting Aug. 1. United, which flies the same route seven times a day, yesterday matched Independence's fares, which start at $49 one way. Before Independence's announcement, United had fares that ranged from $65 to $233 one way for the same route.
Also, Independence plans eight daily flights between Dulles and Pittsburgh, twice as many as US Airways, which has a hub in Pittsburgh.
"Independence Air is really, really going after them," said Terry Trippler, president of terrytrippler.com, a travel information site. "This is kind of like divorcing your wife and marrying her sister."
Filling all those seats will be one of the company's biggest challenges. To save money, Independence is selling tickets only by phone, through Independence kiosks at Dulles and through its own Web site, www.flyi.com.
Its flights will not appear on such widely used online services as Travelocity and Orbitz. Instead, Atlantic Coast will spend $30 million on advertisements, hoping passengers will be attracted by set walk-up prices, no Saturday night stay requirement and a promise to never overbook a flight. Some of the ads feature political spouses James Carville and Mary Matalin, comedian Dennis Miller and soccer star Mia Hamm.
Kerry B. Skeen, Atlantic Coast's chief executive, said that selling a ticket through flyi.com will cost the company about 50 cents, compared with $10 for a ticket sold through another site. "It lowers our cost, so we are able to pass it back to you," Skeen said at a news conference yesterday.
Independence is the largest addition to a crop of low-fare carriers to recently enter the Washington market, among them Ted, United's low-fare unit; Spirit and Frontier airlines; and JetBlue Airways.
Atlantic Coast officials announced the idea for Independence last summer amid a battle with United over the amount it was being paid to operate each United Express flight. Atlantic Coast broke from its contract and will start winding down United Express service on June 5.
"Our goal was to select the best markets from D.C.," said Skeen, when it was noted that Independence's routes are similar to United's. "We expect a very competitive response.
"I think we're going to change the competitive landscape and enhance the vitality of communities we serve."
As expected, competitors dropped fares at Dulles immediately, "leveling the playing field," said George Novak, lead research scientist at the George Washington University Aviation Institute in Ashburn. "What will differentiate them is the ability to have a low-cost structure to operate."
To cut costs, Atlantic Coast has subcontracted some call center functions and reduced labor expenses, Novak said. But rising jet fuel prices may throw the company off course, he said.
Independence, unlike many airlines, does not have a reserve of fuel and could not lock in a supply when prices were lower because it did not buy its own fuel as a contract carrier for United. Its business plan had projected costs of about 90 cents per gallon for fuel, but fuel now costs about $1.25 a gallon.
"We don't like what fuel is at today, but competitors have the same cost," Skeen said.
The company might also find itself in a traffic jam. Dulles has had significant increases in delays in recent months, and Independence plans to add 300 daily departures at Dulles by summer's end, contributing to an anticipated 17 percent increase in traffic there this summer.
Atlantic Coast's conversion "is risky, no doubt about that," said Darryl Jenkins, visiting professor at Embry-Riddle Aeronautical University in Daytona Beach, Fla. "At the same time, I don't know what their alternatives were. How far in do you tie yourself with a partner that can't make money?"