United Airlines' parent company UAL has received board approval to launch a business jet fractional ownership subsidiary which is expected to operate some 200 aircraft by 2005. UAL has committed $250 million to launch the programme.

Several North American airlines are set to follow United's lead as they try to recapture premium passengers lost to business jet fractional ownership and charter operators.

Air Canada has unspecified plans to enter the business aviation market if its strategic partnership with Canadian charter operator Skyservice is approved. American Airlines is believed to be close to announcing its plans and Delta, if it chooses to follow suit, already has a corporate charter operation within its Comair subsidiary. In Europe, British Airways recently announced a link with charter operator Air Partners.

UAL says its fractional operation will be funded by and linked to United, but will be a separate stand-alone business. The company has been cleared to negotiate with manufacturers. It has a memorandum of understanding with Dassault and is close to signing a similar agreement with a second manufacturer.

The company plans to begin selling shares next month and to start flying early next year. UAL decided to enter the fractional market after studies revealed top executives at firms with which United has large corporate travel deals no longer fly with the airline.

Whereas existing fractionals sell mainly to individuals, United is expected to leverage its corporate travel deals to sell aircraft shares in large blocks to major companies. The company will target US customers initially.

Source: Flight International