United Airlines' parent UAL is working on ambitious plans that could see it entering the market as a business jet operator as early as 2002 in an effort to retain its premium class passengers.

UAL is publicly remaining tight-lipped on its plans, but confirms that over the last several months it has "explored several aspects of the business aviation market that are important to its premium customers".

The group confirms that these areas include "fractional ownership of business aircraft, fleet management, business aircraft charter, corporate shuttle products and links between United's mainline commercial service and business aviation products outside the United States." If UAL proceeds with its plans, business aircraft activities would be operated by "new wholly separate entities", it adds.

UAL has been much more open with its employees, however. They have been told that the group's business jet studies, which have been running for almost two years, could result in the operation of 200 business jets with up to 14 seats by 2006. UAL is believed to be in negotiations with a number of business jet manufacturers, including Dassault Aviation.


John Rosanvalon, president of the US Dassault Falcon Jet division, says the two companies hope to finalise a memorandum of understanding (MoU) within 30 days covering the sale of 30-40 Falcon jets and a similar number of options. Dassault declines to comment on the Falcon models under discussion or the delivery schedule. Dassault's models include the mid-sized Falcon 50EX, the large-cabin Falcon 900 and the transcontinental Falcon 2000. Gulfstream is also believed to be in negotiations with UAL, but declines to comment.

UAL's move would pitch it head-on with well-established fractional ownership companies, including Executive Jet which pioneered the business aircraft ownership concept. Executive Jet's NetJets shared ownership programme - which is established in the USA, Europe and the Middle East - currently includes 345 aircraft, with 496 on order. Other established fractionals include Flight Options, Bombardier's FlexJet, Cessna's CitationShares and Raytheon's TravelAir.

Fractional ownership is particularly well entrenched in the US, although take-up in other regions is far slower. It is not known whether UAL has attempted to acquire any of the existing fractional companies, although this is likely to have been the group's first move to break into the market.

UAL's plans come as a number of other carriers are exploring options for entering the business jet market to boost their high-yield business. These include British Airways, Virgin Atlantic and Qatar Airways, although these carriers are not considering programmes anywhere near as revolutionary as UAL.

The concept of airlines operating aircraft in corporate configuration is not new. United's Star Alliance partner Lufthansa, for example, explored the option with Bombardier in the 1990s but did not launch it. The business jet initiative also comes as UAL suffered a $300 million first quarter loss, blamed largely on a decline in high-yield business travel due to the softening US economy.

UAL is reported to have surveyed 400 corporations and business aircraft users. The majority of those questioned appeared to welcome the plan, seeing business jets as a critical productivity tool.

Source: Flight International