Shuttle By United

Shuttle by United was an "airline within an airline" brand operated as a subsidiary of United Airlines from 1994 to 2001 along the West Coast of the United States. It provided air shuttle service between San Francisco International Airport (SFO), Los Angeles International Airport (LAX), and other cities using Boeing 737-300 and 737-500 aircraft.

The economic recession of the early 1990s, plus the relentless expansion of low-cost carriers and other effects of deregulation pressured the major airlines to reduce costs and fares. In 1993 United Airlines concluded an agreement with its unions whereby employees would take ownership of 55% of the airline in exchange for reduced wages and benefits for new employees. The management moved to organize the lowest scales into a new "airline within an airline" dubbed "U-2."

"U-2" attempted to replicate some of the cost advantages of regional competitors such as Southwest Airlines. All 58 of its aircraft were of a single type, the B-737. Hot meals were eliminated. The fare structure would be reduced and simplified to lure passengers, with revenue stabilized by increasing frequency of service, while electronic ticketing would reduce costs.

At the same time, "U-2" would remain legally part of United Airlines, with access to its Apollo Computer Reservation System. Passengers would still enjoy pre-assigned seating, could transfer seamlessly to and from "mainline" service, and accumulate miles in United's Mileage Plus frequent flyer program. In this respect, it resembled competitors' first generation "airline within an airline" divisions such as Continental Lite, Delta Express, and US Airways' Metrojet.

Shuttle by United, as "U-2" became known to the public, began operating on October 1, 1994, out of SFO. It offered flights to Los Angeles for as little as $19 one-way. Within three years it had expanded to 20 cities and comprised 5% of United's total capacity. In 1999 it established a second base in Terminal 8 of Los Angeles International Airport, United's newest hub, by which time it also served as a feeder operation for United's transcontinental and international services. In the late 1990s its name was changed to United Shuttle.

With demand for travel to the San Francisco Bay Area heavy during the Dot-com bubble, Shuttle became profitable, but it also encountered mounting operational problems and labor unrest. Frequent fog at SFO had always caused flight delays. These delays became compounded with Shuttle's high frequency schedule, and compounded again by inadequate staffing. In 2000, two out of every three shuttle flights between SFO and LAX were delayed or canceled.

When air travel declined in 2001, it became evident that cost savings had not materialized to justify the separate operation of the Shuttle, and it was folded back into mainline United.

In December 2002, United declared bankruptcy and hinted at a revival of the Shuttle. However, it instead created a leisure destination carrier called Ted, part of a second generation of "airline within an airline" services with Delta Air Lines' Song and Air Canada Tango. Ted itself ceased operations in early 2009 and its fleet was folded back into United's.