United Airlines launched a subsidiary to handle checked bags and perform other services for its regional unit, United Express, a move in line with industry peers aimed at improving operations. United Ground Express (UGE) will take over customer and cargo service starting this fall at some of the 150 U.S. airports where parent United Continental Holdings Inc currently outsources work. United declined to specify the airports but said UGE will initially serve cities where it contracted Envoy Air, a subsidiary of American Airlines Group Inc. UGE also will launch service on Dec. 9 at the Kalamazoo airport in Michigan in conjunction with new United Express flights there. Envoy in May decided it would only perform ground services for flights scheduled by its parent company, and it will begin transitioning work to UGE in September, a source familiar with Envoy’s business said. United’s move comes six months after it reached a union deal to outsource some 1,150 positions at 16 airports across the country. It had said furloughs or layoffs could result if affected workers declined offers to transfer to other airports. United spokesman Charles Hobart declined to say if the launch of UGE was related to the airline’s earlier outsourcing plan. However, he said furloughed and former United employees could apply to work for UGE. The shuffle has helped lower costs significantly at the second-biggest U.S. airline by capacity. Then-Chief Financial Officer John Rainey said on an investor call last month that United saved $350 million in non-fuel costs so far this year, and was on track to reach $1 billion in annual non-fuel cost savings by the end of 2016, a year before initial expectations. Hobart said UGE “will provide cost-effective operations at traditionally outsourced locations.” The airline will continue to rely on third parties for ground-handling where it makes financial and logistical sense, he said. Rivals Delta Air Lines Inc and American launched similar services years ago. American formed AMR Services Corporation in 1983 and sold that business in 1999. Delta still owns subsidiary DAL Global Services. Aviation industry consultant Robert Mann said the move could help United address conflicts of interest inherent in outsourcing, in which a third party might offer privileged service to its parent company or largest customer rather than United Express. The ground-handling business, he added, “can be very profitable, but you have to run it efficiently and somewhat ruthlessly.” (Reuters)