Nearly a year after it was first revealed, Independence Air took to the skies last week with 10, 50-seat regional jets dispatched to five markets. The competition is lining up to nip the new airline in the bud, but analysts question if the old competitive responses will still work.

A unit of Atlantic Coast Airlines [ACAI], the new low-fare carrier will be flying 87 regional jets by summer's end out of Washington Dulles International Airport. In the late fall, the first of 27 Airbus 319s will be put into service.

Independence Air marks the first time a regional airline has embarked on path to grow into a low-cost carrier flying mainline aircraft. Despite sitting on nearly $350 million in cash, a number of Wall Street analysts have doubted that Independence can thrive, in part because it has never been done before.

The carrier did not release first day results. However, CFO Richard Surratt briefly addressed a group of industry analysts after the market closed on the first day. "It is too early to say how the day went," he said. "The customer reaction was very good, excited and energized."

While it is spending $30 million to build brand identity, Independence is not subscribing to a third party reservation system, such as Orbitz [ORBZ] or Expedia. "We don't want to pay the middleman to sell our tickets," Surratt said. However, the carrier has lined up stand-by agreements with some of these third-party vendors in case the sales begin to lag. At the moment, 95 percent of the bookings are through the carrier's Web site, he said, instead of its phone system.

Atlantic Coast is in a two-month transition with United Airlines [UALAQ] and Delta Air Lines [DAL] as the code-share contracts with both carriers end in August. It is adding new destinations nearly every week as the CRJs are removed from United's and Delta's fleets for painting and refurbishment.

Over the next 60 days, Independence will be competing against new United Express carriers out of Dulles. As Atlantic Coast relinquishes a route, one of a handful of other regional airlines who are now United code-share partners will begin flying the route. In addition to maintaining the same routes, United has stepped up its competition against Independence by dropping some fares and handing out frequent flyer bonuses.

In addition to competing with its old partner, United, Independence Air faces increased competition from Delta and Northwest Airlines [NWAC]. Late last week, US Airways [UAIR] announced reduced fare for selective flights out of Reagan Washington National Airport, which happen to compete with Independence Air.

Delta, which already has 11 flights between Dulles and Atlanta, will be adding four more on Aug. 1. It will be offering 15 roundtrip flights departing on the hour beginning in August. It already offers 16 roundtrip flights to its Atlanta hub from Washington National and 13 roundtrips each day from Baltimore-Washington International Airport.

Independence began with eight flights to Atlanta on its launch day growing to 16 daily flights by Aug. 1.

Delta's lowest fare will be $87 while Independence's cheapest ticket will be $79.

Delta will provide this service with both its own mainline aircraft and via regional jets flown by one of its regional units, Atlantic Southeast Airlines.

Northwest for the first time will offer non-stop flights between Dulles and Lansing, the Michigan state capital. Its four weekday flights will be offered on regional jets flown by Pinnacle Airlines [PNCL]. The service begins on July 15.

On July 17, Independence will begin flying seven daily round trips to Lansing. Later, on Aug. 23, it will fly eight flights to Detroit - one of Northwest's major hub cities.

The cheapest ticket on Northwest to Lansing will be $79 versus $69 on Independence Air.

While the normal counter-response for an airline trying to protect its turf is to flood the market with flights, Daryl Jenkins, an industry consultant and visiting professor at Embry-Riddle Aeronautical University, doubts if it will work this time. "I think it is a very stupid move. You are losing money and you have consigned yourself to losing more money. We need some new thinking in this business," Jenkins said. "I would love to see some people who have been in this business a long time retire."

It is too early to tell if Delta's and Northwest's moves will work, said Sonjia Murray, a consultant with SH&E. "Delta scared JetBlue [JBLU] off last year" when JetBlue attempted to start new service between Atlanta and California. However, it hasn't been able to "scare off" AirTran [AAI] from that same route and its fares must now match AirTran's low-fares.

"I think the feeling is that their frequent flyer programs will make up the difference, I don't believe this is true," Jenkins said.

However, Murray, a card-carrying member of United's frequent flyer club, said "it will take a lot for someone like me to switch."