Delta had Song. United had TED. (On the West Coast they also had Shuttle by United.) US Airways had MetroJet. Consultants, especially McKinsey, were peddling the same idea to major airlines in exchange for big fees. In order to compete they needed to start low cost carriers inside their carrier, and those new airlines would fly leisure routes. They’d offer lower fares. And in the case of Song they’d even offer a better product than mainline.
Gradually the attempts faltered, and each of the airline-within-an-airline concepts was killed.