New United low-fare carrier debuts with initial flights today
By David Kesmodel, Rocky Mountain News
February 12, 2004
You've seen the ads. You've heard the hype. Perhaps you even gorged on one of the free burritos.
Now you get to meet Ted.
United Airlines' new low-fare carrier makes its debut today in Denver, with flights to Fort Lauderdale, Fla., and Las Vegas.
If you're flying Ted - short for United - expect a lot of personal attention.
Fliers will hear "Thank you for flying Ted" over the intercom, and they'll be told to buckle their seatbelts because "Ted wants you to be safe."
Passengers also will listen to Tedtunes, gnaw on Ted sandwiches and sip Ted's favorite beer. (OK, the secret's out: It's Foster's Lager.)
United, the 78-year-old carrier with the buttoned-down image, wants its new airline, based at DIA, to be fun and neighborly.
Chicago-based United even gave Ted a splashy blue-and-orange paint job to help distinguish it from its gray-and-blue parent. It used a quirky stealth marketing campaign last year to tease Ted's arrival, replete with burrito and pizza giveaways from an invisible "Ted."
The moves are part of an effort to win back passengers who have bypassed United in recent years to book trips on discount rivals such as Frontier, Southwest and JetBlue.
By being colorful and folding Ted flights into the vast United route network, United thinks people will pick Ted over rivals when ticket prices are similar.
The fast-growing low-fare sector has given Denver's dominant carrier fits. It is one reason United is flying under Chapter 11 bankruptcy protection.
As part of its effort to step out of bankruptcy, United parent UAL Corp. is taking the risky step of launching an airline-within-an-airline less than three years after its last such effort, Shuttle by United, failed.
United executives stress that Ted's route structure is different than Shuttle's and contend it has a better chance to turn a profit.
For one, they say, its costs will be much lower than Shuttle's because of the massive wage and benefit cuts United employees took last year.
But many industry analysts are skeptical. Some think United could be neglecting its main operation at a critical juncture by spending too much time on Ted, which initially will operate less than 10 percent of its fleet.
They also question whether Ted's costs will be low enough to make it profitable.
Ted's fares generally match those of rivals such as Denver-based Frontier.
"They're trying to focus on the hip image of a JetBlue, but they're forgetting that the real thing about JetBlue is the low costs," said Alan Sbarra, vice president of Unisys R2A Transportation Management Consultants in Oakland, Calif. "Having a hip image isn't enough in this industry."
Executives say Ted will be cost- competitive by using its planes more efficiently and offering more seats for sale per flight than United did on the same routes, he said.
"But that doesn't get them to Southwest-type costs or Frontier-type costs," Sbarra said. "It's not really a long-term solution."
The main problem, he said: Ted workers operate under the same labor contracts as United employees do, while other low-fare carriers tend to have lower pay rates.
Southwest's cost per seat flown a mile - the industry's main method to measure expenses - was 7.69 cents last quarter. Frontier's was 8.31 cents. United's was 9.85 cents.
Mike Boyd, an Evergreen-based aviation consultant, thinks Ted is just United cloaked in different colors.
"Never in the history of aviation has a coat of paint been so expensively promoted," he said in his online newsletter. "The sector costs of running the airplane will be the same as before, and fares will remain matched with Frontier, just as before."
The carrier is a distraction, he contends. And if Ted fails to be profitable, United will be worse off than it was before, he said.
Sean Donohue, United's vice president for Ted, has said the carrier is being choosy about which routes it flies so it can be profitable.
He says Ted will be cost-competitive with discount rivals on the same routes but hasn't disclosed the carrier's target figure for unit costs.
"We know Ted's unit costs will be lower than (United's) main line, and we'll be competitive," United spokesman Jeff Green said Wednesday.
Bookings on Ted are on target with expectations, "and we're pleased with that," he added.
Although United flight attendants will picket Ted flights today over United's plan to cut retirees' health benefits, Green said workers generally are fired up about Ted.
United had to order 2,000 Ted caps in Denver, where it employs about 6,000, because so many workers wanted them, he said.
Ted also starts Las Vegas-San Francisco service today.
Ted will fly to a total of eight cities from DIA by mid-March, including Orlando, Fla., and New Orleans. Aside from a few new routes, Ted is replacing service that United had operated.
Its focus is on leisure destinations.
Ted plans to base 19 single-aisle Airbus A320 jets in Denver by year-end and have about 45 of the planes in the Ted fleet.
United removed first-class seating from the Ted aircraft. The all-coach setting allows it to offer 156 seats, 18 more than on United's regular A320s.
Passengers will be able to buy food - including sandwiches, salads and chips - and drinks.
Jeff Potter, Frontier's chief executive, said money-making Frontier is ready for the competition.
While Ted is celebrating its launch today, Potter will meet with Frontier workers on DIA's Concourse A and offer some encouraging words.
Frontier plans no major response to Ted's launch. "If we tried to react to everything that this industry presents, we'd go crazy," Potter said.
Sales of Ted tickets appear to have had little impact on Frontier's business, he said. Ted initially is overlapping about 18 percent of Frontier's routes.
Frontier's bookings this month and in March and April are up against year-ago levels, and "that's also for the markets Ted serves," Potter said.
By David Kesmodel, Rocky Mountain News
February 12, 2004
You've seen the ads. You've heard the hype. Perhaps you even gorged on one of the free burritos.
Now you get to meet Ted.
United Airlines' new low-fare carrier makes its debut today in Denver, with flights to Fort Lauderdale, Fla., and Las Vegas.
If you're flying Ted - short for United - expect a lot of personal attention.
Fliers will hear "Thank you for flying Ted" over the intercom, and they'll be told to buckle their seatbelts because "Ted wants you to be safe."
Passengers also will listen to Tedtunes, gnaw on Ted sandwiches and sip Ted's favorite beer. (OK, the secret's out: It's Foster's Lager.)
United, the 78-year-old carrier with the buttoned-down image, wants its new airline, based at DIA, to be fun and neighborly.
Chicago-based United even gave Ted a splashy blue-and-orange paint job to help distinguish it from its gray-and-blue parent. It used a quirky stealth marketing campaign last year to tease Ted's arrival, replete with burrito and pizza giveaways from an invisible "Ted."
The moves are part of an effort to win back passengers who have bypassed United in recent years to book trips on discount rivals such as Frontier, Southwest and JetBlue.
By being colorful and folding Ted flights into the vast United route network, United thinks people will pick Ted over rivals when ticket prices are similar.
The fast-growing low-fare sector has given Denver's dominant carrier fits. It is one reason United is flying under Chapter 11 bankruptcy protection.
As part of its effort to step out of bankruptcy, United parent UAL Corp. is taking the risky step of launching an airline-within-an-airline less than three years after its last such effort, Shuttle by United, failed.
United executives stress that Ted's route structure is different than Shuttle's and contend it has a better chance to turn a profit.
For one, they say, its costs will be much lower than Shuttle's because of the massive wage and benefit cuts United employees took last year.
But many industry analysts are skeptical. Some think United could be neglecting its main operation at a critical juncture by spending too much time on Ted, which initially will operate less than 10 percent of its fleet.
They also question whether Ted's costs will be low enough to make it profitable.
Ted's fares generally match those of rivals such as Denver-based Frontier.
"They're trying to focus on the hip image of a JetBlue, but they're forgetting that the real thing about JetBlue is the low costs," said Alan Sbarra, vice president of Unisys R2A Transportation Management Consultants in Oakland, Calif. "Having a hip image isn't enough in this industry."
Executives say Ted will be cost- competitive by using its planes more efficiently and offering more seats for sale per flight than United did on the same routes, he said.
"But that doesn't get them to Southwest-type costs or Frontier-type costs," Sbarra said. "It's not really a long-term solution."
The main problem, he said: Ted workers operate under the same labor contracts as United employees do, while other low-fare carriers tend to have lower pay rates.
Southwest's cost per seat flown a mile - the industry's main method to measure expenses - was 7.69 cents last quarter. Frontier's was 8.31 cents. United's was 9.85 cents.
Mike Boyd, an Evergreen-based aviation consultant, thinks Ted is just United cloaked in different colors.
"Never in the history of aviation has a coat of paint been so expensively promoted," he said in his online newsletter. "The sector costs of running the airplane will be the same as before, and fares will remain matched with Frontier, just as before."
The carrier is a distraction, he contends. And if Ted fails to be profitable, United will be worse off than it was before, he said.
Sean Donohue, United's vice president for Ted, has said the carrier is being choosy about which routes it flies so it can be profitable.
He says Ted will be cost-competitive with discount rivals on the same routes but hasn't disclosed the carrier's target figure for unit costs.
"We know Ted's unit costs will be lower than (United's) main line, and we'll be competitive," United spokesman Jeff Green said Wednesday.
Bookings on Ted are on target with expectations, "and we're pleased with that," he added.
Although United flight attendants will picket Ted flights today over United's plan to cut retirees' health benefits, Green said workers generally are fired up about Ted.
United had to order 2,000 Ted caps in Denver, where it employs about 6,000, because so many workers wanted them, he said.
Ted also starts Las Vegas-San Francisco service today.
Ted will fly to a total of eight cities from DIA by mid-March, including Orlando, Fla., and New Orleans. Aside from a few new routes, Ted is replacing service that United had operated.
Its focus is on leisure destinations.
Ted plans to base 19 single-aisle Airbus A320 jets in Denver by year-end and have about 45 of the planes in the Ted fleet.
United removed first-class seating from the Ted aircraft. The all-coach setting allows it to offer 156 seats, 18 more than on United's regular A320s.
Passengers will be able to buy food - including sandwiches, salads and chips - and drinks.
Jeff Potter, Frontier's chief executive, said money-making Frontier is ready for the competition.
While Ted is celebrating its launch today, Potter will meet with Frontier workers on DIA's Concourse A and offer some encouraging words.
Frontier plans no major response to Ted's launch. "If we tried to react to everything that this industry presents, we'd go crazy," Potter said.
Sales of Ted tickets appear to have had little impact on Frontier's business, he said. Ted initially is overlapping about 18 percent of Frontier's routes.
Frontier's bookings this month and in March and April are up against year-ago levels, and "that's also for the markets Ted serves," Potter said.
