Why Ted's demise is a boost for business travelers
— -- Strolling along Chicago's Magnificent Mile a few years back, I happened upon a group of young men and women dispensing oranges on a bustling street corner. Their unusual mission: to introduce a new airline. "Ted" was United Airlines' new, low-cost, discount airline-within-an-airline, sporting new livery with an orange version of the United tulip logo emblazoned on every aircraft tail. Earlier this month, amid far less fanfare, United grounded Ted after only four years of service.
In desperate times with exorbitant fuel costs, U.S. airlines are frantically cutting capacity, parking gas-guzzling older airplanes, raising fares and focusing more on the premium revenues generated by business travelers. While shrinking one's way to profitability is often a flawed strategy, terminating Ted seems like a sound financial decision for United Airlines, and it will also benefit business travelers.
Ted was created to serve leisure markets and compete with low-cost carriers (LCCs) like Frontier and Southwest Airlines. With single-class service and faster turnaround times, United sought to emulate its rapidly expanding competition. "Ted enabled us to offer customers more seats and flights to leisure destinations," says Robin Urbanski, United's media relations manager.
But times have changed. "With today's record-breaking fuel prices, we can not afford to continue to fly our most unprofitable routes, which in many cases are leisure markets," Urbanski told me. United is reducing domestic capacity by 17% during 2008-9. Most cuts will affect leisure markets previously served by Ted, such as Florida and Las Vegas. The 56 Airbus A320 aircraft operated by Ted will be redeployed on routes currently served by United's Boeing 737s and the 737 fleet will be retired.
While Ted allowed United to offer low fares in leisure markets, the two distinctly different airline brands often confused travelers, particularly when connecting from one to the other. Others shunned Ted because of its single-class coach configuration. Those who fly first class or pursue upgrades will be pleased to learn that the A320s reclaimed from Ted will have 12 first class seats while the Boeing 737s they replace offer only eight.
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