Archive for Wednesday, November 19, 2003

United hopes Ted boosts profits

Company selling tickets for flights on discount carrier

November 19, 2003

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— United Airlines began selling tickets Tuesday for its low-fare carrier Ted, a venture executives said would play a crucial role in the future of the bankrupt firm.

Ted, which will start flying in February, will be based at Denver International Airport, the home of discount carrier Frontier. United's parent, UAL Corp., hopes Ted will be competitive with low-cost carriers that are snatching customers from big airlines.

The Ted fleet will begin with four Airbus A320 aircraft and expand to as many as 45 planes by the end of 2004. Each A320 will have 156 seats.

United is pitching Ted as laid-back fun, with overhead programming -- Tedtv -- that will include music videos, standup comedy and sitcoms. The headsets for Tedtunes will be free, though merchandise such as children's toys will carry a price tag.

"We want everything about Ted to be a little bit unexpected, a little bit outside the norm," said Sean Donohue, a United vice president. "Ted will reveal even more of its personality as we continue to add destinations and hubs."

Executives said Ted would differ from other low-fare carriers because it would be linked to United's frequent-flyer program. It also would include a 66-seat Economy Plus section with four extra inches of leg room.

Ted announced sample fares among its nine destinations, ranging from $59 from Los Angeles to Las Vegas to $409 from Denver to Fort Lauderdale, Fla., Las Vegas, Phoenix and Reno, Nev. The airline is expected to have 106 daily flights by early April.

"For the longest time, we would see a lot of customers going to the competition," Ted pilot Luis Castillo said. "It was frustrating to see customers slip away and not do something about it. With the launch of Ted, we're doing something about it."

United is not the first traditional hub-and-spoke carrier to try using its own discount airline to compete with low-cost carriers such as Southwest that have been gaining market share. In April, Delta launched Song, a low-fare airline that competes with JetBlue and AirTran on the East Coast.

Analysts have been largely skeptical of this "airline-within-an-airline" model.

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