Should Ual Think Over Ted?

Andre1980 said:
Secondly a first class or elite frequent flyer for UA coming from london to IAD and wants to continue a connecting flight to FLL where there is a firstclass available and they realise UA's TED does not cater towards them that may cause UA to lose some business from these high flyers.
UA doesn't have any first class seats IAD-FLL because they don't have ANY flights IAD-FLL. This is a new route, and Ted is making it possible.

And if the introduction of Ted on IAD-TPA/ORL/LAS causes high fare frequent flyers to abandon UA, I'd be shocked. If there were significant high fares (F/C) coming out of those cities connecting in IAD to Europe, UA would be doing a heck of a lot better financially and would not be turning those routes over to Ted. Do business travelers fly to those places, either from or through IAD? Certainly. But they aren't on International F/C tickets or even domestic F tickets. Those business travelers are going to be sitting in economy plus with the same leg room as domestic first class and will have the middle seats all blocked. The frequent flyer is going to be perfectly fine with a window/aisle in E+ and the middle seat empty on a fairly short flight like IAD-Florida. And if enough seats are sold to fill the middle seats in E+, then Ted is probably making money. And by replacing UA with Ted on those routes, UA gets a few more seats to sell and slightly lower costs.

There, a non-UA employee (for the most part- lol) signing the praises of Ted.

Who knows, Ted might fail. But if travelers were buying F tickets to justify an F cabin, UA wouldn't be in Ch 11. Yes, F is a loyalty tool. But E+ takes care of that. I think putting Ted in these leisure markets is a good, good move.
 
I'll just take BA from London to MIA and forget the TED stuff at Dulles, or does UA think that enough people are willing to make the transfer at IAD onto TED?
 
OK AA191...you do that and I'll take one of our 747's to Narita. Can't wait till we start coming after you sky nazi's again.
 
This has to do with TED, but a little off topic. I wanted to book a LAS-DEN r/t for Mar 17-21. I checked TED. TED said it had an $88 promo fare - r/t priced out at $257. Went to Frontier - same dates - same times(within 1 hr on departures both ways) - $220 r/t. Even tried AWA - $255 r/t - had to connect in PHX for the way home. Checked Continental for fun, because they don't fly that route - $750 and I had to connect in IAH both ways - OUCH!!

Needless to say - Frontier beat TED up. Sorry.
 
coolflyingfool said:
This has to do with TED, but a little off topic. I wanted to book a LAS-DEN r/t for Mar 17-21. I checked TED. TED said it had an $88 promo fare - r/t priced out at $257. Went to Frontier - same dates - same times(within 1 hr on departures both ways) - $220 r/t. Even tried AWA - $255 r/t - had to connect in PHX for the way home. Checked Continental for fun, because they don't fly that route - $750 and I had to connect in IAH both ways - OUCH!!

Needless to say - Frontier beat TED up. Sorry.
Don't you find it a little ridiculous that you declare Frontier beat Ted up because you found a $37 savings on Frontier flights on one RT on one city pair that you checked? And thus Ted is the loser?

If Ted's planes are empty, sure, they are the loser. But on March 17th, if that plane is full then I think it is pretty obvious that Ted is the winner- the plane is full and the fares are higher.

To declare F9 the winner in the Ted vs. F9 battle because they had slightly lower fares on the dates you tried is ludicrous. If Ted folds, then obviously F9 wins. But if UA sees revenue increase or F9 sees revenue reductions, then Ted is the winner.

And there are a lot of people who would be more than happy to pay $37 extra to maintain UA elite status and earn frequent flyer miles that are redeemable worldwide.
 
Dave said:
I believe Ted will be an asset to UAL. One thing that had been missing from UAL's route structure was leisure destinations at reasonable prices. Ted will fill this void and also allow the vacation traveler access to UAL's global network, something traditional LCO's don't have.
Then why not try to get the costs down across the network, instead of confusing your customer and diluting your product? Word is that there are two camps at WHQ, one which wants to roll out Ted nad hope for the return of business travellers across the rest of the system. The other wants to turn UA into a hi-quality LCC, with simplified fares, but more features than WN, B6, or FL. A hybrid, like HP is becoming. I think the HP model is the one UA should be looking at, from Sydney to Cheyenne, and all points in between.
 
7.5 is correct. And the losing group at Elk Grove will be the timid bureaucrats awaiting the return of the business flyer. I doubt if many on this board have ever used Webex for a client conference, but if you have then you know why the airlines are hurting.

LH & AF are quietly runnning those biz jet flights using A319s/320s and are planning to add more city pairs. What does that tell you?

Meanwhile the Elk Grove airline vets have to hire expensive consultants to devise a clownish attempt at luring cheapo fliers who'll switch for a dime.

The ATSB is watching and the fat lady is humming...
 
whatkindoffreshhell said:
7.5 is correct. And the losing group at Elk Grove will be the timid bureaucrats awaiting the return of the business flyer. I doubt if many on this board have ever used Webex for a client conference, but if you have then you know why the airlines are hurting.

LH & AF are quietly runnning those biz jet flights using A319s/320s and are planning to add more city pairs. What does that tell you?

Meanwhile the Elk Grove airline vets have to hire expensive consultants to devise a clownish attempt at luring cheapo fliers who'll switch for a dime.

The ATSB is watching and the fat lady is humming...
I bought WEBX stock in 2001. :D

While I support Ted, I also believe UA should follow HP's lead into hybridity...
 
UAL's Ted Unit Could Be Profitable As Early As 2005
Wednesday, Febuary 11, 2004 03:42 PM ET Printer-friendly version

WASHINGTON (Dow Jones)-- UAL Corp. (UALAQ, news) on Thursday will launch Ted, UAL's new plan to cut costs and defend market share on leisure routes.

Ted is a low-cost airline and will operate as part of United, flying about 10% of United's domestic capacity. As Ted Vice President Sean Donohue said, Ted is literally part of "Uni-Ted."

By simplifying operations, flying planes longer each day and adding 18 seats to each plane, Ted can cut unit costs by 15% to 20%, compared with UAL's main United airline, Donohue said in a telephone interview with Dow Jones Newswires. Ted's labor costs are equal to those of United, which has cut some labor costs as UAL restructures under bankruptcy protection.

The idea for UAL is to cut costs on the most popular, most competitive leisure routes, such as Denver-to-Las Vegas, by shifting those routes to Ted. So Ted can offer fares that compete with the Frontier Airlines (FRNT, news) of the world while defending United's market share and minimizing damage to profits.

By March, Ted will have 19 planes, and by the end of the year, it will be full-sized with 45 midsize planes.

"With that type of growth, the revenue on Ted will grow correspondingly," Donohue said.

In fact, once Ted is full-sized, the airline can turn a profit. That could happen as early as 2005, Donohue said, though he's not making an official prediction.

"From a cost standpoint, you really maximize your efficiency and minimize unit costs when you get up to maximum size," he said.

Ted will use Denver and Washington as hubs and fly to vacation destinations such as Florida and Las Vegas. The airline will have just six different fares: three economy class and three business class, with the highest fare at $299 one way. That puts Ted's fares on par with other low-cost carriers, which have set $ 299 as the magic maximum fare for one-way travel.

The in-flight experience on Ted will be slightly different from that on the main airline. Donohue said the audio and video selections will be more relaxed than United's, with "more comedy," he said.

But UAL doesn't want to create a low-cost carrier as distinct from the main airline as Song is from parent Delta Air Lines Inc. (DAL, news) . Delta markets Song as a completely different brand.

Donohue said he found that customers want a low-cost product that's a bit different from United, but also draws on United's brand, network and mileage reward programs. He calls it "hitting the sweet spot" between the new and the familiar.

Donohue said Ted's bookings are better than expected, and the airline will have stronger load factors than United during the peak flying season.

Donohue wouldn't predict whether Ted will continue to add capacity in 2005.

"Our opinion is this: This industry does not have a great track record for predicting the future," he said.

Some critics have said that Ted would do well to look at the past instead. Several major carriers, including UAL, have started their own low-cost airlines, only to shut them down for lack of profit or for high costs.

Donohue said the company is focusing on preventing the major error of United's Shuttle, which saw costs rise until they were out of hand.
 
A History Lesson For Young Ted: Continental Lite 101


By ELIZABETH SOUDER

Of DOW JONES NEWSWIRES


NEW YORK -- Ten years ago, Continental Airlines Inc. (CAL) started its own low-cost airline, called Continental Lite.


These days, executives with the Houston airline say that was a mistake they won't repeat. Continental Lite offered only the most basic airline service: safe air transport. To trim costs, the airline cut meal service and even cut the number of cleanings the planes received each day.


Customers didn't like it, and walked. Furthermore, customers confused the Lite product with the main airline, and stopped flying Continental altogether. So within a few years, Continental shut down the Lite operation.


The failure prompted Continental Chief Executive Gordon Bethune to make his signature statement: "You can make a pizza so cheap nobody wants to eat it."


Thursday, a decade after Continental's flop, UAL Corp. (UALAQ) launched a new low-cost airline, called Ted. And last year, Delta Air Lines Inc. (DAL) launched its own low-cost carrier, called Song, though Delta has since halted Song's growth as the Atlanta-based carrier reviews all of its operations.


Both are going about the exercise much differently than Continental, offering passengers some extra amenities while cutting costs by boosting productivity on the most popular routes.


But many experts urge the airlines to consider history: no low-cost airline operated by a major carrier has succeeded. Critics say the benefits of Song and Ted could be done without going to the trouble of starting a whole new airline and without risking confusion among customers. Plus, those efforts do nothing to solve what experts say is the most pressing problem: high labor costs.


"No legacy airline, in our opinion, will be successful with a low-fare airline within an airline. The simple reason is that, in order to operate a profitable low-fare airline, that airline must actually have low costs," Raymond James analyst Jim Parker said in a research note.

Avoiding Continental's Pitfalls


Ted and Song are intent on avoiding Continental's mistake of cutting back too much on service. Both are keeping some frills, such as on-board entertainment. Song is even installing satellite television, which the main Delta airline doesn't even offer. Other frills, such as meals, are no longer free.


Acknowledging Continental's cheap-pizza problem, Song spokeswoman Stacy Geagan said, "We could never afford to give customers food they would want to eat." Instead, Song sells organic salads, designer chocolate and signature cocktails on board, converting what was once a cost in to a possible revenue stream.


Both Song and Ted say they have cut unit costs, or the cost per seat per flight, by double-digit percentage amounts by boosting productivity. The low-cost airlines operate more daily flights on their routes than the parent airlines, and use technology to keep costs down.


The secret is making use of economies of scale. The airlines fly big planes on popular routes, back and forth constantly throughout the day. Ted Vice President Sean Donohue said the routes Ted flies among big cities such as New York and sunny destinations such as Las Vegas and Florida are so popular, he can justify operating flights at all hours of the day, from 7 a.m. to 10 p.m.


UAL's last attempt at a low-cost airline, like Continental Lite, flew short hops to smaller cities. Those flights, which Chicago-based UAL now operates in part with regional carriers, are more expensive to fly and these days command much higher fares than the Ted routes.

High Labor Costs Persist


But critics say all those cost cuts could be done without all the trouble of starting new airlines. And still, the two start-ups have the same labor costs as their parent airlines.


Delta's labor costs are among the highest in the U.S. airline industry, and Delta is pleading with its unions to agree to lower salaries. UAL has trimmed labor costs while the airline restructures under bankruptcy protection, but still costs are higher than those of JetBlue (JBLU).


In the fourth quarter, JetBlue's total unit operating cost was 6.09 cents, while UAL's unit operating cost was 9.85 cents and Delta's unit operating cost was 10.87 cents.


Employees for major carriers are mostly unionized, and bargain collectively for better salaries and benefits. Most low-cost carriers, with the exception of Southwest (LUV), don't have unions. Further, the major carriers have numerous employees who have been on the payroll for decades, earning raises along the way. JetBlue started operations in 2000, so all employees are relatively new hires.


Still, officials at both Ted and Song claim the airlines are on the road to profitability. Once Ted reaches its full-size of 45 airplanes by the end of 2004, Ted's Donohue said, the unit can turn a profit. Donohue said that can happen as early as 2005, though he isn't making an official prediction.


And a source familiar with Song said the airline's load factors are currently better than break even. Delta doesn't break out financial results for Song.


Many airline experts doubt either operation will show sustainable profits. Continental Lite never did.


"Unless they can get labor costs down and some of the other costs down, I don't know what they accomplish," said Sam Coats, who worked for several low-cost carriers before becoming vice president of Continental Lite.


Coats, now an independent consultant to the airline industry, also said Ted and Song risk confusing passengers about the United and Delta brands.


Delta's Song is attempting to create a distinct image marketing itself as a product distinct from Delta, using different colors and targeting its product at women.


As for UAL's Ted, the idea isn't to market a totally different brand, but to hit the "sweet spot" between UAL's familiar United brand, and some new things on Ted, said Vice President Donohue. The changes are slight: the logo is different, and the on-board music and video selections include "more comedy" than the main airline, he said.


Brand confusion about Continental Lite caused customers to think Continental had scaled back service on the main airline, and damaged the Continental brand, said Coats, who is looking for an opportunity to run an airline again.


"We got to the point that the whole airline was perceived as cheap," he said. "We would have done better to call it Ted or Song or Rufus or something."


-By Elizabeth Souder, Dow Jones Newswires; 201-938-4148; [email protected]


Updated February 13, 2004 11:16 a.m.
 
Oops.... I posted this one after reading only the first page of this thread, and then discovered that the topic had gone a LONG way from the post I was actually replying to. Sorry if it seems disjointed from the rest of the discussion.

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Well, I for one am not a UAL employee, just a happy and loyal customer (at least when I was consultant and got to travel for a living), and could say nothing but amazing things about my experiences with UAL even as late as last August when I was making my plans to use my UAL miles to fly to Asia for vacation. Everywhere from the front line to the reservation office, to the airplane, it was a great experience. My impression is that the greater majority of UAL employees want to make a difference and maintain a world class airline. Thanks to those of you who do, I look forward to getting to the skies again.

As for Ted, which is the original discussion of this thread, I don't totally disagree with it. I have read good and bad, and in reality, only time will tell if it was a good idea. I think UAL did a great job of minimizing start up expenses for this. Also, being under BK protection, they had to run this by a lot more people (lenders, judges, etc...). All of the people with a stake in this are in it to make money, if they had not seem some good coming out of it, Ted would have never happened. Most of these people have millions to loan UAL to get out of BK because they are smart, and savvy. I am in biz school now, but claim to have no knowledge of the ins and outs of all of this. I am excited about it, as well as the new livery, and see UAL around for many years.

For all of you at UAL, thanks for amazing experiences, and I hope that things continue to get better.

Regards,
CAETravlr :eek: :eek:
 
I just booked a second LAS-DEN r/t for the month of March and I got a $170 fare on Frontier and TED was still at $254. Sorry, it was a no-brainer. I know it is early, but I would have thought that to get peopple on to TED early on, that they would have matched Frontier's prices. In both cases I booked tickets more than 40 days in advance so most of the cheap fare buckets should have been available.
 
coolflyingfool said:
I just booked a second LAS-DEN r/t for the month of March and I got a $170 fare on Frontier and TED was still at $254. Sorry, it was a no-brainer. I know it is early, but I would have thought that to get peopple on to TED early on, that they would have matched Frontier's prices. In both cases I booked tickets more than 40 days in advance so most of the cheap fare buckets should have been available.
Yeah, that surprises me too...Seems Uni/TED should be offering some loss-leader fares early in the game to entice the public.
 
coolflyingfool said:
I just booked a second LAS-DEN r/t for the month of March and I got a $170 fare on Frontier and TED was still at $254. Sorry, it was a no-brainer. I know it is early, but I would have thought that to get peopple on to TED early on, that they would have matched Frontier's prices. In both cases I booked tickets more than 40 days in advance so most of the cheap fare buckets should have been available.
What are your travel dates? March 16-20 is $193 roundtrip on both UA and Frontier.
 
No, my travel dates are 17-21 and 24-28. When I booked the second time I got the $85 difference. If UA/Ted has a $193 fare now, I can assure you it wasn't there in early February. I did search on UAL/Ted/Orbitz/Expedia/AOL/Frontier, so I think I covered all the bases pretty well. Sorry UAL.