Should Ual Think Over Ted?

[LiveInAHotel]

What major carrier has been successful with an airline within an airline? Nobody!

Here are some carriers who have tried in the past or are trying it now:

1. Continental- Continental Lite...failed

2. United- Shuttle by United...failed

3. US Airways- MetroJet...failed

4. Delta- Song...not doing as expected and soon will be gone

5. United- Ted...second try by United and will have the same results as Shuttle by United

If the majors want to beat the LCC at their own game, they have to become a LCC only. Operating two brands is to costly these days.

Northwest and American are playing it smart. They're just lowering their fares to compete in the LCC markets.

 

[boeing787]

Time will tell. TED load factors are running in the 80s. Thats a fact!

 

[autofixer]

Time will tell. TED load factors are running in the 80s. Thats a fact!

So did Metrojets!

 

[HPearlyretiree]

Load factors mean nothing, remember the old joke "We are losing money on every customer, but we plan to make up for it in volume!"

 

[Fly]

yawn

 

[TJoe]

From the USA Today. Sounds like Frontier is a better ride.





Portland to Denver: Frontier vs. United


United Airlines is so desperate to blunt Frontier Airlines' advances at their shared Denver hub that the still-bankrupt Big Six carrier launched Ted, another attempt at a low-fare carrier. Meanwhile, Frontier will fly you back and forth from Portland, Oregon, for $438.20. That buys an 18-inch wide coach seat on an Airbus A318. The seat pitch is 33 inches. United charges $484.20 to fly roundtrip on a Boeing 737-500 that has 17-inch wide coach seats with 31 inches of seat pitch.


•My Verdict: Fly United if you want the privilege of being close to a Red Carpet Club room (membership required, of course) or need the MileagePlus miles. Otherwise, I'd save the $46, take the Frontier EarlyReturns miles and the wider, roomier Frontier seats.

 

[TJoe]

What are the seats like on Ted?

 

[Fly]

Ted is flown on Airbus's...not 737's. So that article is a little misleading I suspect (or self serving?) Besides: Ted isn't flying PDX sooooo that's not TED that's United. This is from the Ted website: Today's flight marks the start of Ted's commercial service which will grow to 52 daily roundtrip flights by the end of March from Denver to Reno, Las Vegas, Phoenix, New Orleans, Tampa, Orlando, Ontario (California) and Ft. Lauderdale. Ted also will begin service between Las Vegas and Los Angeles, Las Vegas and San Francisco and San Francisco and Phoenix.

Beginning April 7, Ted service will begin from Washington-Dulles to Ft Lauderdale, Orlando, Tampa and Las Vegas.


So that blows that theory anyway. Good reporting USA Today <_<

 

[TJoe]

Fly,
You need to read the article. It mentions United launching Ted, but it does not say this flight is Ted. It is comparing United's full class service to Frontiers low cost, one class service. My question was if United's main line coach seats are less comfortable than Frontiers, what are Ted's going to be? Joe

 

[Borescope]

how many flight attendants does United still have on involuntary furlough???

The key here is "involuntary"

 

[Cosmo]

Fly,
You need to read the article. It mentions United launching Ted, but it does not say this flight is Ted. It is comparing United's full class service to Frontiers low cost, one class service. My question was if United's main line coach seats are less comfortable than Frontiers, what are Ted's going to be? Joe

To answer your question, United operates only A320s on its Ted flights. The A320 has the same fuselage cross-section as Frontier's A318s and A319s, and thus the same 6-across seat width.

As for the USAToday article, which was obviously an opinion column, did it mention that United currently has more daily nonstop frequencies in the DEN-PDX market than Frontier (6 vs. 3)? Did the article mention that while Frontier is adding an A318 flight on this route in March (daily nonstop frequency going from 3 to 4), 2 of the current A318 flights each day will be downgraded at that time to CRJ-700 flights operated for Frontier by Horizon? And did the article mention that Alaska also operates 3 daily nonstop flights in the market with B737-400/700s, and what that carriers' fares might be? Based on what you posted, the answer is "no" (the source for the above questions is the February 2004 OAG).

It should be remembered that any "snapshot" of comparative fares can give a very misleading indication of each carrier's true average fares in a market. But even if Frontier really does have a lower average fare in the DEN-PDX market (as seen over a reasonable period of time), United might have concluded that it really can get a premium over Frontier's fare for the reasons stated in the article. Also keep in mind that both carrier's local traffic on this hub-spoke route is likely to be only a small portion of all passengers carried, probably in the 20%-30% range. So looking at local fares in a market, especially from a hub, does not give a complete accounting of a market's profitability for a carrier.

IMHO, if the column writer had done some additional research and analysis, the article probably would not have been so negative about United -- unless that was the writer's intent all along.

 

[Borescope]

did it mention that United currently has more daily nonstop frequencies in the DEN-PDX market than Frontier (6 vs. 3)?

So, we can lose twice the amount of money?

 

[Cosmo]

So, we can lose twice the amount of money?

That's unlikely, since it is generally recognized that the carrier with the greatest frequency in a market usually gets a traffic and revenue premium versus its rival(s). In addition, there's really no way to tell which carrier is doing better financially on a route without knowing each carrier's RASM and CASM for that specific route.

But more importantly, the primary issue for United is network profit maximization. So even if United is losing money on DEN-PDX on a stand-alone basis, the route is nonetheless worthwhile to operate if the revenues generated by those DEN-PDX passengers throughout United's system provide a net positive contribution (after subtracting the costs of the DEN-PDX flights) to the carrier's bottom line.

 

[Ukridge]

Cosmo, you or someone else may be able to answer this question. If certain city pair combinations are unprofitable per se, but add positively to the revenue side on a continuing segment, then this would be seen as an acceptable solution. My question from a 'just curious' standpoint then is what percentage of a major airline's city pair combinations are unprofitable as stand alone segments? Do the airlines even track this? It would seem to be a rather complex tasking to "trace" if you will, a passenger all the way through the system to see the end result in terms of revenue. Yet, it seems to be a necessary duty if they are going to fly some flights as 'loss leaders.' How difficult is it to track this?
Speaking of loss leaders, there was discussion the other day about Swiss (formely known as Swiss Air). The contention from one quarter was that although it is a terribly money losing enterprise, it actually serves a loss leader for the country as a whole. Although it cannot operate profitably, it brings in enough business to the cantons (you know, hiding money, providing equipment to Dr. Kahn in his efforts to populate the third world with nuclear weapons, etc.) to offset any money the state has to provide to keep it afloat. I found this idea of a national 'loss leader' rather interesting - not sure it has bearing on United but I would think your government will look at air transport as a national asset and not an incubus for market expermentation.
Cheers

 

[Cosmo]

My question from a 'just curious' standpoint then is what percentage of a major airline's city pair combinations are unprofitable as stand alone segments? Do the airlines even track this?

Ukridge:

Without trying to sound too evasive, the answer to your questions are that the airlines do indeed track this information, but the percentages vary -- by airline, by time of day, by day of week, by month of year, etc. Beyond that, I wouldn't have a clue as to how many of an airline's sectors are profitable, on whatever basis you might want to use. But I'm sure the airlines themselves know their own percentages, and I suspect that it's a heavily guarded secret. But I'll defer to any airline folks who want to get into specifics.

It would seem to be a rather complex tasking to "trace" if you will, a passenger all the way through the system to see the end result in terms of revenue.

Regarding your comment about tracing passenger routings for revenue purposes, the airlines do that, too, thanks to the current state of computerized record-keeping. In fact, here in the States the data is reported in the form of a 10 percent survey in rather comprehensive detail to the DOT. This is what's known as Origin-Destination (or O&D) data, to which you might have seen references in various posts.

To give an example, United knows how many of its passengers traveled between IAD and SFO on: a. nonstops, b. ORD connections, c. DEN connections, d. LAX connections, e. LAS (i.e., non-hub) connections, f. ORD and DEN (i.e., double) connections, etc., etc., etc., well, you get the idea. United also knows how many passengers on an IAD-DEN nonstop flight are local, how many connected at IAD (say, from LHR), how many connected at DEN (say, to SLC), and how many connected at both IAD and DEN (say, from LHR to SLC). The data is all there, neatly collected. The key issue is how and to what extent United makes use of this data to maximize its profits (or minimize its losses), on both a per-flight or per-route basis as well as on an aggregate system-wide basis.

I hope that helps.