Photo: Pentagram.
I may as well start calling this "The Failed LCC Corner." Following my post on Delta Song, I was asked by several people why I did not choose Ted by United. Good question; they were on almost parallel tracks and equally as witty. Like Song, United had launched Ted in response to JetBlue Airways’ disruption in the early 2000s. Further, Ted also utilized resources from its parent company (instead selecting Airbus A320s).
Using bright gold and deep blue, Ted aircraft were a welcome sight at airports nationwide. The airline’s run made it a bit longer than its Delta counterpart, lasting upwards of five years before the airline ceased operations. Ted was the most formidable among the subsidiaries we have/will discuss and may have very well been around today if it wasn't for record-high fuel prices. So, let’s get into it.
History
As previously discussed, there was a low-cost revolution within the aviation industry in the early 2000s. New York City low-cost carrier JetBlue Airways had just come onto the scene, driving down ticket prices in many major markets. Southwest began to compete uniquely, expanding its presence at smaller secondary airports that were convenient alternatives to major hubs.
The post-9/11 timeframe was challenging for airlines worldwide. Traffic demand was at an all-time low, and as war quickly approached, fuel costs began to soar. Now, there was a new and genuine threat to their existence. Feeling the heat, Delta launched the aforementioned low-cost carrier Song, Continental, while United focused its response on its own low-cost subsidiary - Ted.
United had already taken a swing at the whole low-cost carrier thing. In 1994, Shuttle by United was mainly formed in response to the recession of the early-1990s and increasing low-cost competition. The carrier performed well out of Los Angeles and San Francisco hubs on high-density routes with shorter stage lengths. The airline would be folded into United in 2001 following the terror attacks. Yet, in 2003, the parent company hinted at reviving the Shuttle brand. Instead, they chose to launch Ted.
Another low-cost carrier had played a significant role in Ted’s emergence - Frontier Airlines. At the time, Frontier was transitioning into the foundation of the airline we know today. Having recently retired its last Boeing 737, the low-cost carrier established an extensive network out of its hub in Denver, where United held a significant hub for years prior. This would be where Ted had their most prominent presence, but routes were established out of other United hubs, such as Chicago-O’Hare and Washington-Dulles.
For five years, Ted would compete with the best on popular getaway routes. Of United’s 99 Airbus A320s, 56 were dedicated to the Ted brand. As its Classic-generation Boeing 737 fleet began to be phased out, United looked to its fleet of Airbus A320s to fill the void.
In 2008, fuel costs skyrocketed once again, totaling 84% higher than the previous year and wreaking havoc on airlines looking to do business in the United States. Legacy carriers generally scaled back networks and grounded planes to mitigate the effects. There were several repercussions to the fuel crisis, including the termination of the Ted brand.
Business Affairs
Financially, the airline did everything United asked them to do. While low-cost carriers competed with point-to-point flying, Ted allowed passengers to connect through hubs at a low fare to select leisure destinations from each city, expanding their reach beyond their primary markets. In comparison, Delta Song primarily focused on point-to-point flying and was rarely a sight at their central Atlanta hub, making them less versatile.
Its fleet of Airbus A320s sat 156 passengers in a 3 x 3 configuration, and the first eleven rows were allotted extra legroom for those willing to book economy-plus tickets. The parent company owned or operated all aircraft, crews, and other resources. Flights were also operated under the United callsign, and planes could be used interchangeably.
The fleet was also fitted with in-flight “TedTV,” allowing the no-frills passengers added experience and friendly customer service, thus more bang for their buck. For example, agents would assign seats before the flight, allowing families to sit together. Budget passengers, many of them loyal United customers, would return to the airline for an enjoyable experience at an affordable cost. Ted customers could also earn United frequent-flyer miles, further incentivizing continued business.
Largely thanks to its genuine marketing, Ted hit the ground running. Sales were initially strong, exceeding the airline’s expectations after their first year. Financial performance was never the root cause of Ted’s failure - no airline except Southwest and JetBlue turned a profit in 2008. For example, Frontier - Ted's primary rival out of Denver - reported losses of $87 million for the same year.
In finality, a United spokeswoman, Jean Medina, stated that “Ted worked well in another economic environment.” Unfortunately, the economy is a constant and significant variable at play regardless of a company’s industry, and for airlines, it was a time of turmoil. Indeed, at these moments, some hard decisions had to be made, which was then uncharted waters.
At their closure, Ted served 23 destinations in three countries. The route map would remain consistent during their tenure, never caught trying to do too much while touching cities nationwide. It was as if they learned their lesson from their previous experiment. Shuttle greatly benefitted from the tech bubble but had little to fall back on when times got tough.
Toward the tail end, United had felt that customers preferred a dual-class offering. Thus, the airline justified retrofitting former Ted aircraft with a reconfigured interior and placing them on business routes. However, with what we know today, that is hardly the case - there is a serious population of consumers who are primarily interested in the lowest fare.
Marketing
The Ted brand was created by then executive vice president Sean Donohue, who stated the goal was to create a “warm, friendly and inviting” airline. From the start, executives clamored that Ted would be an airline filled with excitement. The Mayor of Denver would even declare “Ted Day” in the airline’s honor.
It is quite evident where the airline's name came from. The design studio Pentagram, a long time partner of United and consultant in the matter, said of the name:
After considering hundreds of names, we discovered one right before our eyes: Ted. By using the last three letters of its parent’s name, Ted was able to signal just the right balance of informality and friendliness, with a built-in connection to the umbrella brand.
This was easy to say for fans. Critics, such as industry consultant Robert W. Mann Jr., were quick to point out that "Ted" stood for the “end of United.” Jokes began to emerge that American would launch a low-cost carrier, “Can” and Northwest would startup one named “West.”
In the early 2000s, low-cost carriers had a reputation for being the friendly option to fly versus the “big bad” legacies. Despite this dichotomy between brands, United attempted to balance the two. Flight attendants would hand out free headphones for passengers to watch complimentary TedTV, and passengers could purchase signature Teddy bears on flights.
Fallon Worldwide, a United agency, was in charge of the marketing for the airline. Before announcing the startup airline, Fallon began hinting at the future carrier with billboards claiming, “I’ve seen Ted” and “Meet Ted.” This informal campaign would only be the start and serve as a business school case study of the importance of creativity in advertisement.
Fallon would bolster their informal campaign with self-described guerilla marketing, where the unseen fictional carrier Ted would meander around the community of Denver performing good deeds. For example, United would deliver flowers to a local Denver hospital from “Ted.”
To make things more interesting, radio ads would run with a conspicuous voice of Ted, eventually transitioning into television spots purporting the search for a Ted spokesperson. United would even go as far as to outline the Ted logo with enormous letters in a sod field outside of Denver.
This unique campaign generated nationwide coverage, eventually leading to the unveiling of the new airline. As a result, Ted saw unprecedented ticket sales at their launch and was viewed favorably in the marketplace throughout its existence.
Ted Today
No, the movie had nothing to do with the airline. Regarding resources, all Ted aircraft integrated into the mainline fleet still fly with United today, while they are certainly moving up in age. Ultimately, there was little impact on the aviation industry as a whole. While Ted has been gone for over a decade, low-cost alternatives have been available on the routes they served for quite some time.
Unfortunately, the low-cost carrier is no longer associated with friendly service. Frontier is often synonymous with the opposite, especially after restructuring as an ultra-low-cost carrier.
I am curious to know when customer service and low airfares became mutually exclusive. I know it will never happen, but I want to see low-cost airlines emerge to restore humanity to air travel at an affordable cost. JetBlue, once known for its Bluemanity, has been named Worst Airline of the Year in several recent years. Ted at least solved two problems - the cost of tickets and friendly skies.