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Thu, Feb 12, 2004

Ted's Excellent Adventure

United's Budget Carrier To Fly From DEN

Denver passengers take note: a battle of the airlines is about to take place in your neighborhood. A new era of low-fare competition begins Thursday at Denver International Airport (DEN) when United Airlines launches Ted, its discount carrier.

The major carrier hopes to challenge Denver-based Frontier Airlines for the budget traveler's dollar at DEN, a growing market that Chicago-based United can't ignore. Matching up Frontier with Ted, which will fly to eight destinations from Denver by mid-March, promises to give travelers more low-cost options on those leisure-oriented routes. But it won't necessarily set off a fare war. So far, Ted is matching Frontier's prices without undercutting them.

United officials say Ted is essential to their reorganization under Chapter 11 bankruptcy protection. The carrier's market share at DEN, its No. 2 hub and a major contributor to its $3.5 billion in annual sales, is sliding. Today, low-cost carriers account for 20 percent of the airline seats flying in and out of the airport, and the number will grow. By the end of the year, United plans to have 40 Ted planes in operation, with 19 based in Denver. That's more than a quarter of the roughly 70 mainline United jets currently based in Denver, according to a Denver Post estimate based on the portion of United's flights operated from DEN.

By comparison, Frontier has 39 mainline jets (planes with more than 100 seats), with plans to add another nine by the end of the year. Frontier's passenger share doubled to 16 percent in the past three years, while United's fell 10 points to 60 percent. During that time, flights on low-cost airlines, primarily Frontier, rose 65 percent, a recent airport study found. Meanwhile, United and its commuter affiliates slashed departures by 17 percent.

The Ted strategy is to serve leisure travelers with service that resembles Frontier and JetBlue Airways, but with access to United's global flight network and popular frequent-flier program. The airline will continue to fly business routes such as Denver-Chicago with United planes. So far, United has announced Ted flights from its hubs in Washington, Los Angeles and San Francisco.

FMI:  www.flyted.com

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