Thu, Feb 12, 2004
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.
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