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United Grounds Ted Air Service

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By TED JACKOVICS

The Tampa Tribune

Published: June 5, 2008

TAMPA - United Airlines said Wednesday that it will discontinue Ted, its "airline within an airline," as part of a cost-savings plan to trim about 100 aircraft and 1,100 employees throughout United's system.

It's unclear when Ted's last flight will depart and how it will affect Tampa International Airport, which Ted serves with flights to Chicago, Denver and Washington Dulles International Airport.

Louis Miller, director of Tampa International, said the Tampa routes could be maintained as United Airlines flights. And it could work in Tampa's favor that the three cities Ted serves from here are United hubs, Miller added.

Still, one unknown factor is how Tampa will be affected by an earlier goal set by United to trim domestic capacity by 14 percent by December, compared with December 2007. Another factor is red ink. United posted a $547 million first-quarter loss.

"I am not surprised by United's decision," Miller said about the news of Ted's impending shutdown, which has been rumored for more than two years. "The 'airline within an airline' concept has not been one that seems to have worked elsewhere," he said.

Ted was created so United Airlines could regain some of the market share it had lost over the years to low-cost carriers such as Southwest, AirTran and JetBlue. But despite the enthusiastic launch of Ted in 2004 by Glenn Tilton, United's chairman, president and chief executive, the concept had not succeeded for other major carriers, including Continental, US Airways and Delta.

What originally differentiated low-cost carriers from the long-established airlines like United was their low cost of operations that enabled them to offer low fares. Today's fuel cost spikes, with jet fuel up about 80 percent in the past year alone, have created financial problems for all airlines to some degree.

United said in a release Wednesday that schedule changes would principally be accommodated through "modest reductions of underperforming markets and through frequency reductions while retaining a commitment to all five U.S. hubs."

The airline said it would trim its staff by 1,100 more than the previously announced reduction of 500 employees by year's end. It is not known how United's Tampa employment might be affected.

At Tampa, Ted accounts for some 276 of the daily average of 676 passengers departing Tampa International for Chicago, 230 of the 337 daily average passengers leaving Tampa for Washington Dulles, and 199 of the 436 Denver-bound daily passengers.

United also will retire 94 Boeing 737s and six Boeing 747s.

The airline plans to incorporate its 56 Airbus A320 aircraft that Ted flies into United service by the end of 2009, with plans to reconfigure the A320s beginning next spring to add a first class section.

United is not alone in announcing reductions. American Airlines last month said it would trim flight capacity by 11 percent to 12 percent by December and eliminate "thousands" of jobs. Delta Air Lines said Tuesday that it would drop more flights in addition to a recent 11 percent domestic reduction and 3,000 buyouts.

Spirit Airlines, which announced Tuesday that it might cut up to 212 of its 540 pilots, said Wednesday that it has not decided yet about possible flight schedule cutbacks at Tampa International Airport.

"Spirit has not made any decisions regarding systemwide capacity reductions," chief executive Ben Baldanza said Tuesday. Baldanza said Spirit's announcement of trimming pilots and 240 of 750 flight attendants was to meet federal regulations to notify labor representatives of "possible" reductions.

It is believed Spirit's decisions about trimming flights will depend on fuel price trends the rest of the year.

Reporter Ted Jackovics can be reached at tjackovics@tampatrib.com or (813) 259-7817.

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