United Airlines has hunkered down to deal with $130-a-barrel oil. Rebuffed by potential merger partners, United is slashing jobs, cutting routes and grounding fuel-guzzling planes. United is also dumping Ted, its 4-year-old experiment created to compete head-to-head with Southwest Airlines and other discounters.
Ted was launched with much fanfare in February 2004 as a more relaxed, cheaper and hipper “airline-within” its formal parent, United. Ted’s fare structure was going to be simpler and it was going to fly the same vacation routes to Las Vegas and Ft. Lauderdale that catapulted Southwest Airlines to success.
Ted was going to rock. It was going to help passengers chill out on their way to fun and sun. Ted was going to be the dude to United’s Dad. Ted was going to serve grilled salmon salads and give kids candy. We’re not kidding. That was before Ted and the parental unit decided food was a frill that wouldn’t be missed.
Ted, though, never really drew much of a distinction in the minds of passengers. The chillin’ Ted used many of the same airports, gates and workers as United. Sometimes passengers would end up on Ted when they thought they had booked on United or end up on United when they expected to be on Ted. It was hard to tell the difference.
We don’t envy any airline trying to make it in this environment. It is tough going and it’s likely some airlines won’t survive if oil prices keep rising.
But we’d like to ask an impertinent question at Ted’s wake. If United intended to copycat Southwest, why didn’t the airline really do it?
That’s not just a question for United. It’s a question for every U.S. airline.
Southwest is the only major U.S. carrier that is expected to turn a profit this year.
Southwest is successful because it has a streamlined cost structure and made some wise decisions to hedge against rising fuel prices. It benefits from a route system that takes advantage of cheaper, secondary airports in some metropolitan areas.
But Southwest also does well because it has a reputation for putting customers first. Now it is capitalizing on the moves by airlines to impose baggage charges and other fees that seem intended to turn away customers. Southwest’s advertising lure: No surprise fees. It has a booking policy that makes it easier to change flights. Southwest just seems more focused on pleasing fliers.
Southwest says it began with a “simple notion” that “if you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline.”
It has a work culture in which employees — clerks, baggage handlers, gate agents, flight attendants, pilots, on up to the CEO — are expected to pitch in and do whatever it takes to get their passengers where they want to go. The result: Southwest’s passengers are almost cultlike in their loyalty to the airline.
Loyalty to an airline. Imagine that.
Yes, oil prices are pummeling the airlines. But some of their wounds are self-inflicted.
