United Airlines Corp.

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United Airlines Corp.

IT'S TIME TO FLY CAMPAIGN
RISING CAMPAIGN
TED LAUNCH CAMPAIGN

1200 E. Algonquin Road
Elk Grove Township, Illinois 60007
USA
Telephone: (847) 700-4000
Fax: (847) 700-4081
Web site: www.united.com

IT'S TIME TO FLY CAMPAIGN

OVERVIEW

The September 11, 2001, terrorist attacks crippled the airline industry in general and UAL Corporation's United Airlines in particular, forcing the company to file for bankruptcy in 2002. Though United was still the world's number two carrier in 2004, substantial obstacles lay along the airline's path back to profitability. Trying to reorganize and emerge from bankruptcy, United launched "It's Time to Fly," the airline's first branding campaign since 1999.

Conceived by United's agency of record, Fallon Worldwide of Minneapolis, "It's Time to Fly" targeted business travelers with animated TV commercials set to United's signature sound track, George Gershwin's Rhapsody in Blue. Print, outdoor, and online advertising likewise used distinctive illustrations to communicate the campaign's key message: that United understood the lives of businesspeople. Focused primarily on hub cities Chicago, Denver, Los Angeles, San Francisco, and Washington, D.C., "It's Time to Fly" likewise included innovative international components in London and Hong Kong.

One of the campaign's TV spots was nominated both for an Emmy Award and an Annie Award from the International Animated Film Society, and the stylishness of the campaign as a whole was a bright spot and a potentially significant step in the company's arduous struggle to remake itself for the future.

HISTORICAL CONTEXT

The early years of the new millennium were extremely difficult ones for airlines, and United had it tougher than most. In 2001 a proposed merger with U.S. Airways was blocked by antitrust regulators, and then two United jets were involved in the September 11, 2001, terrorist attacks that both changed global politics and left the airline industry in shambles. During the decline in air travel that followed the attacks, United had to lay off more than 20 percent of its employees and eliminate a substantial number of its flights. The airline lost $2.1 billion in 2001 and filed for Chapter 11 bankruptcy protection in late 2002. UAL progressively cut its workforce and instituted pay and benefit decreases during bankruptcy reorganization, and in late 2003 it launched a low-fare carrier, Ted (a shortened version of the brand name United), to compete with discount airlines such as Jet Blue and Southwest, whose lower fares had long spelled trouble for full-service airlines like United.

The airline's last branding campaign, "Rising," which ran in 1999, had been an ill-timed and poorly received attempt to convince consumers that the airline's best days were in front of it. The difficulties facing full-service airlines were at that time all too apparent, and UAL's growing operational and labor troubles—problems that contributed significantly to the company's eventual bankruptcy—already loomed on the horizon. After it filed for bankruptcy the company had an understandably modest advertising budget. Since 2002 United's advertising had been largely restricted to promotional and fare-sale efforts.

TARGET MARKET

"It's Time to Fly" was a global campaign that primarily targeted frequent business travelers, attempting to show them that United understood its role as a facilitator of their success. The tagline itself implicitly referred to the airline industry's recent troubles and emphasized the benefits of traveling for business purposes. As a company spokesperson told the Wall Street Journal, "It's Time to Fly" was "a call to action for our own employees and a call to action for our customers … it's time to get back to meeting face to face … we are ready when you are."

TV ads paired George Gershwin's Rhapsody in Blue, which had been United's theme music since the 1980s, with animated storylines (free of dialogue) dramatizing the role that air travel played in the lives of business-people. "Interview," for instance, showed the importance of face-to-face meetings by dealing with the ups and downs of the job-interview process. In the commercial a man woke up early, fussed over his appearance, and caught a United flight to an out-of-town interview, only to realize, on the elevator just before meeting his prospective employers, that he was wearing one brown shoe and one black shoe. He was dejected after the interview until he got a call on his cell phone informing him that the job was his. On the United flight home he napped with a smile on his face, and a flight attendant thoughtfully pulled down the window shade. Meanwhile, "A Life" traced the life and retirement of a business traveler in 60 seconds, during the course of which he traveled for both business and pleasure. This illustrated not only the business traveler's dependence on United but the seamless integration of all phases of his life, made possible by the airline's worldwide presence. The music in each commercial mirrored the ups and downs of the lives and situations being featured, and it was only interrupted at the end of each spot by the voice of Robert Redford intoning, "Where you go in life is up to you. There's an airline that can take you there—United. It's time to fly."

Print ads similarly employed illustrations, some of which had been conceived as original artwork for the New Yorker magazine, and again the intent was to show business travelers that United understood them and the role that flying played in their lives. In one, a man ascending at a subway stop found himself emerging into a literal jungle. The accompanying copy read, "You didn't get where you were going by finding the most comfortable spot in the office." Other print ads communicated United's role in the business traveler's lifestyle with messages such as "Let's face it. It's hard to climb the corporate ladder without going up 30,000 feet" and "Business is a series of battles. We make the chariots."

COMPETITION

United was number two among air carriers during the "It's Time to Fly" campaign. American Airlines, owned by AMR Corporation of Fort Worth, Texas, was the world's number one airline, and Atlanta-based Delta Air Lines was number three. Like United, both of these companies had been posting heavy losses and had been advertising only minimally in the years since the terrorist attacks of September 11. Both, likewise, had flirted with bankruptcy and were in the process of downsizing as a means of moving back toward profitability.

HOW DID THEY DO THAT?

To create the United spot "Interview," Academy Award-nominated animation partners Wendy Tilby and Amanda Forbis used the same process they had used in their acclaimed short film, "When the Day Breaks." First they shot digital-camera footage of their friends and neighbors realistically performing the roles in the film, and then they edited the story using the software programs iMovie and After Effects. Using the animation program Flash, they made computer drawings on top of the real-life scenes before printing out the images and painting them by hand. Among Tilby and Forbis's chief worries during this process was the possibility that the main character looked too much like the actor Ben Affleck. To correct this potential pitfall the animators altered and exaggerated the main character's features.

In 2004 American, like United, launched a branding campaign for the first time in several years. American's "Something Special in the Air" commercials had stopped airing in the late 1990s, and a brand campaign had been in development when American lost two of its planes in the September 11 attacks. (American then lost a third plane in a November 2001 crash.) Following on the heels of near-bankruptcy, layoffs, and restructuring, the 2004 campaign, called "Tickets to Life," attempted to show that American was the carrier with the best understanding of its customers. Each of the campaign's four TV spots featured a passenger heading to or from an important event, the significance of which an American Airlines employee clairvoyantly understood, and each ended with the tagline, "We know why you fly." The branding effort's estimated 18-month price tag was $60 million.

Delta Air Lines remained on the brink of bankruptcy through 2004, with high fuel prices and labor costs prolonging its difficulties and forcing it to cut jobs and reduce expenses. Its plan to stay aloft in the coming years included expanding its presence at several airports and expanding its low-fare subsidiary, Song, launched in 2003. In 2004 Delta ran an integrated campaign on behalf of its flagship brand, featuring an emphasis on its recently expanded operations at New York's JFK Airport. As part of the New York effort Delta unveiled a 30-story mural designed by artist Bruce McCall, best known for his contributions to the New Yorker. It also decorated Mini Coopers like Delta jets and employed drivers and street crews to engage passersby with a range of promotional offers.

Dallas-based Southwest Airlines was the only major airline in America to maintain its full flight schedule and to avoid employee layoffs in the aftermath of September 11. Its straightforward business strategy allowed it to remain profitable despite the overwhelming problems plaguing the rest of the industry. Southwest kept costs to a minimum through its exclusive use of one type of aircraft, the Boeing 737, its focus on short flights and small airports, and its no-assigned-seats policy. The airline, which had begun as a regional carrier, took advantage of its competitors' cutbacks by expanding during the industry downturn, adding direct international flights and adding to its East-Coast presence with service to Philadelphia and Pittsburgh.

MARKETING STRATEGY

"It's Time to Fly" was launched on February 18, 2004, with a print ad in the Wall Street Journal. The print ads, numbering 10 in all, used illustrations by New Yorker contributors such as Carter Goodrich, Rea Irvin, and Charles Martin. Other publications selected for the print run, which continued throughout 2004, were the New York Times Magazine, Time, Newsweek, BusinessWeek, Fortune, and Fast Company.

A total of four TV spots headlined the campaign. The first, "Interview," broke in United's hub markets during the Academy Awards telecast on February 29, 2004. The TV spots, each of which was scripted by Fallon and paired with a version of Rhapsody in Blue, were crafted by award-winning animators, who were given a choice of scripts and allowed substantial creative freedom. Academy Award-winning animators Aleksandr Petrov and Michael Dudok de Wit designed "A Life" and "Rose," respectively; while Academy Award-nominees Wendy Tilby and Amanda Forbis animated "Interview," and two-time Academy Award-nominee Joanna Quinn animated "Lightbulb." Each spot was dialogue-free, with the on-screen action tied to the ebb and flow of the Gershwin song, and each included the closing voice-over by Robert Redford. TV placements beyond the Oscar-night launch included hub-market buys during national events, including the U.S. Open golf tournament and national cable programming that tended to interest business travelers, such as CNN Headline News, CNBC's Squawk Box, and A&E's Biography.

Outdoor ads ran on billboards in Chicago and Los Angeles, featuring similarly distinctive illustrations that supported the overall look of the campaign. An online campaign—United's first—focused on British business travelers, targeting U.K.-based websites with a high concentration of business traffic. United and Fallon targeted London commuters in the Bank Underground station, inserting panels down a 160-yard length of station corridor to duplicate the appearance of a plane's interior. Views of scenery en route to New York or San Francisco from London were visible beyond the make-believe windows. United and Fallon likewise utilized Hong Kong's MTR underground system, installing backlit images along 300 yards of wall space between subway stations to create an effect comparable to that of a cartoon flip book. The resulting 20-second "movie" simulated a flight from Hong Kong to Chicago, showing views of both cities and both airports along with views visible along the way.

The global media campaign was also synchronized with in-house efforts aimed at bringing United's various operations together under a strengthened brand image. These efforts included a new look for the planes' exteriors. A blue-and-white paint job replaced United's predominantly gray livery and complemented the look of the company's just-commissioned Ted planes.

OUTCOME

"It's Time to Fly" attracted admiring press coverage and made United, according to Advertising Age's Bob Garfield, "the most elegantly advertised" airline of the time period. The TV commercial "Interview" was named a Shoot magazine "Top Spot" in April 2004, was one of five nominees for an Emmy Award for best prime-time commercial, and was one of five spots nominated in the advertising category of the International Animated Film Society's Annie Awards.

The favorable attention did not translate into profitability for the airline, however. UAL kept struggling through 2004. In 2005 the company continued to trim expenses, winning permission to default on its employee pension plans and announcing that some among its senior management team would take a 15 percent salary cut. Pilots saw increased flying time and other benefit reductions, as the company considered another round of major layoffs.

RISING CAMPAIGN

OVERVIEW

"Fly the Friendly Skies" had been a stalwart slogan for United Airlines since 1966, but as legions of business travelers could attest, the skies became increasingly unfriendly in the 1990s. The airline industry developed a decidedly negative public image because of deregulation, delayed takeoffs, lost baggage, cramped seating, and unsatisfactory customer service. A subsidiary of the UAL Corporation, United Airlines was the world's largest carrier, and its executives felt compelled to turn a new face toward fed-up consumers. After an exhaustive consumer research study, the airline began to revamp its positioning. United released "Rising," a campaign that acknowledged the lack of quality in the industry with a message promising to make things better. The airline hoped that such an honest approach would gain it consumers' trust and increase business.

Created by the ad agency Fallon McElligott, the $140 million print and television campaign debuted on May 22, 1997. Marketing experts initially called the campaign bold because it was the first in the airline industry to acknowledge the "rising" dissatisfaction flyers felt with all carriers. Instead of saturating viewers with the industry's advertising stereotypes—images of contented passengers headed (on time) for exotic locales while enjoying gourmet in-flight meals—the United campaign admitted that customers had a right to resent poor service and vowed to do whatever it took to satisfy the customer. The voice-over for one spot remarked, "If Orville and Wilbur had to go through what you do just to fly, they would have stayed in the bicycle business." After United employees and ad critics later criticized the campaign's condescension, the strategy shifted to a more ambiguous, uplifting message. The campaign concluded in late 1999.

During the later half of "Rising," the net income for United dipped to $187 million in 1999 from $218 million the year before. At first the campaign fared well, even garnering a few ad-industry awards. During its last year, however, ad critics ruthlessly discredited the campaign for promising something that United ultimately never delivered.

HISTORICAL CONTEXT

The world's leading passenger air carrier, United was also one of the oldest major airlines. In 1929 United Aircraft and Transport was formed by the partnership of aircraft designer William Boeing and engine designer Fred Rentschler. Then based in New York, the startup company—renamed United Airlines in 1931—was the first carrier to offer coast-to-coast services. By 1934 a reorganization brought United's transportation headquarters to Chicago, where it remained.

United was the largest business under the umbrella of parent company UAL Corporation, which also operated subsidiaries that included Apollo Travel Services, Galileo International Partnership, Shuttle by United, and United Express. In 1997 UAL formed the Star Alliance partnership with international airlines including Germany's Lufthansa, Scandinavian Airlines System (SAS), Air Canada, and Thai Airways to further increase international business. With hubs in Chicago, Denver, San Francisco, Tokyo, and Washington, D.C., United delivered passengers to 140 destinations worldwide; its fleet of 50 jumbo jets was among the industry's largest.

Though not known for technical innovation (United's first foray into jet service in 1959 trailed that of competitor American Airlines), the company parlayed partnerships, acquisitions, and a reputation for customer service to grow into the world's leading air carrier. During the 1960s and 1970s new management brought related industries into the fold. Hotels, car rental services, and a computer reservation company at one time were part of the company briefly known as the Allegis Corporation, whose goal was to become a travel conglomerate. But with the 1987 resignation of CEO Richard Ferris, the revamped UAL sold off the non-core acquisitions to focus on the core business of delivering "the friendly skies."

By the 1990s changes in the airline industry brought a proliferation of new names to airports across the United States, cutting into United's profits. In addition, skyrocketing fuel oil prices and a recession brought fierce cost-cutting measures from large and small carriers. Seeking a new way of doing business, United sought a union buyout in 1993. Losing almost $800 million a year, the company was forced to lay off thousands of employees and cut management salaries. Conflicts with pilots, machinists, and flight attendants continued to threaten UAL's operations until 1994, when stockholders approved an employee purchase of the company in exchange for almost $5 billion in wage concessions. With United employees holding 55 percent of the stock, the air carrier was among the world's largest employee-owned publicly traded companies.

But growth came at a cost. Deregulation and "fare wars" were bringing more people into airports, resulting in overbooked flights and crowded runways. Something had to give, and for the typical high-volume business traveler—United's target customer—that something was reliable service. Research revealed that United's passengers considered the airline no more capable of delivering "friendly skies" than its competition. So in 1997 UAL retired its venerable slogan (and its longtime ad agency) to establish a new image. The Minneapolis agency Fallon McElligott was charged with creating a campaign that would speak to U.S. business travelers on their own terms.

TARGET MARKET

United's core customer was the business traveler; such customers constituted 9 percent of United's passengers yet provided 44 percent of the airline's revenue. With its large fleet and service to major business centers, United had a great investment in this customer category and could not afford to alienate the frequent flyer, who also tended to be among United's most vocal critics. These travelers valued reliable takeoffs, comfortable travel, and easy access, all of which the airline industry was hard-pressed to deliver during the 1990s.

The recreational traveler was not ignored; print ads highlighted pleasurable upgrades such as improved meals and the addition of Starbucks coffee to in-flight service. An Advertising Age report also noted that United had "become the first major airline to advertise specifically to the 'gay market' by adding a gay-oriented magazine to its 'Rising' print media plan."

COMPETITION

In the growing universe of passenger carriers, United had to compete not only with major names like Delta, Trans World Airline (TWA), Continental, and Northwest but also with smaller or regional/international names such as America West, Virgin Group, Japan Air Lines, Italy's Alitalia, British Airways, and New Zealand's Kiwi Air Lines. United's major competitor, Delta Airlines, introduced its own new advertising slogan in 1997. Delta's "On top of the world," meant to reinforce good impressions of flying, was more in keeping with the kind of advertising traditional to the airlines market. In a 1997 J.D. Power & Associates survey, United finished with a "below average" rating among commercial airlines for flights under 500 miles. For flights longer than 500 miles, the company landed in third place behind Continental and TWA.

Competition outside of the airline industry included regional and national rail and bus lines, such as Amtrak and Greyhound. Some people chose to travel by train or bus because they were put off by the cost or inconvenience of airlines or because of fear of flying.

INTERNATIONAL ENDORSERS

Marlon Brando's voice-over in United Airline's international commercials represented a trend among high-profile actors. These celebrities, who may not otherwise have compromised their A-list integrity by making American commercials, appeared in or provided voice-over work for advertising spots screened exclusively overseas. Some of the more notable commercial stars included Woody Allen, Jodie Foster, and Leonardo DiCaprio.

MARKETING STRATEGY

Prior to the "Rising" campaign United invested hundreds of millions in improving and upgrading its equipment, from ordering more wide-bodied Boeing 777s to redesigning each airline seat for the comfort of the passenger. In early 1997 the ad agency Fallon McElligott began talking to United's target customers. The answers they received were eye-opening, said Fallon planning director Rob White in a Chicago Tribune article. According to frequent business flyers—"road warriors," as they were dubbed—the idea of an airline turning around its service overnight was unfathomable. "They were telling us that we have to spend time in purgatory first," White said. "You can't just go from hell to heaven without a stop in between." A proposed campaign based on sarcastic humor did not go over well. Other storyboards showing superior customer service were dismissed as containing undeliverable claims.

"Then," reported the Tribune article, "the agency struck gold." A focus-group meeting of frequent flyers of all airlines revealed layers of resentment and frustration over poor customer service. What if United, instead of trying to counter those opinions, agreed with them? That idea "just resonated with people," said White, and the $140 million "Rising" campaign was born.

With "Rising" United took the unorthodox step of acknowledging that air travel had become more stressful of late. One commercial reenacted the Wright Brothers' historic first flight of 1912—except that the brothers were now plagued with modern-day delays. Meanwhile, a voice-over remarked, "If Orville and Wilbur had to go through what you do just to fly, they would have stayed in the bicycle business." In another commercial less-than-appetizing airline food was the focus. And in a third spot United employees who had assembled for the start of a six a.m. meeting were left waiting—chagrined and confused—when the meeting leader intentionally showed up late. The purpose was to remind the staff how their passengers felt during delays and other travel-related frustrations. "Air travel needs to be easier, more professional, especially for the people who do it most," noted the voice-over in one spot. "Now it will be, because, compared to the rest of the industry, United Airlines is headed in a different direction." Each commercial ended with the tagline "United Airlines. Rising."

The theme was taken up not only in broadcast spots but also in print ads. One ad touted United as "a better way for cynics to travel," while another mocked traditional airline advertising by asking, "Wouldn't it be great if we could all fly commercials?" Even United's 1997 annual report replaced corporate "silver linings" with featured letters from unsatisfied customers, along with replies from the company on its plans for improving poor service.

Internationally "Rising" broke in United's Latin American, Asian, and European markets in October 1997. Notable in these spots was the voice-over of actor Marlon Brando in his first television commercials. The strategy was to "tackle perceived low-brand awareness overseas, where our image is either confused or nonexistent," said the company's international advertising manager in an Advertising Age piece. He added that, outside the United States, American-based airlines "tend to be lumped together. We're seeking to stand out."

The international campaign was produced by the global ad agency Young & Rubicam, with creative treatments centered less on acknowledging customer dissatisfaction than on showing the history and resources of this major air carrier. One television spot began with a little boy playing with a model airplane while behind him rose images of vintage aircraft through the years, culminating in a new Boeing 777. As Advertising Age continued, "Print ads focus on the particulars of the airline, such as the one that shows a hand-written pie chart explaining, 'You've got $710 million to improve the life of the business traveler. How do you spend it?'"

Near the end of 1998 the campaign's creators changed strategies after months of criticism. Ad critics attacked "Rising" for advertising the faults of an industry that United dominated and then for never setting a high-water mark for service after promising improvement. On January 2, 1999, the "Rising" campaign was modified to advertise United's advantages instead of industry shortcomings. One spot, titled "Dreamer," featured a United jetliner taking off and magically transforming into a child's toy. Similar spots followed. In one a United jet was shown integrating into a flying flock of geese; in another commercial, titled "Circus," the United aircraft blended into a Cirque du Soleil dance troupe. Despite Fallon's attempt to improve the campaign, the 1999 spots were accused of being vague and not adding to United's brand. One print ad featured the text "Rising is astonishing. Rising is imagination. Rising is borderless and big. Rising is go. Rising is unstoppable. Rising is performance. Rising is leading the way."

OUTCOME

United executives were initially pleased with the campaign. In a press release United senior vice president David Coltman announced, "Our TravelTrak scores rating 'customer preference' have risen over the past year. Similarly, our high-yield revenue numbers have steadily improved, so it appears the Rising campaign is having the desired impact on our target audience." United's sales were up 6 percent in 1997. The campaign collected a Gold EFFIE Award for most effective campaign in the transportation category. The Chicago American Marketing Association gave "Rising" its Champs Gold Medal Award for marketplace effectiveness. The campaign also earned two certificates of excellence for creativity in public relations.

Among the advertising community, reaction to the unconventional "Rising" ranged from admiring to skeptical. "Inspired and inspiring—in addition to being risky bordering on reckless" is how an Advertising Age reviewer characterized the campaign. "It's easy enough to identify the problems," the article continued. "With clever advertising such as this, it's also easy to persuade viewers you're solving them … The trick—not on the airwaves but in the air—is to prove that you weren't lying. Every testy gate agent or ill-explained cancellation will turn 'Rising' into an ugly joke that rebounds on United."

Unfortunately for United, sales dipped from $218 million in 1998 to $187 million in 1999. During the campaign's final year, ad critics united against it. In June the ad critic David Snyder wrote in Crain's Chicago Business, "… the whole 'Rising' theme is flawed. Saying you're rising implies that you were schlock before, but now are really trying to make things better. Hardly a leadership position for the world's largest airline."

Despite dropping sales and a lack of fanfare, United executives stood by the campaign. John Kiker, United's vice president for advertising and communications, said in Adweek (Midwest edition), "We don't regret [the campaign] at all. It did us a lot of good and helped us learn what we needed to improve on." The executive admitted in the same January 10, 2000, publication that the message behind the campaign was too lofty for most consumers. A few days earlier, in an interview with the New York Times, Kiker said, "In all honesty, senior management's opinion is that 'Rising' did us a lot of good…. It was interesting, intriguing and made us focus on what we had to fix. But employees felt it laid a lot of blame on them and that was unfortunate." Fallon released a new campaign for United in January 2000.

TED LAUNCH CAMPAIGN

OVERVIEW

In 2002 UAL Corp.'s United Airlines was forced into bankruptcy by years of dwindling profits compounded by the terrorist attacks of September 11, 2001, which left the airline industry in disarray. Though United remained the world's number two carrier, it faced particularly daunting challenges as a full-service airline, given the growing consumer shift to low-fare, one-class airlines. A critical part of the company's strategy for exiting bankruptcy, then, was the launch of a low-fare subbrand called Ted, whose name was derived from the last three letters of the flagship brand. Rather than advertising the new brand with a costly, full-scale traditional campaign, UAL and its agency of record, Fallon Worldwide of Minneapolis, targeted Ted's future home base of Denver, Colorado, in a self-described guerrilla campaign revolving around the Ted name.

The teaser campaign, which was launched on October 29, 2003, was meant to introduce the Ted personality even as Denver and the wider world were kept in the dark as to Ted's identity, and United successfully kept its secret through most of the two weeks between the marketing launch and the new carrier's official unveiling. Ted claimed responsibility for random acts of kindness, such as the delivery of flowers to a Denver hospital, and actors on Segway scooters wore signs reading, "I'm not Ted." A website featuring cryptic messages from Ted was established, and Ted was spelled out in enormous sod letters in a farmer's field near Denver. After the launch the offbeat tone of the Ted personality was extended to a radio campaign purporting to chronicle the search for a Ted spokesperson. This campaign moved to television in 2005.

The guerrilla campaign effectively attracted media attention, and Ted grew according to schedule in its first year. United claimed, at the one-year anniversary of Ted's first flight, that the brand had exceeded company expectations, and Ted's flight schedule continued to grow as United struggled to exit bankruptcy protection.

HISTORICAL CONTEXT

In the late 1990s Dallas-based Southwest Airlines Company expanded into a national industry force, attracting passengers with its consistently low fares and on-time departures and arrivals. Southwest was able to keep prices low thanks largely to a straightforward business strategy calling for the exclusive use of one type of aircraft (the Boeing 737), a focus on short flights and small airports, one-class service, and a no-assigned-seats policy. A host of new airlines copied and modified Southwest's business model even as the original low-fare airline expanded. By the turn of the millennium, traditional full-service carriers, unable to match the fares of these new competitors, were struggling to remain profitable. United, which had a 70 percent route overlap with low-fare carriers, was particularly vulnerable in the evolving airline marketplace.

Airlines experienced unprecedented challenges in 2001, and United had it tougher than most. A proposed merger with U.S. Airways was blocked by antitrust regulators, and then two United jets were involved in the terrorist attacks of September 11, 2001, which, while changing global politics, left the airline industry in shambles. During the decline in air travel that followed the attacks, United had to lay off more than 20 percent of its employees and eliminate a substantial number of its flights. The airline lost $2.1 billion in 2001 and filed for Chapter 11 bankruptcy protection in late 2002. UAL progressively cut its workforce and instituted pay and benefit decreases during bankruptcy reorganization.

In the fall of 2003 United prepared to launch a low-fare carrier called Ted (a shortened version of the brand name United), to begin flying in February 2004. Based in Denver and primarily servicing leisure destinations, Ted was a critical component of United's strategy for the future. Though skeptics pointed to UAL's own previous unsuccessful attempt to launch a low-fare sub-brand, the Shuttle by United, as well as to a similar failed attempt by Continental Airlines, UAL planned to expand Ted's fleet from an initial 4 aircraft to 45 within a year. Ultimately UAL projected a Ted fleet of 156 planes.

TARGET MARKET

UAL and its primary advertising agency, Fallon Worldwide, set out to establish a unique personality for the Ted brand while acknowledging, through the very name of the discount carrier, its connection to parent airline United. With a promise to keep last-minute one-way fares below $299, Ted appealed to business travelers, who buy the majority of plane tickets on short notice, but the Denver-based carrier's primary focus was on markets with a large percentage of leisure travelers (such as Orlando, New Orleans, Las Vegas, Phoenix, San Francisco, and Los Angeles). Ted therefore sought to establish an image of friendliness and approachability. As Fallon creative director Bruce Bildsten told Brandweek.com, "When people fly on leisure the flight is actually part of the vacation experience. They want to have a fun time on the flight so the experience on Ted is going to be in line with the mentality of the people taking the trip."

The advertising supporting the Ted launch was, accordingly, offbeat and untraditional. Two weeks prior to the announcement of the carrier's launch, Fallon enlisted guerilla-marketing specialists in Ted's hometown of Denver, allowing United to conceal its role in an unbranded teaser campaign meant to introduce the Ted personality. The teaser campaign, which, according to Bildsten, was "about being friendly and doing good things in the community in a way that endear [sic] the airline to the community rather than imposing on it," featured stealthy acts of kindness supposedly committed by someone named Ted as well as numerous mysterious appearances of the Ted name. Throughout the teaser campaign United kept its connection to Ted secret, leaving Denver residents to guess the identity and significance of the Ted personality.

COMPETITION

Though United was the number two airline in the world, the creation of Ted was a response not to its traditional rivals but to smaller low-fare carriers, whose robust growth had been achieved at the expense of the major full-service airlines, all of which were struggling. Southwest was America's low-fare leader, and JetBlue Airways Corp. (based in Forest Hills, New York) was a rising star in the expanding subsector. Among the leading traditional airlines, only Atlanta's Delta Air Lines, Inc., had an existing low-fare subsidiary.

Southwest was the only major airline in America to maintain its full flight schedule and to avoid employee layoffs in the aftermath of the terrorist attacks of September 11, 2001. The airline took advantage of its competitors' cutbacks by expanding during the industry downturn, adding direct international flights and adding to its East Coast presence with service to Philadelphia and Pittsburgh. Southwest was also the airline industry's biggest advertiser, supplementing local fare-oriented advertising with national branding work. The airline ran branding campaigns focused on its NFL and NHL sponsorships, while also continuing to update its long-running "Wanna Get Away?" campaign. In keeping with Southwest's friendly, fun-loving image, "Wanna Get Away?" featured individuals who, after becoming involved in extremely embarrassing situations, had a clear, humorous motivation for wanting to get away. In 2003 Southwest expanded its sports branding work with a campaign surrounding its newly minted sponsorship of the NBA.

JetBlue, operating out of New York's JFK airport, adapted the one-class ticketing and short-haul model introduced by Southwest and achieved profitability soon after its February 2000 launch. Modifying the Southwest model by offering assigned seats as well as seatback satellite television and by flying more than one type of plane in order to serve smaller markets more efficiently, JetBlue, like Southwest, capitalized on the industry behemoths' troubles by expanding each year following its launch. Among JetBlue's advertising was a campaign of "mockumentaries" satirizing traditional airline advertising. For instance, a pilot being interviewed said, in one commercial, "The whole plane wanted to go to California." The documentary interviewer asked, "What did you do?" and the pilot answered, with mock earnestness, "We took 'em." Similarly, in another scene, a flight attendant proclaimed, "A woman asked me for a soda, so I gave it to her. With ice." JetBlue thereby positioned itself as a new alternative to an airline culture in which competitors congratulated themselves for doing jobs that should be taken for granted.

Delta, meanwhile, remained on the brink of bankruptcy through 2004, with high fuel prices and labor costs prolonging its difficulties and forcing it to cut jobs and reduce expenses. Its plan to stay aloft in the coming years included expanding its presence at several airports and expanding its low-fare subsidiary, Song, launched in 2003. Song did only minimal marketing during its rollout. Delta planned to wait until Song reached its first-year goal of 144 flights daily before choosing a full-time advertising agency for the account.

MARKETING STRATEGY

On September 30, 2003, UAL notified Fallon executives about its plans to launch Ted and asked the agency to begin work on a buzz marketing campaign preparatory to the November announcement of the new carrier's launch. As Fallon's account director for United, Alex Leikh, told Advertising Age, "A week later we had 60 to 65 pieces of creative on the table, from teaser print ads to outdoor boards, and a week after that we came back with another 150 pieces." Fallon contracted with a guerilla-marketing firm in Denver and made sure to keep its fingerprints off the campaign in order to preserve the mystery of Ted's identity. "There's been a lot of cynicism about low-cost airlines," Leikh said, "so United decided to introduce it directly to the consumer." The teaser campaign was launched on October 29 in Denver, Ted's home base.

The campaign attempted to generate as much interest as possible with what was clearly a small budget. Actors, sometimes riding Segway scooters, carried signs reading "I'm not Ted" on Denver streets, while flowers were sent to hospital patients and a restaurant full of diners were treated to dessert, both courtesy of Ted. At sporting events Ted was wished happy birthday, and Ted was spelled out with gigantic sod letters in a field near Denver. A website, www.meetted.com, accompanied the campaign, offering mysterious messages including, "Here's to friends who answer the phone at 3 a.m." and "Here's to movies with orangutans." The campaign ran for two weeks, and on November 12 United confirmed the gradually building suspicions of media outlets like the Denver Post, announcing details of Ted's business strategy as well as setting February 12, 2004, as the date for its first flights.

NEW CARRIER, OLD PROBLEMS

United Airlines had a history of labor-relations difficulties prior to the Ted launch, and a new chapter in that history threatened to tarnish Ted's introductory flights. Having laid off a substantial portion of its workforce as a part of bankruptcy reorganization, United enticed 2,500 flight attendants into early retirement in the summer of 2003. When, about a month before Ted was scheduled to begin flying in February 2004, the company announced that it needed retirees to pay higher premiums for health care than had been agreed upon months earlier, the retirees claimed that they had been induced to retire under the assumption that their health-care benefits would not be changed. The Association of Flight Attendants organized picketing at airports and public events and ran advertisements that lampooned the new United subbrand, such as "UniTED cheaTED its Retirees."

As Ted began flying, United and Fallon added a radio campaign touting a fictional search for a Ted spokesperson. In addition to Denver the radio campaign ran in Chicago and Washington, D.C., United hub cities added to Ted's service roster following the carrier's successful launch. In 2005 the spokesperson search moved to television, with nine 30-second spots filmed on location in Las Vegas and Miami and featuring real people selected on the street by Fallon's creative team. The supposed aspiring spokespersons were shown on camera responding to cues given by improvisational comedian Jonathan Mangum. In one a man with a metal detector said, "If you don't want to keep hunting for fares, go to flyted.com." In another, Mangum asked a self-described ventriloquist to explain, in a British accent, that Ted does not charge booking fees. The TV spots ran on cable and network stations in Denver.

OUTCOME

The teaser campaign on behalf of Ted achieved its goal of attracting the attention of consumers and the media prior to the Ted launch. United announced the successful rollout of its initial 196 daily flights on August 11, 2004. Sean Donohue, vice president of Ted, said, "We've received strong endorsements from customers, outpaced our goals for on-time departures and arrivals, had positive financial performance and made significant competitive inroads in the markets we serve." By Ted's first anniversary the airline's number of daily flights had grown to 208, and United claimed solid market share gains, which it attributed to the addition of its low-fare carrier. As Donohue said in a company press release, "Ted has met or exceeded all of our expectations … Financially Ted delivered strong year-over-year margin improvement driven by an increase in both United elite customers as well as new customers to the airline." Ted continued to expand through 2005, though United had not yet found its way out of bankruptcy.