What is the decision facing United Airlines?

Correctly setting prices in any industry is challenging, but air travel can be an especially complex proposition. On the same plane, you’ll have customers that are primarily schedule focused and willing to pay a higher rate to get to a business meeting on time. Sitting next to that traveler (probably in the middle seat)
is a leisure traveler who planned a trip months in advance and just wants to get the lowest fare possible. And then there is the perishability issue—when the wheels go up, any empty seats can no longer produce revenue at any price. This is the environment that United Airlines and other carriers face every day.
United Airlines is one of the leaders in an industry that has seen many companies come and go since the beginning of commercial air travel in 1914. Along with American Airlines and Delta, United is considered one of the “big 3” in air travel. Formerly a part of airplane manufacturer Boeing, the company was formed in 1931 and today claims to have the world’s “most comprehensive global route network.” Recent counts show 4,600 daily departures taking 148 million passengers per year to 354 destinations in 48 countries.
While clearly a survivor, United has in recent years found themselves in competition with a new class of airline known as ULCCs: ultra-low-cost carriers. You may have flown on one of these economical (or “cut rate”) carriers, such as Spirit, Frontier, and Allegiant. Southwest Airlines also offers low fares, but (along with Jet Blue and Virgin America) is considered in the low-cost carrier category, as they offer some standard services not available with the ULCCs. In this class of airline, what distinguishes them is what they do not include as part of the fare:
reserved seats, snacks, drinks, ability to carry on a bag, in-flight entertainment, seats that recline, leg room, and often, on-time arrivals. These flights are not about service—they are all about getting you from point A to B at the lowest price possible.
To compete with low-cost carriers, United first took a run at creating an LCC of their own. Called Ted, the airline had its own separate planes. Skeptics joked that the name stood for “the end of United.” While United survived, Ted was discontinued after five years.