Why did Frontier Airlines change its business model?

Why did Denver-based Frontier Airlines change its business model? Photo: Wikipedia.

Why did Denver-based Frontier Airlines change its business model? Photo: Wikipedia.

As most readers know, Denver-based Frontier Airlines this week took the final step in becoming an ultra low cost airline, similar to Spirit Airlines. That means if you fly Frontier, you’ll pay for drinks and carry-on bags. On the bright side, the airline says its fares will be a lot cheaper than mainstream carriers.

Kirsten Painter of the Denver Post has been covering this story well and conducted an interview last week with Frontier CEO David Siegel. The full interview is up on a Denver Post blog, but I wanted to share some snippets with readers.

On why changing customer behavior could represent more profit for the airline. 

“When soda’s not free, fewer people want it, the less we carry onboard, the less fuel we burn, the more money we spend. So this is about changing customer behavior. If the customer behaves in a way that saves us money, we give them some of that back. They can behave any way that they want to behave, but if it saves us money, we’ll share that with them to give them an incentive to behave differently.”

On one of the reasons for instituting a carry-on bag fee. 

“We want to create a disincentive (for carrying on) but we don’t want it to be punitive or customer-unfriendly. But it’s a balancing act because you really want to change behavior, it’s better for the customer because they save money.”

On the reason the fee for bags gets higher, as the passenger moves physically closer to the gate.

“We don’t have a higher fee at the gate because we want to make more money. We have a higher fee at the gate so we hope we never collect it.”

Facebook Twitter Plusone Linkedin Reddit Tumblr Email

Frontier Airlines: Is there room for a third ultra low cost airline?

Frontier Airlines belivves there's space for a third ultra low cost carrer in the United States. Do you agree?

Frontier Airlines believes there’s space for a third ultra low cost carrier in the United States. Do you agree?

I linked to it earlier today, but I think it’s worth taking another look at Brett Snyder’s interview with Daniel Shurz, Senior Vice President – Commercial for Frontier Airlines.

In one of the most interesting parts, Schurz says the U.S. market needs more ultra-low cost carriers, like Allegiant and Spirit. He says the airlines we now view as low cost — Southwest and Jetblue among them — are not really LCCs in the European model.

Into and out of the UK on intra-Europe flying, ULCCs account for over 50% of capacity. In all of Europe, it’s just over a third. Spirit and Allegiant represent slightly below 3% of US capacity. Even if you include Frontier, we want to get to the ULCC point, it’s still under 4.5% of the capacity. I think that leaves a significant opportunity for ULCCs in the US market, and I think it leaves an opportunity for differentiated strategies across the ULCCs.

Frontier has been making a play not only in its long-time home of Denver, but also in smaller airports in the Northeast, such as Trenton, N.J. Shurz tells Snyder that the region is ripe for an ultra low cost carrier.

And the world has changed. I think you’ve done work, Brett, to show how much domestic fares have risen notably on one airline, but also generally. And that’s what’s creating opportunity for ULCCs in the country. It’s that fare umbrella. The northeast never had low fares to the same extent since Southwest was never that big in the Northeast. And their failure to succeed in Philadelphia has led to fares rising. One of the things about Wilmington is that even though Baltimore fares are lower than in general in the northeast, they’re significantly higher than they were 5 to 10 years ago.

I’m not sure whether Frontier will be successful as the third ultra low cost carrier in the United States. But I do think the market needs more low-fare airlines to undercut carriers like United, American, Delta and even Jetblue and Southwest. It’ll be interesting to see what happens.

Do you think Frontier can make it? The airline likely will be sold in the next few days to Indigo Partners, a Phoenix investment firm. 

Facebook Twitter Plusone Linkedin Reddit Tumblr Email

The aviation stories (non-LAX related) of the past week

Brussels Airlines is celebrating "Movember"  by adding a mustache to a A319.

Brussels Airlines is celebrating “Movember” by adding a mustache to a A319.

It’s been a busy last few days on the aviation beat here in Los Angeles. But here are some of the best stories from elsewhere during the past week:

U.S. Attorney General Eric Holder said he wants to resolve the American Airlines/US Airways lawsuit short of trial, writes Ben Mutzabaugh of Today in the Sky. A sticking point, apparently, are the slots the combined airline would own at Washington Reagan National, New York JFK and New York LaGuardia. Justice does not want the combined carrier to be too strong at those airports.

Here’s another take of Holder’s preferences from David Koenig of the Associated Press. “We will not agree to something that does not fundamentally resolve the concerns that were expressed in the (lawsuit) and do not substantially bring relief to consumers,” Koenig quotes Holder as saying.

The standalone US Airways is growing its traffic, but its revenue is not rising accordingly. That’s according to this Associated Press story posted on Skift. 

In light-hearted news, Jaunted takes a look at how 4 airlines are celebrating “Movember.” This has become the month, apparently, in which men grow mustaches.

“Airline Lost Your Luggage? Let Your Phone Find It.” An interesting story about the possibilities of baggage tracking services by Bloomberg Business Week’s Justin Bachman.

And finally, Brett Snyder of Crankyflier.com interviews Frontier’s Senior Vice President — Commercial about the airline’s strategy going forward. There’s some inside baseball stuff here, but if you want to delve into the issues of what it takes to run an airline, you should read this. 

Facebook Twitter Plusone Linkedin Reddit Tumblr Email

In May, seven LAX flights were chronically delayed

If May’s data is any indication, you might want to avoid certain airline flight.

The U.S. Department of Transportation published a list this week of 170 flights that arrived 30 or more minutes late at least half the time in May.

The worst offender? A Go! flight operated by Mesa Airlines from Honolulu to Kona. It was at least 30 minutes late 80 percent of the time in May. The average delay was 69 minutes.

I was surprised to find some Southern California flights on the list, as our airport operations here are generally efficient. Here are the flights — all involved LAX — that made DOT list. (For this grouping, only 30 minute and greater delays are considered)

Carrier         Flight   Origin-Dest   Dept. time  % late flts Avg. Delay 
Southwest   3225       SJC-LAX         2000             60%          77 min.
Frontier        419         DEN-LAX         2055             55%          141
Southwest   1345       LAX-LAS          2145             55%            75
Southwest    655        SFO-LAX         1355             55%            60
Southwest    1345      SFO-LAX         1955             55%            72
American      2467      DFW-LAX        1715             52%            98
American      231        MIA-LAX            1800            52%            65

Facebook Twitter Plusone Linkedin Reddit Tumblr Email

Here’s one reason Los Angeles World Airports does not subsidize new flights

UPDATE: Frontier’s flight cited below between Denver and Rockford, Ill. is not being entirely cut as I initially reported. Frontier is instead making the flight summer only service.

People periodically ask why Los Angeles World Airports chooses not to given incentives to airlines operating at LAX or Ontario International Airport.

Lots of airports do it. You waive terminal or landing fees for awhile, and you can convince an airline to start an otherwise marginal route. Smaller and midsize cities do it because civic leaders and airport executives believe it’s their only chance of getting a nonstop flight to Chicago, or Dallas or Denver. Politicians and business interests often argue it’s good for economic development.

But incentives are not permanent. And when they end, airlines often pull out.

Hence, this week’s news that Frontier Airlines is rolling back its flights between Rockford, Ill. and Denver. The Rockford Register Star reported that in the first nine months of that service service, the airport was paying Frontier $30,000 a month to prop up the flight.

It will now be summer only service.

Facebook Twitter Plusone Linkedin Reddit Tumblr Email