Saturday, May 10, 2014

The Bottom of the Barrel

"With an unbundled product, customers can save even more by choosing to pay for only the products that they want, allowing them to customize their flight experience for each and every flight"

If you believe the hype spewed out this last week by Frontier Airlines, I might have some beachfront property to sell you -- in Arizona.  Stung by being spun off from its previous owners, a hub in Denver with competition on 3 sides, and a route system that looks to be a hodgepodge of places no one wants to go on top of seemingly well thought-out routes (i.e. their old, original route system), Frontier Airlines seems to be in a breakneck sprint to the bottom of the barrel of airline choices nowadays, a far cry from their glory days from startup in 1994, to the Airbus fleet renewal and expansion of the Denver hub, and the addition of the Cancun hub.

Let me give you some background history.  This is not the first Frontier Airlines to fly around.  The first carrier named Frontier started in the 1940's as an amalgamation of three smaller carriers based in Arizona, Utah, and Colorado.  They selected Denver as their base of operations and grew from there.  They were one of the only airlines to support the Airline Deregulation Act of 1978.  Due to mounting competition at their sole hub from two other major airlines also hubbed there, Frontier began racking up losses and was eventually bought out in 1986 by PeoplExpress, who itself was bought by Continental (one of the other 2 airlines hubbed in Denver at the time) just a few months later.

Fast forward a few years, to around 1993 or so.  Denver Stapleton has pretty much outgrown its usefulness, and the new Denver International Airport was under construction.  Due to yet another bankruptcy filing and cost cutting measures, Continental has shuttered the hub in Denver, leaving tons of communities across the Mountain West and Midwest without adequate air service.  Enter Denver businessman Sam Addoms, and several former original Frontier executives.  They decide to restart Frontier in Denver, serving cities abandoned by Continental's tear down of the Denver hub, using Boeing 737 equipment.  In July 1994, the first 737 takes off, connecting Denver to Bismarck, Faro, Grand Forks, and Minot.  It was a great little operation that grew to encompass a nationwide system with a fleet of brand new Airbus A318's, A319's, and A320's.

Things were looking so great for management they decided to grow sideways.  They reformed as Frontier Airlines Holdings, Inc.  a parent company for the airline and any subsidiaries management decides to add, in 2006.  (In my opinion, this was bonehead  move number 1, as the original Frontier tried this and spectacularly failed after they started an airline-within-an-airline called Frontier Horizon back in 1983)  The parent company was based in Delaware, to take advantage of the extremely business friendly practices in state, while the operating headquarters and Frontier's hub still remained in Denver.  The parent company gave upper management the leeway to begin other subsidiaries, taking their focus off of the airline completely.

One of the first things management did was start Lynx Aviation, Frontier's answer to feeder flights in and out of Denver, using 70-74 seat DeHavilland Dash 8 equipment, hoping the new subsidiary would cut costs at Frontier by 30% with operating efficiencies in the smaller communities Frontier served as well as lower wages than the mainline carrier paid.  Not a bad idea, in general, just badly executed and ill timed.  In 2008, Frontier's credit card processor, First Data, announced it would withhold 100% of the carrier's transactions beginning May 1, 2008.  It put such a cramp on Frontier's liquidity, management threw the whole company, parent included, into Chapter 11 Bankruptcy Protection.

In Spring of 2009, Frontier reported that it will exit bankruptcy as a new subsidiary of Republic Airlines , once a feeder carrier for Frontier.  They also bought up Milwaukee based Midwest Express Airlines, famous for their baked on-board chocolate chip cookies.  Then they merged BOTH airlines under the Frontier brand, and went about cutting costs, slashing staff, and outsourcing stations away from Denver to third party contractors.  The instituted a march towards becoming a different kind of airline, a relatively new breed that has popped up called ULCC, for Ultra Low Cost Carrier.  That means you pay for your ticket, and your bags, your seat assignment, and everything else associated with your trip.  Marketing gurus call it "unbundling".  I call it a giant pain the wallet.

Final fast forward to this past winter.  Republic has been actively looking for a buyer of Frontier, after figuring out they were better off being a contract carrier than to run the risks of flying themselves.  In comes Indigo Partners, who own Spirit Airlines, and run by former America West boss Bill Franke.  They come in and announce that the company will institute a new fare saving gimmick, Frontier's Discount Den, where members can save $5 on their 1st checked or carryon bag,  as well as giving Frontier the ability to flood your email with deals on airfare to such exciting places as Trenton, NJ or Dover, Delaware.

And speaking of the costs for your checked bags, carryons and seat assignments, here's the breakdown:


Time of Carryon purchase:                        Classic Plus Fare            Economy Fare

Frontier's Discount Den member
booking on flyfrontier.com                               Free                                $20

Non-member booking on flyfrontier.com
or Reservations                                                Free                               $25

Web check-in at flyfrontier.com                       Free                               $25

Airport/concourse kiosk, or agent                     Free                               $35

At the gate                                                         Free                               $50


And seat selection?  Check this out:, anywhere between $3 and $15 depending on whether you assign a seat at booking, at check-in, or you allow Frontier to select your seat for you.  mind you, I do not recommend letting the airline select your seats if your not traveling alone.

Checked baggage remains the same at frontier as it does on almost every other airline in the United States, you still have to pay, but the fees range from $15 for Discount Den members at time of booking to $75 at time of check-in.

Like I said before, I'm not a fan of the ULCC practice.  The concept looks great, on paper, and sometimes, on the bottom line.  But to the consumer who flies more than once or twice a month, this blows.  I'll take my higher ticket fare and $25 checked bag fee to one of the network carriers and get to where I'm going in relative peace and quiet (and shoot for a chance at an upgrade).

Frontier seems to be headed for the absolute bottom of the air carrier barrel.  I will have a chance to try them out with their revitalized ULCC concept this November though, as my 12 year old daughter has been begging me to let her fly on Frontier, just once.  We'll see how that goes.


 

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