Frontier Airlines I.P.O. Signals a Travel Industry Recovery
“We just believe we have more embedded growth, we also have lower costs, and we believe we have a great brand that positions us well in the low cost space,” said Biffle.
The airline claims it is unique among low-cost airlines. While Spirit serves more crowded markets and less crowded Allegiant Air markets, Frontier is more evenly distributed. The airline said it kept planes moving more hours each day than most other major airlines and offered some flights just a few days a week to serve smaller cities. In addition to Denver, Frontier has a strong presence in Orlando, Florida and Las Vegas.
Frontier also claims to be more frugal than its peers, which will hopefully appeal to environmentally conscious consumers.
The airline made $ 251 million in 2019 before losing almost as much last year. The company has cash and cash equivalents of approximately $ 1 billion and employs approximately 5,000 people.
The deregulation of the U.S. aviation industry in 1978 paved the way for the growth of low-cost airlines, which typically operate direct point-to-point flights often to secondary airports in major cities – an approach developed by Southwest. This strategy facilitates the efficient use of aircraft and crews and enables airlines to offer relatively cheap fares. The more traditional hub-and-spoke model from American, United, and Delta is more expensive to maintain but easier to grow once established.
The ultra-low-cost model is a recent creation that is often credited with popularizing European Ryanair. Companies that use it are much more aggressive when it comes to keeping costs down and maximizing sales. These airlines typically use their planes an hour or two more per day than other airlines, filling more and smaller seats on planes. They also charge many services that many traditional low-cost airlines themselves include in the ticket price, such as: B. Seat selection or printed boarding passes.
However, it is unlikely that any major airlines would easily kick the ground at Frontier and its associates. In March, for example, United, which operates most of its flights at Denver Airport, announced plans to add dozens of non-stop flights between small Midwestern cities and a handful of tourist destinations. Even before the pandemic, United and other major airlines copied ultra-low-cost companies by offering lower fares and charging more services.