Friday, January 16, 2015

Frontier Airlines: Philadelphia and Trenton serve complementary roles

Colorado-based Frontier Airlines is changing its strategy at Trenton-Mercer Airport to limit East-West flying in winter, but still views the market as a valuable part of its network, even though it has increased departures at nearby Philadelphia International Airport, an airline executive said an interview. 
Frontier SVP-commercial Daniel Shurz said considerable guesswork went into Trenton because, before Frontier began service in November 2012, the airport had no commercial flights. For much of the year, Frontier has learned, Florida works best, which is why it recently dropped flights to Nashville, St. Louis, Indianapolis, Milwaukee and Cleveland. “We just found the market wasn’t ready for the second wave of destinations we started,” Shurz said. 
Local media in Trenton have suggested Frontier is making a pivot away from the airport to invest at Philadelphia, but Shurz said the changes represent more of a shift in strategy than a drawdown. He views the two markets as complementary: “There will be fewer destinations on our board,” he said. “But we will still have three aircraft based in Trenton.” Frontier is also retaining its flight attendant base there, one of only three in the system. 
During the summer, the plan is to move aircraft to routes from Trenton that Frontier knows works—such as Charlotte, Minneapolis, Chicago, Atlanta, Raleigh, Tampa and Orlando. Many of those cities are legacy carrier hubs, but Shurz said that’s not the reason for keeping the routes.

“It’s not on purpose except to the extent that today the hubs of network airlines tend to be the largest destinations,” Shurz said. “The largest destinations tend to work better.” Charlotte and Raleigh, he said, are particularly strong because so many Pennsylvania and New Jersey residents have moved to North Carolina in recent years.  
One benefit of Trenton is that Frontier is often insulated from competitive responses. But the economic calculations could be different in Philadelphia, where Frontier launched Miami, Tampa and Orlando service last month. Atlanta, Chicago and Charlotte will begin in the spring.

Frontier has also been selling seats from Philadelphia on its own platforms on an Apple Vacations charter it operates to Cancun. Shurz declined to speak in detail about the competitive response Frontier expects to see in Philadelphia over time, but he noted that Frontier’s cost advantage should insulate it against some pressures. 
Shurz suggested the Philadelphia-Chicago route, served by American Airlines and United Airlines, is too thick to not attract an ultra low-cost carrier. He said the route serves 1,200 passengers per day who pay an average fare of slightly more than $200 one way. “There’s clearly an opportunity for an airline with lower costs to offer better deals for people who either weren’t going or were driving,” Shurz said. 
Shurz also said Frontier is not making as large of an investment in Philadelphia as it may appear. While Frontier did not have scheduled service from the airport until recently, it did operate Apple Vacations charters to two destinations—Punta Cana in the Dominican Republic and Cancun.
“Increasing utilization is part of the change in our business model,” Shurz said. “And the first thing that caught our interest was that the airplanes that were flying to the Mexico and Caribbean weren't doing anything else when they got back.” To fly its current Philadelphia schedule, Frontier only had to add one more aircraft at the airport.

(Brian Sumers - ATWOnline News)

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