Spirit Goes to Denver, But Why?

The next stop for Spirit’s growth train here in the US is in an unlikely place . . . Denver. Why would Spirit go into a market where there’s certainly no shortage of capacity? Something tells me that the airline wants to send Frontier a message.

Spirit Fights Frontier

Spirit will begin daily service from Denver to Ft Lauderdale and Chicago/O’Hare with twice daily service to Dallas/Ft Worth and Las Vegas. First flights are on May 3. Of all the places in the US that Spirit could tackle with its model, why go to Denver now, where three airlines continue to slug it out? It has to be at least somewhat about Frontier.

As we all know by now, Frontier wants to become an ultra low cost carrier and it has started making some big moves in its network to begin that process. While some airlines, like Allegiant, tend to stay away from competition when there are so many other opportunities out there, Spirit likes to get up in your face and let you know that it’s there to make life miserable.

Of course, this move won’t exactly make life miserable but more just be a pain in the butt. Spirit is only coming in with 1 or 2 flights a day and that’s barely going to make a ripple, but the airline is warning Frontier that it’s up for a fight. Need more proof? How about this gem in the press release from Spirit’s Chief Marketing Officer Barry Biffle (who I interviewed hear last year):

We understand that Denver has been looking for an ultra low cost carrier and we are here to satisfy that need. . . .

In other words, “Hey Frontier, this is our game. You try it, we’ll be there to fight you every inch of the way.”

So far, the two airlines seem to be taking different paths in their approach to ULCC-ness. Frontier’s new service looks more like Allegiant’s with sub-daily flights to smaller cities. But it still has its substantial existing service patterns which are more likely to overlap with Spirit.

Let’s take a look at the frequencies for this Friday in the markets that Spirit is entering:

Denver to American Frontier Southwest United

Chicago 5 3 (MDW) 9 (MDW) 10

Dallas 10 5 0* 6 (+3 DAL)

Ft Lauderdale 0 2 2 1

Las Vegas 0 6 9 5
*Southwest serves Love Field with a stop, but won’t begin nonstop until allowed in 2014.

Fares are already inexpensive thanks to the major competition, at least in some of these markets, but Spirit will still try to squeeze in below. Can it do it? Maybe, but you would think there would be better opportunity elsewhere. That’s why my guess is that Spirit wouldn’t have picked Denver next had it not been for Frontier making too much noise for Spirit to ignore.

[Original Frontier photo via Flickr user redlegsfan21/CC 2.0]


23 Responses to Spirit Goes to Denver, But Why?

  1. Brad says:

    Could Spirit also be testing the market for overall network synergies? After all, Frontier WILL eventually be mostly divested, if not completely spun off from Republic.

    • CF says:

      I suppose it’s possible, but I’m not sure how much insight the airline would gain from adding its own flights. I mean, if it bought Frontier, it would see the books. Doesn’t seem necessary to me, but then again, who knows?

  2. This could back fire for Spirit if the other carriers match or closely match Spirits fares. They have more flights and can offer better service then Spirit. Plus AA/UA/WN has big mileage programs that can take people to a lot of places.

  3. Zack Rules says:

    I am curious about repeat business on Spirit. JetBlue claims to have made gains at FLL (or at least forced Spirit to take down some capacity) where the two compete. Also, Spirit seems at least in the past to have had difficulty sustaining markets once opened [or at least with the same capacity at the onset]. I wonder if this is still the case.

    Unrelated, Cranky, if you have been following what is going on at Kingfisher, it might be a good time to dust off another “Worst Airline Ever” award.

  4. Brad says:

    Brett – Could this also be an exploratory move by Spirit? Might they be testing network synergies with the future (independent) Frontier ULCC model? After all, Republic is prepping a spinoff divestiture, correct?

  5. I am not sure how much this move has to do with DEN, per se, as it does about its growing focus ops @ ORD,LAS,DFW and of course, FLL (their Mecca). Smelling animal tail blood is obviously a motivator in this decision….but I am betting that this has more to do with the 4 focus cities than the DEN market.

  6. Maybe Spirit feels it can board enough passengers in Denver to make a profit on the route. It really may amount to nothing more than that.

    By the way, I do see the possibility of a future merger or buyout once Frontier has gotten to where it wants to be.

    “The Frontier Spirit” has a nice ring to it.

  7. Felix says:

    Many airlines have deliberately avoided matching Spirit fares at the same level as they do not have the high degree of ancillary fees to offset lower base fares. If an airline like Frontier matches they will actually be undercutting Spirit fares.

  8. davywavy says:

    Based on what Spirit said in its earnings call, the decision to go into DEN is actually based on economics, their assessment of the market and their own developing hubs. It sees other opportunities as well, in other cities.

    I have no doubt Spirit will have as much with DEN as it can but doesn’t see it as “an attack” on anyone.

    I bet Southwest thinks it is jolly tedious, though. It just excluded DEN from its latest national fare hike and I doubt it wants fares there to go even lower.

  9. Ian L says:

    What I found interesting was the lack of cheap fares right when Spirit made their announcement. You could get a few ~$30 fares here and there, but they required a round-trip purchase and everything else was rather expensive.

    Now the situation has changed a bit. DFW, which is rather expensive for the flight length (compared to, say, AUS/SAT), now has fares competitive with AUS/SAT ($80ish one way), albeit with a round-trip purchase, tight seating and no carry-on allowed. Add in a carry-on and you’re up to $115 one way, assuming you don’t pay $60 for Spirit’s $9 fare club, which pays for itself in 1.5 round-trips in this case. Of course, at that $115 you still have to deal with tight seat pitch, randomly assigned seating and paying for everything under the sun. And Sprit has to deal with the potential for its competitors to drop fares down to nearly, if not completely, match its own (Frontier can do this and still turn a profit; dunno about UA and AA).

    ORD is $90ish one way, or $80ish with the aforementioned $9 fare club (which, again, pay for itself after three segments, if you’re willing to commit yourself to Spirit for that long). Again, flights here aren’t priced as a hotbed of competition…$115-$125 one way is the default for ORD/MKE/MDW. Here, bringing a carry-on aboard will erase the price advantage of Spirit versus anyone else. Maybe they’re counting on this fact. Also, since Spirit only has one flight per day along this very high-traffic route, other airlines would be shooting themselves in the foot to react. Smart move, Spirit.

    FLL gets a little more interesting. Spirit is marginally *higher* than US Airways’ one-stop service on some days, but slightly lower than everyone else (but not enough to pay for a carry-on). The $9 Fare Club actually almost pays for itself with a single round-trip (assuming a carry-on), since the fare difference between club and non-club is $15 each way. The flight is non-stop, but the seat pitch is tight and the flight is long…will Spirit put A320s on this route to ease the pain?

    Then there’s LAS. WIthout the $9 Fare Club a Spirit standard ticket costs about $3 less than a United or Frontier ticket. The gap grows to $13 if you get a $9 Fare Club membership. Considering the better on-board product of Frontier (and more available flight times), why would someone choose Sprit over Frontier on this route, particularly if Frontier eats the couple-dollar current diference and starts advertising that, in apples-to-apples comparisons, they win vs. Spirit?

    Like others said, maybe this is more about ORD/FLL/LAS/DFW than DEN, but if Spirit is trying to strike fear into the hearts of Frontier, at this point adding some flights along heavily-contested routes with practically useless mile rewards isn’t going to do much. Particularly since Frontier is now going for markets into which Spirit will never tread.

  10. Sanjeev M says:

    DEN is centrally located, so Spirit can do several quick turns back to the bases where the aircraft came from. Frontier should not be worried and I think David Siegel knows what to do. Frontier has the kinda of connecting mass that NK wishes they had and the cost base that WN wishes they had and the brand loyalty that UA never had. F9 will go into the small midwest markets and nicely pull plenty of connecting traffic with no need to worry about UA, WN, or now NK.

    However, that being said I hope Frontier keeps up the marketing of its segmented fare groups and keeps the cookie, and that should be enough to ward off Spirit.

  11. Cook says:

    Agreed. DEN is hardly an under served market. Spirit might have better prospects in several other places.

  12. David says:

    I wouldn’t be surprised if Spirit picks up some of the post SWA-AirTran merger slack at places like BWI…not saying they will announce anything soon, just at some time in the future.

    • Sanjeev M says:

      There’s plenty of gates at BWI in Concourse D. However, Southwest is loved by the Maryland and DC crowd. And they’re not really cutting much. In fact I think with the merger BWI becomes the WN station with most daily departures.

      NK however would be really successful in all the Latin American connections at FLL, and the Maryland Latino VFR market is huge. However, whether this warrants opening another station in the DC area is questionable given the operation at DCA.

  13. Todd in CMH says:

    I see little risk in this move by Spirit as I assume they will be the ‘yet-unnamed suitor’ to actually purchase Frontier from Republic.

  14. Bret says:

    I notice that SW has announced LAS-DTW service. One of the few Spirit routes out of LAS not also served by Southwest. Interesting.

  15. Jim says:

    You responded with similar skepticism when Spirit started LAX-LAS. That seems to be going quite well from what I can see.

    • CF says:

      What evidence do you have that it’s going well? I mean, I’m sure there’s probably anecdotal evidence but I haven’t seen any hard numbers confirming that it’s working. My only piece of evidence was the flight I took on a Wednesday in November that was less than half full. Of course, I won’t make a judgment based on that flight.

      • Jim says:

        I don’t have any actual numbers, but US Airways withdrew the route soon after, so it seems like Spirit knocked out one of their competitors. I can’t assume that this is the reason US pulled out, but the timing seems to imply a correlation. However, Spirit has been flying the route for 9 months now, so they seem to think it’s working.

        • CF says:

          That doesn’t mean Spirit is doing well. It could mean that Spirit made the market even worse so US Airways walked away, but I bet they weren’t related decisions. US Airways walked away from many Vegas markets at the same time as part of the continued shrinkage of the Vegas hub to nothing.

  16. Jay says:

    Could this be a ?test the waters? market for Spirit to possibly look at Frontier as a partner and/or acquistion? Republic has stated it wants to divest Frontier so this may be a way for Spirit to pick up pieces such as aircraft, routes, and a possible customer base? Just a thought.

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