It’s not often that I find a reason to write about Houston twice in one week (or one decade), but sure enough, here we are. Frontier announced yesterday that it would move back from Houston’s Hobby Airport to Intercontinental. Even for people who don’t care about Houston, this is a strategic move worth discussing. It says a lot about how Frontier and Southwest operate as airlines.
Frontier decided to move its three daily Denver-Houston flights from Intercontinental to Hobby back in November 2010. At the time, the rationale given was that “Hobby offers Frontier’s guests easy access to downtown Houston and many popular tourist attractions in the area.”
For an airline that’s used to competing with United in Denver, that makes sense. This move gave Frontier an opportunity to differentiate itself from United’s service to Intercontinental by going elsewhere. Trying to serve Denver-based travelers meant Frontier was smart to look for a more convenient option. Hobby was also cheaper, but not by a ton. In 2010, the cost per enplanement at Hobby was $9.44 versus $11.06 at Intercontinental.
Here we are less than two years later and Frontier is switching back. What’s changed? A few things, I’d say.
Most importantly, Frontier is a different kind of airline today than it was just two years ago. It is now on its quest to be an ultra low cost carrier. You would think that would mean operating at the lowest cost airport, but the difference between Intercontinental and Hobby is not that great in the scheme of things. (It’s not like the deep chasm between Ft Lauderdale and Miami, for example.)
At Hobby, Frontier could have undercut Southwest. Southwest is hardly the low fare leader it once was, and that might not be hard to do, but what is hard to do is overcome Southwest’s perception as a low fare leader. Southwest’s roots run deep in Houston, and the roots are going deeper every day in Denver as well. If people want to go to or from Houston Hobby, they first think of Southwest. And since Southwest doesn’t participate in any online travel agent systems, people are going directly to Southwest.com to book.
That’s not to say that Frontier couldn’t have won some business by having a lower fare, but there’s just too much noise from Southwest there and it’s probably not a winning battle.
Intercontinental, on the other hand, looks like a low cost carrier’s paradise. It’s not insanely expensive to operate there, but more importantly, as Frontier notes in the second sentence of its press release, “Frontier will be the only domestic low-cost carrier at Bush Intercontinental.” It had to say “domestic” because VivaAerobus flies to Monterrey, Mexico. For the many people who think of Intercontinental first, those who maybe live on the north side or simply think northward, Frontier now has some real opportunity to go in and make some waves without Southwest creating problems.
This is exactly what Spirit has done at O’Hare, DFW, and many more. It goes where the big guys are, where the bulk of the traffic lies, and undercuts the heck out of it.
Frontier is, to be fair, a different animal. (Sorry, I know.) It isn’t quite running that same barebones schedule that Spirit flies. Frontier also can connect people via Denver to a lot of places. It’s something of a hybrid at this point, so United might be more interested in responding. But then again, United might not want to really get into a fare war on what should be a very profitable hub-to-hub route. It’s not like a move by United is really going to push Frontier to walk away from Houston. If Frontier starts growing further in Houston, then maybe United would be more concerned, but it shouldn’t be wasting its time on this one route.
Where does this leave Hobby? It leaves it in the same place we see Love Field, Midway, Oakland, you name it. Southwest has done an incredible job of effectively becoming a monopoly carrier at these airports and that’s a nice position to be in for an airline. Sure, JetBlue is still at Hobby, but would it stay if Southwest started flying from there to LaGuardia? I’m not so sure. Other than that, it’s just regional jets on American to DFW and Delta to Atlanta. Pretty sparse.
So, Southwest will continue to have what’s effectively its own airport on the south side while everyone else stays north.
20 comments on “Frontier Waves Goodbye to Houston Hobby, Moves Back to Intercontinental”
It makes sense for F9 to move against UA rather than WN. Take your wins where you can and retreat when necessary to save yourself. It wins wars so why not this as well.
I’d also be interested to read your updated feelings about the long term prospects for Denver. When you were here for the State of DIA you made the statement that you didn’t think DEN could be a sustainable 3 airline hub. Has that thinking changed as F9 has morphed or do you think that still holds true?
Now that F9 has A Concourse, UA has B, and WN has C DEN is starting to feel well utilized. I have noticed the concourses feel very full regardless of which one you end up on. My personal wish is for DL to move out of C to A. As the last non-WN carrier on that concourse they just don’t belong.
Where is there room on A-Con for DL?
Yes, I know. That is why it is my personal wish. Right now there isn’t any. However, AirTran will be leaving their gates soon enough and if F9 shrinks just a bit that would potentially open up enough gates for DL. It’s a long shot I know.
Good question, Jason. I still don’t think there’s room for three airline hubs there, but with Frontier going “ultra” low cost, then it could create more opportunities than were there before. We’ll see how Frontier’s Denver route system ends up looking.
As mentioned in the last paragraph, there might be a story about OAK since they have lost or are about to lose two of the four remaining legacy carriers very recently (AA and UA) and have minimal access via the others (DL to SLC and LAX, US to PHX, all three destinations also served by WN). Having used the airport around 10 years ago, I was surprised to see the lack of nonstop service east of the mississippi, really east of denver (e.g., no dallas access, nothing south or east of MCI or south or west of IAD, just lots of holes).
http://www.flyoakland.com/routemap.shtml
Yes at OAK WN seems to be dominating in the Lower 48. The other carriers at OAK are pathetic. However I’ve heard OAK redeyes on B6 are huge cash-cows for them.
I’m inclined to also bring BWI into this mix. People all over the Midatlantic associate WN with BWI and low fares. BWI has bent over backwards to do whatever WN likes. I’m afraid in a few years that BWI will become fortress WN, with US just feeding its longtime FF’s to CLT and DL on a handful of routes.
I tend to agree somewhat, although I think there is enough direct origin traffic. AirTran folding into SWA has accelerated the phenomenon since they were 1 and 2 in traffic count, with #3 a distant third. BWI could use another LCC to fill the gap left since the merger; Spirit, Frontier, Jet Blue, etc. could be good fits.
B6 has been at BWI for two years or so now but it’s hard to tell because they have a bunch of flights to BOS but that’s it. The fact they haven’t opened up any other destinations tells me they are getting hammered there.
The “BWI as a WN fortress hub” ship sailed with the FL merger. As David pointed out, FL was the #2 carrier at BWI and the only thing keeping WN in check. That, obviously, will no longer happen. The Final Four carriers are already reduced to only hub service (and all hubs aren’t served nonstop from BWI anymore either).
WN clearly strong-armed BWI into building the new Terminal A while it was obvious that US was emptying out of Terminal D. There are probably at least 25-30 empty gates in Terminal D. WN could have used all of D, moved the other airlines to B and not built A. Oh well!
It is hard to blame them and they held up remarkably well in the post 2008 economy. It is hard to blame any airport for getting in bed with SWA, given their profitability and popularity. The alternative for airports like BWI, Midway, etc. could have been much worse (see Pitt, St. Louis, etc). Even with the issue that Bill from DC alludes to in terms of the terminals, the growth has been solid over the years since SWA arrived in 1993. But he’s right, airline consolidation is leaving a lot of empty gates at airports like BWI, even as they set new passenger records.
I agree 100% with David. With the benefit of hindsight, it just seems strange to see such large portions of an airport empty while it is also setting passenger records. And I didn’t even mention the complete white elephant that is the “international” terminal (well, there is that daily BA flight to LGW that the state of maryland subsidizes to the tune of millions of dollars per year).
I believe the BA flight is to LHR. Also, BWI terminal E serves many US military charters.
Takes me back to my TWA days when TW fly to IAH and then after the Ozark purchase also flew to HOU. After a while of flying to both airports, they just moved everything to HOU.
So is Houston not a large enough city that one airline can not fly to both airports and give people the choice of which is better for them to fly to?
Frontier could also now be a good connection to/from airlines like EK to the middle east and any other international airline using IAH that isn’t part of an alliance.
And who knows, maybe some deep scandal will pop up some day where WN paid Frontier to move so they could have more space at HOU for all that international flying they want to do from HOU :-)
A comment about Oakland, it is becoming more of a Southwest/Alaska private airport. Since most people in the bay area live in the east bay where Oakland is, you would think there would be more nonstop service by more airlines like it used to be. The population growns, but the air service shrinks.
A couple more points here:
1. When Frontier does a fare sale out of Denver, Southwest matches it 99% of the time. Even if it means offering a $50 all-in one-way between Austin and Denver (I’ve flown one or two of those). My guess here is that Frontier is aware that Southwest is willing to price its flights on that route at a loss to keep Frontier from filling u its E90s out of HOU, so they’re moving to IAH to provide some differentiation (and maybe fly under the radar if/when they do attempt to undercut WN on the route).
2. Frontier mentioned in the article about their ability to interline with a number of airlines out of IAH…including UA. It sounds like they want passengers who would normally go DEN-IAH-XXX on Star Alliance partners to take them for the DEN-IAH leg to save money, then switch airlines and go wherever you want to (since IAH has an order of magnitude more international service than DEN).It’s an interesting strategy, particularly considering Frontier’s mention of UA as a potential interline partner for your DEN-IAH-XXX flight.
It’s almost as if they see WN (and eventually Spirit) as their competition rather than United. Though if people end up liking Frontier’s on-board product offering and pricing better than UA’s DEN-IAH and convert more flying to Frontier (maybe allowing Airbii to serve the route), I don’t think the airline’s gonna complain :)
“Airbii” is not a word.
Ain’t ain’t a word either.
lol
Tru dat.
Who dat!
Denver plans on expanding it’s concourses in the future. As a result, DL could move from C to A. Each concourse was designed to be enlarged to handle as many as 99 gates each, but I doubt they will ever grow to that size.
Cranky
I saw that Spirit just announced a new route from Dallas to Portland which is scheduled for the middle of the night. Do you think Frontier will follow them in this direction?
You’d think it would make sense, right Zack? I mean, Frontier has effectively started doing that in Orlando lately already. Houston might be a good opportunity, if Frontier can get its costs low enough.