Frontier Makes a Pragmatic, Unsurprising, Yet Sad Move to Outsource Airport Staff

For years, you could hear Frontier employees talk as if they were part of one big family. It Frontier Layoffswas that level of care that often brought the airline praise from frequent fliers. It also helped create Frontier’s image as Denver’s hometown airline.

But while the name on the airplane and the animals on the tail may still exist, the core of the airline is a lot different than it used to be. And now we’re seeing the results of that change in the form of a decision to outsource all airport staff except in its Denver hub. This is a sad change, but it really is the right thing for the airline to be doing today. I hate to say it, but it’s true.

One Frontier employee who will soon be out of a job sent me an internal memo with details of what’s happening. Of course, many smaller Frontier stations are already outsourced but now the rest, save Denver, will join in.

The first group of stations that will go through this transition to outsourcing will be Dallas, Las Vegas, Los Angeles, San Francisco, and St. Louis, which will transition to vendor services by the end of April. The second group will be Albuquerque, Omaha, Orange County, and San Diego, which will transition to vendor services this summer.

Some of these seem like very clear moves. I mean, Frontier has 2 flights a day in Albuquerque. It’s hard to justify having your own staff in a small station like that. Third party contractors that can handle flights for several carriers throughout the day are much better equipped to run that operation.

In fact, I don’t think any of these stations have more than 5 flights a day anymore. I doubt there are more than a couple of stations at all where Frontier has more than 5 flights a day. There used to be more in bigger cities, sure, but Frontier has changed a lot since those days.

A Different Animal
The reality is that Frontier used to be a full service-style airline. It even used to have 34 inches of seat pitch giving it a JetBlue-esque feel. And Denver was the focus of everything. But in the end, that model didn’t make money and things had to change. The legroom went away. Or shall I say, it went away across the board. Now you can pay more for it in a smaller area up front. The nature of the operation changed as well. You started hearing the airline call itself an Ultra Low Cost Carrier (ULCC) the way Allegiant and Spirit style themselves.

Denver and its insane three-way competition proved to be a liability. Frequent flights to the traditional big cities were cut while smaller cities started to receive sub-daily flights. Places like Knoxville, Harrisburg, Minot, and more found themselves with a few flights a week to Denver. And then the focus went outside Denver. Orlando has a decent operation. There are also a lot of flights in partnership with Apple Vacations down to Mexico and the Caribbean from across middle America. And most recently, Trenton has become a big focus.

It appears that Frontier is trying to be a ULCC with good customer service and friendly policies. That would be a welcome differentiator. And you might think that the loyal employees who have worked at the airline for years would be a good way to provide that customer service. But in the end, if you want to be a ULCC, you need to get your costs down further. If Frontier trains its contractors well, it can still provide solid customer service. Heck, it wouldn’t surprise me to see some of the same people who work for Frontier today end up working for the contractor. But those people will also be able to work for other airlines under that contractor and it will mean greater efficiency.

Yes, this is sad for everyone who loved Frontier for what it used to be. But it’s a wake up call to remind people that this isn’t the same Frontier anymore. It’s a different airline; a ULCC. And it’s going to mean changes like this are inevitable. I hate to say it’s the right thing to do for Frontier, but considering what it is trying to be, it does make sense.

42 Responses to Frontier Makes a Pragmatic, Unsurprising, Yet Sad Move to Outsource Airport Staff

  1. S. Brown says:

    Many, if not most, places in the world airlines do not staff their own ground side but outsource it to the airport or another third party ground handling company. There is nothing unusual about this. In fact, service could improve if there is a choice in ground handlers and the successful bidder knows it can be replaced.

  2. Sean S. says:

    The problem with this as I see it is the problem that often happens with outsourced entities; lack of authority. How much authority will individuals in outsourced stations have to make decisions about issues such as compensation, rebooking, etc. And who will they contact if a decision is outside of their scope? Admittedly Frontier is a rather small airline, so it is not like they are rescheduling complex international iteneraries, but I do see it as a potential difficulty. You can only cut your way into profitability.

    • aliquot says:

      They may not fly oversees on their own metal, but they do interline with other airlines that do (like UA). In the past I have always been quickly rebooked when an F9 flight delay met missing a cooncetion on another airline. I wonder if this will become harder.

  3. Ted says:

    Wonder if they wish they hadn’t saved the animals a few years ago.

  4. I feel bad for all affected employees, and hope they can find new work quickly. But I agree with Cranky’s assessment, its a business not a charity, and F9 needs to lower costs. It simply does not make sense to keep this part of the business in-house.

  5. You ended your write with what I was thinking, that some of these workers could be hired by the company hired to now do the service. Can’t be that many company’s with a lot of extra staff on payroll waiting for a big airline to hire them, so a number of current workers should be the new ‘hired’ outside help.

    Will Frontier still have a station manager at each location to handle all the Frontiers issues/accounting/etc or do outside company’s handle all the daily booking keeping?

    • CF says:

      David – I’m not sure, but I would be that they won’t have a station manager. Maybe in a place like Orlando or Trenton but I doubt in the smaller cities.

  6. Forgot to ad that bad customer service is not a given with outside sources handling everything.

    I can tell you from where I work that in some cases you get better service if someone else is doing a job as they look up an answer and not just assume they know the answer like the regular person doing the job everyday.

    • Ron says:

      Looking up answers is part of a culture. When I lived in England, my doctor would regularly open a book when he wasn’t sure about some symptoms. You rarely if ever see an American doctor do this in front of a patient. Now which do you trust more — a doctor who has everything memorized, or one who knows when he needs to consult a reference?

  7. I don’t hate to say that outsourcing ground handling is the right thing for frontier to do in this case. The right thing to do is whatever it takes to bring about long term profitability. Given all of the challenges it’s faced, one has to admire the job Republic and Frontier’s new management team have done to keep the airline in business. Afer all, liquidated airlines employ no one.

    • Arcanum says:

      “liquidated airlines employ no one”

      That’s a great line, and one more people should remember.

      • davywavy says:

        Absolutely. Because what is missing from Cranky’s somewhat sentimental preamble is the critical fact.

        It may have been one big happy family and frequent fliers may have praised it. But they didn’t fly it – or at least not enough. That airline consistently lost money and when Southwest came along, they flocked to it in droves.

        It’s the oldest rule in the airline book – use it or lose it.

  8. I’m surprised its an above and below the wing outsourcing. Especially in some of their larger cities such as MCO..

  9. Bobsmith says:

    Anyone have thoughts on Frontier’s long term survival? Is Republic running it really lean in order to make it attractive to a potential buyer? If so- any thoughts on who?

    • Eric says:

      Conventional wisdom says Spirit…but Im not so sure. An investment fund like Oaktree or BlackRock may be interested in riding a resurgent F9 wave. They did quite well on the NK venture.

      Since WN is no longer a LCC or LFA there is quite a vacuum on the bottom pricing end of the market.

      • Sean S. says:

        Is there really a vacuum that can be profitably mined outside of the vacation packagers and leisure oriented businesses of Allegiant and Spirit? Not likely. This concept of being Ultra Low Cost ignores that the biggest cost, fuel, is not negotiable and you can only cut to the bone everywhere else for so long before you have nothing left to cut.

        Honestly expanding the field as it were for air travel is something very few airlines have done, and in fact, many of them are receding even further ostensibly throwing in that rationalizing capacity is the only means to do so. I’m not quite sure about this, despite the maturing of the market in America, believing that there continues to be untapped potential for flights in a variety of midsized to smaller cities.

        • I disagree. While it is definately a niche value proposition that would not work in every market, these carriers are generally not in markets for the long-term but just until a new, even more profitable place to deploy assets comes up. There is likely a ceiling on it, but I still think there is a lot of growth potential, domestically and internationally

          Fuel may be absolute, but Spirit spreading it over 174 passengers instead of jetblues 150 is a big difference. Spirit charges for every value-added service so that each component is profitable (i.e. baggage fees to cover baggage costs, kiosk fees to cover kiosk costs, etc)

          • Arcanum says:

            Do you really think there’s that much untapped potential in the air travel market?

            Since just about everyone in the US lives within a few hours of a commercial airport, access to air travel is not a limiting factor the same way it is in, say, rural Mongolia. Anyone who truly NEEDS to fly is already doing so, and while an airline may try to attract more of these customers through better routes or services, ultimately you’re dealing with a fixed number of passengers. Adding service to Appleton, WI doesn’t result in net growth if those passengers would have driven to Milwaukee or Chicago to fly your airline anyways.

            The only real potential for growth is in “discretionary” travel – those who don’t need to fly but might choose to take an extra trip which is not strictly speaking necessary. Obviously, this excludes most of the high-value business/government travelers whose front-cabin fares actually cover the costs of flying. An airline trying to grow in this market is basically catering to leisure passengers – and not just any leisure passengers, but by definition those who are most price sensitive (the Kardashians out there will jet to Paris for a weekend of shopping regardless of price).

            The airline is now stuck trying to find a fare which is cheap enough to attract the most marginal customers but still high enough to cover fixed operating costs and turn a profit. That’s tough. The airlines that have succeeded (Spirit, Allegiant, etc.) have managed to cut costs to the bone (cheaper airports like Bellingham and young non-unionized crews) while maximizing incremental revenue through ancillary fees, hotel sales, etc. A legacy airline could never grow their business the same way.

            There may be some potential to grow business by bringing people to/from emerging regions like Latin America and Asia, but I just don’t see there being a lot of room left to expand in the domestic market.

          • Sean S. says:

            Actually Spirit and Allegiant are both unionized, both pilots and flight-attendants, though ground crew likely is non. That said, whats clear is that this is a situation of diminishing returns unless there is a large push for people to travel more across the board. This is one of the problems systemically with airlines that are increasingly cherry picking routes; its not sustainable. You can’t just travel to the routes that are clear winners because overloading capacity on those routes turns them into unprofitable messes.

            In fact, this is one of the reasons why I believe that Emirates will eventually be in for a rude awakening. With only a fraction of their business being O&D, and there being increasing non-stop options across the board, its hard to see how they can continue to pilfer the lucrative transcon routes without depressing prices so low that they become unsustainable. Now some of this has had a monkey wrench thrown in it due to the temporary shutdown of the 787 fleet, which was to allow for long and thin routes but it will be the inevitable move in time.

          • Emirates? Transcon?

          • DC says:

            “…so that each component is profitable (i.e. baggage fees to cover baggage costs, kiosk fees to cover kiosk costs, etc)” That’s a nice idea, and the airlines are happy for those who drink that Kool Aid, but is it true? Have you seen cost breakdowns where IT costs, baggage handling costs are spelled out and held up against fee revenue?

  10. davywavy says:

    Frontier will also report a full year profit for 2012 – the first full year profit since 2003.

    I also assume this may be a step towards fuller automation of the check-in process. At Air New Zealand in AKL, for example, for the domestic and Australian flights, they actively discourage you from using manual check-in when there is a kiosk.

    Being a Luddite, when I first encountered this I rebelled – pointlessly. Now I am completely comfortable with kiosks, no lines, quick and easy.

  11. Mike says:

    We are going to die…..Al-Queada 1, US Air Carriers 0. Looks like Deregulation was a Winner. Just ask raniff, Eastern and Pan Am. Where are they now? More of these carriers should disappear to give everyone a reality check

  12. Mike says:

    Flying aint what it used to

    • CF says:

      Mike – That’s it. Your comments are not only irrelevant but some have been offensive as well. Consider this your only warning. I am putting your comments on moderation. If the content of your comments doesn’t change, then you will no longer be allowed to comment at all.

  13. Poor ABQ I guess I am sorta biased because ABQ is my home airport but then again I dont even see why F9 even fly’s to ABQ well Republic for F9 They are practicably murdered by UA and WN.
    They use to have a much much larger presence even flights to PVR, but for some reason it was never profitable.

  14. JayB says:

    It’s getting to where you wonder what business airlines think they are in. They’re no longer transportation companies, rather, contracting offices. Contracting offices to process passenger check-in, baggage handling, actual flying, cabin crewing, what else. All flights contracted out. Every flight listed as a code-share of every other carrier in existence.

    Dump the pricing departments…simply photocopy the price lists of the competitors. Better yet, dump the entire airline pricing structure monstrosity. [Of course, that's me!]

    Dump everything related to customer service. What are you going to do about it, anyway? Really upset with something, take it to the FTC, the courts, or the anti-trust divison of Justice.

    Not too far off, I guess, they’re be one airline, with regional operating subsidiaries; one airport owner/operator, with local airport authority subsidiaries; and one company owning/managing the air traffic control system, with center/sector subsidiaries, for everything in the country. All owned by one behemoth corporation: Air Commerce for America, or something like that. “We care because we’re the only game in town. Have a pleasant trip.”

    • You know some airlines have actually insourced important parts of their business. US Airways brought back all of the telephone reservations that they had once outsourced, AFAIK they’re very happy with this decision.

  15. AirlineEmployee says:

    No airline employee in their right mind would agree to work for a vendor unless they really want a job with little or no benefits. They would have a low starting salary ($8 – $10/hour?), few if any benefits (health, medical, etc.). It’s a total insult to have to come in as a new hire with 18-20 somethings ?? Laughable. I don’t think Frontier will be around too much longer.

    • Dave says:

      Unless things have changed dramatically in the past 5 years or so, what you mentioned is what the airlines are offering new employees too. Obviously for those more senior people this isn’t the case, but it isn’t like airlines are paying $20/hr with great benefits to their ground crews either. I know when I was applying for jobs back in 2007 United was starting people at about $10/hr, and I had a college degree.

      Airlines simply cannot afford to pay great wages.

  16. JayB says:

    I submit that there’s a tremendous amount of “untapped potential in the air travel market” in this country.

    There are many routes where service is non-existent. To me, it’s surprising how poorly State capitals’ air service to major in-State locations is. Take Pennsylvania, for example, the only air service from Harrisburg is to Philly. Not to Pittsburgh, not to Erie, not to Bradford or DuBois, not to Williamsport or Wilkes Barre/Scranton or to Allentown.

    Same with routes to/from many State’s primary State university. Take Penn State at State College. One in-State route…to Philly. Nothing to Pittsburgh, Erie, Scranton, or Allentown.

    Airline marketing is the pits. Who’s trying to get people out of their cars? Who’s doing everything possible to facilitate more businessman taking day-trips? What local community has the the money, the wherewithall to see that new routes are established? What community’s primary goal in life is much more than trying to kill off some neighboring community competition? Any State programs to increase State air service for everyone, not just one community against another?

    As to the potential customers. I think you’d be surprised how many people have never taken a trip on an airliner. Lot’s of potential there. Many business and goverermnet officials, the same. Drive, drive, drive. But, will the roads always be there? Where’s the road repair money going to come from?

    • Fred says:

      Well, for the Pennsylvania flights, US used to serve them from PIT as well, before they pulled out several years ago. State capitals and cities with large universities both have decent demand for travel, but a lot of that would be within the state and points nearby where flying wouldn’t be necessary or efficient. Both those markets have been around for a while, and it’s not a matter of nobody has tried to fly there; airlines have tried and failed. Both of those cities have populations of only around 50,000, so they aren’t even that big anyways.

      Yes, there are untapped markets just like there are untapped oil reserves, but it doesn’t mean that going for them will be a smart idea or cost-effective.

    • Ted says:

      You are right that people will fly if given the opportunity – the problem is the price at which they are willing to do so. If you believe you’ve discovered so many untapped markets that are willing to cover the cost plus a decent profit to serve these markets, then what are you waiting for? Go line up investors and start your intra-state Pennsylvania carrier. Let me know how that goes.

    • Dave says:

      There may be some truth to what you say, but it likely is not something that the big airlines will be interested in. The article itself proves this. Airlines can’t afford to pay employees for only one or two flights a day, and that is about all those small cities could support. So how do you intend to employ those people? Those smaller town routes are also generally more expensive, so now I am paying $1000 or more to take my family on a flight that would only cost $100 in gas if I were to drive.

      You are right that there are tons of people that would love to fly given the opportunity, but that doesn’t mean that it makes business sense for the airlines to pursue those routes.

      Southwest actually started as an airline exclusively in Texas so there are situations where that can work. Though, even they had to expand to stay profitable once that option became available.

  17. dennis says:

    You have got to be kidding me. Merger and acquisitions always end with stripping a company of the best parts and dumping the rest. That is what has happened and is happening at Frontier.
    Tell me what company that outsources really gives great customer service? I can count them on my one finger.
    This is a sad day when 700 people lose their job, and everyone thinks this is a good thing. This is the fourth round of employee cuts for this company.

    • davywavy says:

      Quite a lot of airlines outsource, especially at lower frequency stations. Southwest can – and does at RIC, as one example.

      Frontier’s peer group, Allegiant and Spirit, outsource at lower frequency stations and Ryanair charges a fee for manual check-in.

      And, as above, Air New Zealand is going further and is outsourcing – to kiosks.

  18. if i were a stockholder, i would wonder why this wasn’t done 12-18 months ago, especially at stations with 5 or fewer flights. patently ridiculous to have multiple FTEs at such a station. really, that should have been done by now.

  19. Do we know who will contractor be at the airports?

    • Doesn’t matter. What’s guaranteed is a very low-level group of employees, 18 years old to early 20’s. You know, the ones on their cellphones every five minutes, yelling across the lobby to their friends, joking, laughing, acting goofy, talking about ‘the hood’, etc., complete jerks, just hanging on the counter like they’re standing at a bar. The airline I work for outsources baggage handlers at the ticket counter (not ticket agents but the guys that put heavy bags on the bagbelt). Some can barely speak English. This is what they are doing constantly. Complaints to their supervisor falls on deaf ears. The quality of life is about as low as a company can go. What do they care?, they are replaced immediately for any number of infractions – with the same type of person, over and over again. This is what they want, this is what they got.

  20. My only worry is that they may have a Skybus situation. They did the same thing and ended up with damaged aircraft and had to cancel flights. However, I do feel its a smart move. For the smaller stations, there is no point to having the ground handling personel in house. I’m sure as well that there are FBO’s that would love the work.

  21. I hate to lose my job but they don’t look at the the people behind the scene running the show. All they are offering is to relocate to den or severance pay. I wish sean menke would of never left and David Siegel is nothing but a bean counter and they don’t know what its like to have to try to support your family on pay freeze after pay freeze. I honestly wish that southwest would of bought us.

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