I’ve railed against Miami International Airport and its absurdly pricey airport projects in the past. All this drunken spending gave Ft Lauderdale a huge boost as the low cost alternative while Miami lost all of its low cost carrier service. But now, Frontier is moving into Miami with flights to Chicago/O’Hare, Denver, New York/LaGuardia, and Philly. Spirit has been sniffing around Miami as well.
This sounds insane. Why would an ultra low cost carrier want to fly to one of the most expensive airports in the US? In a strange way, it’s exactly Miami’s high costs that have created this opportunity.
When Miami decided to start spending like an airline dork in a model shop, it failed to really grasp that Ft Lauderdale was such a good alternative. Today, Southwest, JetBlue, and Spirit all have very significant operations at Ft Lauderdale while no low cost carriers (except for Interjet to Mexico City) serve Miami. The last disappeared when Southwest bought AirTran and cut the airline’s already reduced flight schedule in 2012.
With Ft Lauderdale as the low cost carrier center of South Florida, Miami was left to cater solely to full service airlines. What does this do to fares? I’m sure you know the answer, but take a look at the spread in the markets which Frontier will be entering.
Those are some really big differences. With low cost carriers gone from Miami, American was able to dominate with more than 80 percent of the domestic market. And with the help of its oneworld partners (Air Berlin, British Airways, Finnair, Iberia, LAN/TAM, and Qatar), American also dominates the international market. It’s a very powerful hub.
The combination of a dominant hub carrier at an expensive airport and a convenient low cost alternative on the other side of town meant that fares were bound to stay high in Miami. This isn’t a surprise. But it’s also not a surprise to see an ultra low cost carrier thinking it can find a niche.
Frontier looked at Miami and must have figured it was worth taking a chance. Yes, the airport is too expensive. It costs more than $20 per enplaned passenger to fly there. To compare, even with increases at Ft Lauderdale, that airport is still only around $6 per passenger. Even with Miami waiving the first 12 months of landing fees for Frontier (shaving a couple bucks off per passenger), for an ultra low cost carrier, Miami’s costs sound like a huge problem.
So what is Frontier thinking? Well, part of this could be the Frontier vs Spirit spat. Spirit has been looking at Miami because it knows that there is a market there. Frontier, under Spirit’s previous ownership, beat Spirit to the bunch. That must be pretty satisfying, but I’d hope this fight wasn’t a real consideration when deciding to serve Miami. There are better reasons to give this a shot than trying to one-up a competitor.
Ft Lauderdale has a ton of low cost carriers, as we know, but there are a lot of people who would prefer to fly out of Miami if the price were right. The right price for Ft Lauderdale can’t be the same price for Miami or the airlines will bleed red ink. But with so many people preferring Miami and the current fares there being so high, Frontier wants to try to squeeze in with fares that undercut American in Miami but still stay higher than what the airline could get at Ft Lauderdale.
That’s a real challenge, especially now that Frontier has to compete with an American Airlines team that is much more interested in challenging ultra low cost carriers. (That’s a US Airways specialty.) But with no other low cost carrier service in Miami, it’s worth a try. Besides, it’s not a huge investment on Frontier’s part. The airline just gets to experiment. If it doesn’t work, Frontier can pull out. If, however, this does work, we’ll see more from Frontier (and others) in Miami. What do you think? Will Frontier still be there in a year?