Though my recent trip to Denver was for a wedding, I had ulterior motives. I was hoping to schedule some time with Frontier’s executive team since the airline has been doing some really interesting things lately. The team is attempting to do something we haven’t seen in the US yet: run an ultra low cost carrier that has a great operation. The transition over the last year has been tough, but Frontier is now a very different airline, and one that’s doing quite well for itself and for its customers.
The airline’s headquarters building sits in a nondescript complex near the bend in Pena Road a few miles west of the airport. This area was nothing until the airport was built, but since then, hotels and chain restaurants have popped up to serve travelers.
Right in front of the door sits a Jeep that was just given away to a flight attendant for achieving record ancillary sales. Inside, I had quite the line-up waiting for me. First up was President Barry Biffle. Then it was COO Bill Meehan and Debbie Price, VP Customer Experience. Lastly I’d meet with Daniel Shurz, SVP Commercial and Josh Flyr, Sr Director, Network.
A Big House-Cleaning
Daniel is unique in the organization. He’s the only senior executive who was there before Indigo Partners bought the then-struggling airline from Republic back in late 2013. At the time, Frontier was nearly two years into its attempt to change into an Ultra Low Cost Carrier (ULCC) but things weren’t going as well as hoped. Republic had unloaded Frontier for a pittance. The airline wasn’t running a good operation, its costs weren’t as low as they needed to be, and customers were angry.
Indigo came in and cleaned house, bringing in Barry Biffle, the former right-hand man to Spirit CEO Ben Baldanza, in April 2014. In May, Frontier found a new CFO. In June, Bill Meehan, formerly an exec with Continental, joined as COO and brought Debbie Price with him. Changes went into overdrive.
At the time, Frontier faced an internal perception problem. Its previous plan to be a full service hub carrier didn’t work, but its employees didn’t know it. According to Bill, there were no regular operations updates, and communication was poor across the board. For Bill, the first priority was to bring consistency and structure. He admitted it “was much worse than we thought it was.”
For example, the planning team had moved half of the airline to flights outside of Denver, many along the east coats, but maintenance was still being done in Denver alone. Outside of maintenance, much of the airline’s services had been outsourced to “business partners,” but there wasn’t enough attention being paid to working with those partners to operate correctly. Debbie came in and implemented training programs unique to each station. Business partners are now brought in at least twice a year.
But Frontier’s problems went beyond its operation. I asked Barry how he was going to differentiate Frontier, and he told me to hold on. He came back with a picture he had hanging on the wall in the hallway. It’s the airline’s blueprint.
One area that needed some attention was the network. Last summer, Frontier had 118 routes it flew less than daily. By the end of this year it will be down to 6. Why the change? Those routes are more costly and more difficult to run from an operational perspective. Cutting many of these routes helped to simplify things.
Network and operations now work together to make sure that upcoming schedules can be comfortably-operated, a process that wasn’t previously collaborative. The result is that the airline is now running a schedule that allows its airplanes to see 13 hour utilization each day, including the impact of spares. And it is running a very good operation.
According to masFlight, Frontier has seen 86.7 percent of flights arrive within 14 minutes of schedule since September 1. The airline has also only canceled 0.2 percent of its flights. Those are stellar numbers which, admittedly, have come during good weather. This winter will be a good test to see how things hold up.
This may sound foreign to people who are used to seeing Allegiant and Spirit run poor operations. But look to Europe and you can see this is a model that works. Ryanair runs one of the most punctual airlines around.
Changing Its Product
With things coming together, the airline turned to its product offering. On the pricing side, it went to a fully a la carte model, but then it introduced “The Works.” For a flat fee, you can effectively buy what would be a very good coach product (including full refundability and extra legroom seating). If you don’t want that, you can just pay the base fare and pick and choose your add-ons.
On the aircraft, Frontier went toward a much more dense offering, but it did so thoughtfully. It invested in all new seats with an interesting feature. The middle is wider than other seats on the airplane.
Up front, there are Stretch seats which have Economy Plus-style legroom. In the back, the regular seats are thinner and have less legroom, but that doesn’t mean they’re torture chambers. Barry noted that the airline invested in what amounted to 30 pounds of foam cushioning on each aircraft above what it had to do. That may not sound like a lot, but your butt will appreciate it.
There are also little things that may be surprising. Yes, food and drink are sold on the airplane, but cups of water are free. Why do that if it’s going to cost the airline? Barry likens Frontier to Wal-Mart instead of K-Mart. He says “treating people just a little bit better, a little more friendly… that will make the difference.”
The Big Stuff is Done
All of the major changes are done. Frontier now has unit costs excluding fuel below 6 cents, which is similar to Spirit. But that’s going to continue to go down. The airline has 80 A320neos on order along with 19 A321s (the first of which was just delivered). The airline has mostly smaller A319s today, and some of those will be returned to the lessor soon. With the increase in seating capacity, unit costs will drop. Further, fleet age will decrease from 9 years to 4 years. A younger fleet means Frontier can ramp up utilization even further, keeping costs down more.
At this point, Frontier has a cost structure that opens up a lot of opportunities on routes that wouldn’t have worked before, and it’s only going to get better.
For now, Barry just wants people to know that Frontier is offering, as its tagline says, “Low Fares Done Right.” That’s why the airline has started a nationwide campaign, including letters published in newspapers explaining that Frontier is a very different airline than it was.
What’s next? There aren’t any big structural changes left, but now it’s a matter of refining the model. He’s working on making Frontier a more family-friendly airline, and the animals on the tail are part of that. While Barry says that the animals are “neutral” for adults, “they’re a positive for kids.” Frontier’s going to start putting the animals on the inside of the window shades. It’s also going to put out baseball-style cards for each of them, making sure kids can have fun with it as they fly.
One of the things that bugged me was the airline’s lack of Pre Check. Barry says Frontier is looking “pretty heavily” at it. Its reservation system doesn’t support it yet, so there is a cost involved.
One thing that’s unlikely to come soon is wifi. “The economics just aren’t here,” according to Barry. But a mobile app is almost ready to be released. This is going to make check-in much easier with mobile boarding passes.
Watching Frontier make this transition has been painful, but it appears that the difficult part is largely done. If it can actually continue to run a good operation and provide a product with good value, then it can meaningfully differentiate itself from other ultra low cost carriers. I had the chance to fly Frontier on my way home, and it was actually really good. I’ll post that report tomorrow.
What does “unit costs except fuel below 6 cents” mean?
Guessing it means that the CASM (cost per available seat mile, i.e., every mile an available seat was flow), excluding fuel, is <$0.06.
That said, this is a rare case of Brett not explaining or clarifying such a metric, and I agree with you that I would appreciate his clarification.
Kilroy – That’s correct, thanks. They often exclude fuel from unit cost numbers because that is a largely uncontrollable cost. So unit costs ex fuel are a good metric to see how management is doing at controlling costs.
By comparison, American runs around 12 cents.
This almost sounds like a paid advertisement for Frontier. Not really any critical analysis, just a bunch of “hey look at how good they say they are”. They ran normal numbers during the easiest operational month of the year, congratulations.
Glad to see they’re releasing a competent mobile app. I flew Frontier for then first (and, thus far, only) time in June 2014, and the lack of a true mobile app was my only complaint.
It’s good that they are trying to change themselves, but to liken yourself to WalMart can’t be good thing since WalMart gets so much negative press.
Well, remember they’re saying they want to be more like Walmart rather than K-Mart. The comparison seems apt to me:
Walmart: Cheap and everyone knows it.
Target: Slightly more expensive than Walmart, but slightly better stuff overall.
K-Mart: They’re still around? What’s their target market these days? Oh and they own Sears too.
I think the comparison works. Frontier was changing but nobody (inside or outside the company) seemed to know what they were trying to be and was wondering how they managed to stay in business. They had all these sub-daily east coast routes from small airport hubs like TTN, yet they still ran a traditional hub and spoke operation out of DEN where they competed with United and Southwest.
I still think that true ULCC’s will only show up when airlines find alternate airports in the same vein that Ryanair does. In that aspect I found Frontier’s Trenton and other small alternative airport strategy as the best attempt to emulate that. They’ve evidently decided to go in a different direction, which is a shame, because I don’t see how they differentiate themselves or beat Spirit which most of their management is composed of.
Allegiant does the small airport thing, but it only works because they do a sub-daily service at a lot of them. Frontier found that to be too expensive for them to sustain, so they need to look in a different direction. Spirit seems to be successful in directly competing with the legacy airlines in major markets, there’s probably an opening for Frontier to do it in markets where Spirit isn’t present yet, and if they did have to compete directly with Spirit, Frontier could probably market themselves as being more friendly and reliable.
There’s the option to doing secondary airports for major markets, and Southwest traditionally did a lot of that (HOU vs IAH, DAL vs DFW, ISP vs NYC, MDW vs ORD). But Southwest has gone into more primary airports as well, and has been in some for a very long time, like LAX.
DEN flyer here — I don’t think there’s a Spirit market here that Frontier doesn’t already compete on; it will be interesting to see how & when Spirit expands their DEN operation.
Millions of people love Wal-Mart and don’t complain about them so I don’t see a problem when an airline compares themselves to a successful company like Wal-Mart.
Also, we all need to stop thinking of airlines as the same, because they clearly aren’t. Since this isn’t 50 years ago we can’t expect airlines to operate like they used to when airfare was higher and only a small percentage of people could fly.
The street I live on has both a Whole Foods and Wal-Mart so I don’t see any issues with having a Frontier competing with a NetJets and customers of both getting what they want and pay for.
Technically, you can’t just call up NetJets and buy a ticket on their flights. They’re not a 121 commercial operator.
But how are airlines “clearly” not the same? Before the mergers in the last decade, when we had six “legacy” airlines, it was hard to argue that air transportation was nothing more than a commodity product.
These days, you’d still be hard pressed to argue that one airline provides a materially different experience from another, at least in coach. For the most part, everybody offers you a seat with 29″-32″ of pitch, and 17″ width. These numbers will fluctuate ever so slightly, but by and large the median passenger expects that and gets that. No airline really has a brand offering that separates them from the rest of the pack.
The example that comes to mind immediately is JetBlue with 34″ of pitch. It can also be argued that airline’s products are materially different in other areas such as entertainment, baggage allowances, and snack options (both paid and complimentary.) I find that my experiences on Delta and Southwest are invariably better than my experiences with the other legacies and ULCCs even if the seat is the same.
I think we’d have to agree on what “materially different” means. IMHO, a mere difference in how the fares/fees are charged or accounted for doesn’t a “materially different” experience make. That is, the fact that one carrier makes you pay extra for it (checked bags, change fees, snacks, IFE) doesn’t make the experience different than someone who bakes it all into one fare.
Things that are differentiators, IMHO — a lacking of Economy Plus/Main Cabin Extra, and potentially the lack of or presence of a first class cabin when the “norm” dictates otherwise.
A couple of things I’d be interested in if you’re soliciting ideas for future articles:
1. What are the unique challenges and costs involved with running sub-daily operations?
2. Why do Allegiant and Spirit have performance issues that their European counterparts do not?
Dan – Good ideas, but I’ll try to give a quick summary on each for now.
1) Big issues are crew-related. If flights are running late, then you might have to overnight people. That might mean paying other airlines to move crews around because you don’t have any flights. There are other issues too – more expensive costs because of the infrequent nature of flights. But having regular service just makes it easier to recover.
Skytrax scores them 2/10. That alone will keep me away. I live in a small town. Frontier started a round trip to Denver seasonally four days a week. It arrives late, leaves early. Base fares are cheap but I am unwilling to try them. Frontier competes with Alaska, Delta, United, and Allegiant here. I would rather pay more and fly Delta. Reliability and consistency!
Oh, employees knew.
It looks like you changed something… I can’t see the comments anymore. Is the template broken? There’s an ad in the middle where it didn’t used to be and I wonder if that’s the problem.
JuliaZ – Nothing changed over here. Are you using a different browser? Feel free to email details to firstname.lastname@example.org and I can try to look into it.
I’ve got a new computer (always a likely suspect). :-) Win 7, IE 10.0.27 (groan), and that’s where I have the trouble. It works here in Chrome, so I guess I will abandon IE and upgrade (again) to IE 11.
JuliaZ – Hmm, that’s interesting. It should work with IE10 I believe. If you want to send screenshots over, I’ll forward on for review.
Looks like someone painted a pretty picture for you.. Fed you a line of crap and you ran with it. When you run a company into the ground there is no where to go but up.The people that worked for that airline and saved it out of bankruptcy, gave back to Frontier to keep it going, and who loved the airline were kicked to the curb without a second thought from management. The traveling public doesn’t know those at the airport and reservations are working for peanuts and have no benefits through Frontier, they are not Frontier employees and have no vested interest in the company.I’m sure that Jeep was sitting out there for you to see and that was before Frontier went and changed the sick policy for inflight without going through their union.
Those new seats are extremely uncomfortable and they do not recline. You are packed in like sardines in their planes.
F9emp – No question that employees have had a rough go of it. Quite frankly, the best thing from an employee perspective would have been to get taken over by Southwest and then get those wages and benefits. But as a standalone airline, the old Frontier model just didn’t work. Now the model works, and yes, it’s a huge change for old time employees. There really wasn’t an option to keep running the airline the old way though.
Ol’ Barry failed to mention that this model works largely in part to having the most underpaid employees in the industry. Peer airlines (Spirit/Allegient) make 30-50% more on average. Upper management is buying million dollar homes in Boulder off the blood, sweat and tears of the employees who have stuck by this airline for years.
This a gross, most likely Frontier sponsored article. Frontier has many groups that are without contracts due to the fact that they do not want to pay their employees what they are worth. Like mentioned they are underpaid by a huge percentage over peer airlines. So yea all that extra money is going to upper management. Not the ones who deserve it, the ones making the airline run the way they are perceiving it to be in the article.
Does Walmart really treat people better than Kmart? I’ve always had better service at Kmart, perhaps because it’s less crowded.
Chiming in here as one of WAY TOO MANY employees forced out the door by management.
Colorado’s Hometown Airline? Not anymore – there aren’t enough F9 FTE for them to claim that one.
All these execs – even Daniel has now drunk the Kool-Aid – will spin themselves as the savoir of Frontier Airlines now and forever more. They’re even forcefeeding that line to employees at the Town Hall they recently held.
Point of fact – it was the employees who saved Frontier Airlines!
Brett – you state that F9 would’ve been better off being bought out by WN? Not so fast, my friend.
You didn’t see what they were “offering” the F9 employees. I know because I saw and while I’m not likely to spill ALL the beans here for all to read as that would identify my position back then…suffice it to say, the F9 employees would’ve been SO much worse off than we were under the Republic regime. Hard to believe? Maybe, but it’s true.
You should hear what the 1993/1994 founders of Frontier Airlines are now saying about this current incarnation – I’m talking about the F9’ers who have employee numbers in the single to double digits. They’re not happy is putting it mildly.
Do I want to see anything bad happen to this airline? Of course not – I put in too many years of blood, sweat and tears to wish ill of that company.
Do I wish some one of those executives would STOP drinking the Kool-Aid and do right by current and past employees? You bet.
Do I honestly think that will EVER happen? Not a chance in hell with Siegel gone. Say what you want about him – he did give a damn about the people there. It’s called being hamstrung by Indigo.
Sherry – Lots to parse here. So I’ll respond inline…
Brett – you state that F9 would’ve been better off being bought out by WN?
> Not so fast, my friend.
> You didn’t see what they were “offering” the F9 employees. I know because > I saw and while I’m not likely to spill ALL the beans here for all to read > as that would identify my position back then…suffice it to say, the F9 > employees would’ve been SO much worse off than we were under the Republic > regime. Hard to believe? Maybe, but it’s true.
I’m not talking about short term. For the long term, employees would be better paid with better benefits if they had been absorbed into Southwest.
I have no idea if Republic was better or not for the short term, but those days are over. Now you have a stable airline but I’m sure the contract is worse than what you’d have under Southwest simply by the nature of the airline structure.
You should hear what the 1993/1994 founders of Frontier Airlines are now > saying about this current incarnation – I’m talking about the F9’ers who > have employee numbers in the single to double digits. They’re not happy is > putting it mildly.
So what do they prefer? Keep running the airline as a semi-full service Denver hub carrier that loses a ton of money? It’s just not an option. I realize people don’t like change, but what’s their suggestion for creating a sustainable airline?