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.
Now What?
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.
