Frontier: The last Frontier?

There are news reports that Republic Holdings has entered into negotiations with third party to sell Frontier Airlines.  Frontier, as it exists today, is made up of Frontier Airlines as bought by Republic as well as Midwest Airlines also purchased by Republic.

The two purchases were an attempt by Republic CEO to diversity his company.  That attempt was arguably quite unsuccessful.

I never sensed that Republic knew what to do with both Frontier and Midwest.  There seemed to be a lack of ideas on how to make these airlines rev up and win for Republic and even basic marketing seemed to defeat them.

When Frontier was for sale, Republic bested Southwest Airlines in price for the airline and that never once felt very smart to me.  In hindsight, I think Southwest likely bid appropriately and when it lost, it did the right thing in walking away and looking for other opportunities.

Who is the buyer this time?  Who knows.  I would speculate that it could be an Ultra Low Cost Carrier such as Allegiant or Spirit and that wouldn’t necessarily be a bad thing.

It could be a mainstream airline but the only one I would learn towards in jetBlue.  It certainly isn’t going to be Virgin America although I’ve long harb0red the idea that jetBlue combined with Virgin America and Frontier Airlines c0uld, at once, become an airline that spanned the United States and even might win big.  But I appear to be the only one who thinks that.

Would Southwest buy the airline?  No, I don’t think so.  Frontier doesn’t offer opportunities that it offered several years ago.  Southwest is a very different airline today with very different needs.

Could it be any of the other legacy airlines?  US Airways?  American Airlines?  No, no way.  United Airlines?  No, that airline is too busy with solving its own problems.  Delta Airlines?  I don’t know why given that Delta has Frontier bracketed in all markets already.

The truth is that I don’t even see jetBlue as a big contender.  That airline has been stuck in a rut for several years and nothing has changed in its operations to make me think they are looking for a risky purchase.

I think Frontier is going to go to Allegiant Airlines.  Spirit Airlines has too much good organic growth going on today but Allegiant is looking to adopt the A320 series aircraft and Frontier offers some opportunities that are complementary more to Allegiant than Spirit.

Time will tell but I don’t see Frontier lasting very much longer as an independent airline.  It’s be sold or liquidate at this point and the reasons to buy that airline wane more each day.

Update:  (The above post was written on Monday, 7/29/2013 and scheduled)  There is some new information that investors and directors currently associated with Spirit Airlines are the buyers for Frontier.  These directors are William A. Franke and John R. Wilson.  Franke is the current Chairman of the Board for Spirit (Ben Baldanza is President & CEO) and John Wilson is a director whose term ends in 2014.

Bill Franke is a former Chairman and CEO of America West and current managing partner of Indigo Partners (a major investor of Spirit) and John Wilson is a principle at Indigo Partners with a background in finance at several airlines including America West Airlines.

Indigo is selling its shares in Spirit Airlines asap and these two are withdrawing from the board asap.  Do the math.  I was wrong, this isn’t Allegiant buying Frontier.

But . . . while Spirit Airlines and Allegiant Air are doing great as Ultra Low Cost Carriers . . . how many ULCC airlines can the US handle?  Frontier has a management team that has been positioning it as another ULCC (not very successfully in my opinion) and continuing that direction leaves me wondering why would you bother?

ULCCs aren’t stimulating more air travel at this point.  Their robbing some low hanging fruit from other airlines on routes that have high fares.  ULCCs don’t attract the attention of the SuperLegacy airlines because they don’t put frequencies up against the SuperLegacy airlines on routes.

Only time will tell but it does look like Indigo Partners will become the new owners of Frontier.

One Response to “Frontier: The last Frontier?”

  1. I Like your look at Frontier. I seem to think that Frontier is going to do fine now that Indigo has control, I think that Frontier will beef up it’s Trenton & Wilmington bases and look for more international opportunities in the coming years. I see Frontier being spun off in 5 years or so and then who knows what will happen. As far as Allegiant goes, I think they are no threat to Frontier overall because they don’t fly to enough destinations across the country, they will just do there own thing. I Don’t know what Spirit is doing, but again I think Frontier is better positioned to grow & as far as Jet Blue goes I Don’t think they will be doing much expanding in the near future so I don’t think Frontier has a lot to worry about there. And 1 more Virgin America doesn’t have enough of a foot print to affect Frontier for now.

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