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Frontier Airlines is a low-fare carrier operating out of Denver International Airport (DIA). It is the second largest carrier at DIA with an average of 118 flights per day. The carrier operates a fleet of 25 Boeing 737s to serve 17 of the top 25 destinations out of DIA, including Boston. In 2001, Frontier will begin to transition their fleet from 737s to Airbus aircraft. Students should be particularly interested in Frontier because it is an all-coach airline that specializes in providing lower fares than other major carriers, such as United Airlines, their primary rival in Denver.
Frontier began service on July 5, 1994, with two aircrafts serving four destinations in North Dakota. The name Frontier comes from a defunct airline that served locations in the West and Rocky Mountain regions from its hub in Denver. The original Frontier provided service from 1946 until 1986. Frontier had been losing money since 1983. It had explored the sale of the airline to United Airlines or legendary airline dealmaker Frank Lorenzo, but no agreement could be reached as to how the Frontier employees would be integrated with the United employees. Frontier filed for bankruptcy and eventually its assets were purchased by Continental Airlines. Continental began serving many of the Frontier routes.
The new Frontier Airlines was founded by a group of eight original Frontier executives led by Hank Lund. The new Frontier’s slogan was “The Spirit of the West.” It has received worldwide attention for its stunning aircraft tails, which show photos of Western wildlife scenes. By 1995, the new Frontier was serving ten destinations throughout the Rocky Mountain region. Of the initial 200 Frontier employees, 75 percent had worked for the original Frontier. In fact, it received so many applications from past employees that it had to stop accepting them after it had received 5,000 applications for the 200 available positions.
The current President and Chief Executive Officer of Frontier is Samuel Addoms, who has served as President since its founding in 1994. During its pre-start up phase, Addoms had served as Executive Vice President and Treasurer. Under Addoms’ leadership, Frontier has grown from a small Rocky Mountain regional carrier to a truly national carrier, serving major cities on the east and west coasts. For example, a BC student could fly Frontier from Boston to Denver and then connect to a flight to Los Angeles, San Francisco, Seattle, Las Vegas, as well as over a dozen other major cities. Frontier often offers far lower fares than the major airlines. Due to his work with Frontier, Addoms was named Entrepreneur of the Year for the services sector by Ernst & Young in 1999. Addoms has also built a profitable airline, with earnings of $27 million on revenues of nearly $330 million.
A major challenge for Frontier in the coming year will be the conversion of the airline’s fleet to Airbus aircraft. Frontier has a firm order for six A319s and five A318s, with an option to purchase nine additional aircraft. Frontier also plans to lease an additional 15 aircraft from GE Capital Aviation Services (GECAS) and another A318 from International Lease Finance Corporation (ILFC). Frontier will take delivery of its first A319 in June 2001 and its first A318 in February 2003. The entire transition will take approximately four years.
Frontier’s stock is currently traded on the Nasdaq under the ticker symbol FRNT. The stock has done very well over the past year, tripling in value. One of the reasons that Frontier’s stock has done so well is because the company is still a small carrier and is able to grow much more rapidly than more established carriers like United or American. For example, in the six-month period that ended September 30, 2000, Frontier saw revenues that increased 49 percent over the past year; American and United saw revenue increases of about ten percent. Frontier likely benefited from operation problems by their primary Denver competitor United Airlines. It remaines to be seen if Denver residents will continue to choose Frontier’s lower fares and better service over United’s larger number of flights to more destinations.
In the coming years, Frontier will face challenges with the transition of its fleet to Airbus aircraft. Frontier may also have to deal with a slowing economy that is usually particularly harsh on airlines. However, Frontier is unique because although it is a young carrier growing quickly, it has an established management team with many years of experience. Regardless, Frontier offers students and other travelers a way to avoid paying the high fares of the major airlines.
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