Frontier Airlines Expands, Attacks Legacy Airline Hubs

Frontier Airlines has just announced a massive expansion for 2024. I don’t usually cover when ultra low cost carriers add routes, since they are constantly adjusting their networks. However, this expansion is a bit different than past ones, and I can’t help but wonder how this is going to play out.

US ultra low cost carriers have been struggling

We know that ultra low cost carriers in the United States have been struggling quite a bit lately. Leisure demand has come back incredibly strong post-pandemic, so you’d think that ultra low cost carriers would be doing well, given that they’re targeted at leisure travelers. Unfortunately there are some issues, though:

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• A lot of the summer leisure demand has been for travel to Europe, and that’s a destination that US ultra low cost carriers don’t serve
• We’ve seen a huge increase in premium leisure demand, and ultra low cost carriers don’t have as many premium products to sell people
• A large portion of the profits for the legacy US carriers come from their loyalty programs, and in particular their lucrative credit card agreements, and that’s something ultra low cost carriers can’t capitalize on in the same way
• In many ways, legacy airlines have gotten better at competing with ultra low cost carriers, by flying larger aircraft, and shifting their route networks to a lot more leisure destinations

In October 2023, Frontier CEO Barry Biffle said that his airline was “kind of the canary in the coal mine,” which is something you don’t want to hear. Executives at the airline have committed to transforming the business, so there’s an interesting development along those lines…

Frontier Airlines attacks legacy airline hubs with new routes

Frontier has just announced dozens of new routes that will be launching this spring, between April and June of 2024. These routes cover 38 different airports. What makes this expansion so interesting is the type of routes that Frontier is adding. No, we’re not talking Baltimore to San Juan, or Islip to Tampa, or Cleveland to Punta Cana, as we might have seen in the past.

Instead, Frontier is expanding almost exclusively to the hubs of legacy airlines, in many cases even flying between their hubs. You can find the full listing of new routes here, but just to give some examples, the airline will fly from:

• Atlanta (ATL) to Minneapolis (MSP)
• Charlotte (CLT) to Chicago (ORD), Dallas (DFW), and New York (LGA)
• Dallas (DFW) to Houston (IAH), Chicago (ORD), Detroit (DTW), Los Angeles (LAX), Minneapolis (MSP), and Salt Lake City (SLC)
• Denver (DEN) to Chicago (ORD), Los Angeles (LAX), and New York (LGA)
• Los Angeles (LAX) to Denver (DEN), Phoenix (PHX), and San Francisco (SFO)

That’s just a tiny sample of the routes, but Frontier is primarily adding flights between major airline hubs (including between hubs of two competing airlines), as well as flights from major airline hubs to other cities that typically have high pricing.

This expansion will be great for consumers

Obviously ultra low cost carriers in the United States need to do something to improve their margins. So this is a very interesting direction for Frontier to take.

Historically, many ultra low cost carriers have been focused on operating point-to-point routes in markets not served by legacy airlines. For example, that’s the entirety of Allegiant’s business model, and Allegiant is probably the most successful ultra low cost carrier in the United States.

Yes, Allegiant has the St. Petersburg to Flint and Punta Gorda to Appleton markets all to itself. So obviously Frontier is going exactly the opposite direction here, entering markets that are largely very well served, but which maybe don’t have very attractive pricing.

Airlines have a ton of pricing power at their hubs. For example, Frontier is starting flights between Charlotte and Buffalo. Currently, American’s cheapest one-way fare in the market is $192. Yes, that’s even when booking months in advance, and worst of all, that’s a basic economy fare. Now Frontier is entering the market, with fares starting at $19. You can bet that this will put downward pressure on American’s pricing.

I think there’s merit to this strategy, though admittedly it also doesn’t come without some challenges. Frontier can’t compete with legacy airlines in terms of frequencies, and the airline also won’t have as much connecting traffic. The legacy airlines can essentially skim point-to-point demand from their hubs with high fares, since connecting passengers largely fill planes with lower fares.

I’m not sure if Frontier will be successful here, but I appreciate what the airline is trying, and the aggressive approach. hopefully the airline can quickly figure out which markets prove successful, and adjust capacity accordingly.

One thing is for sure — this is very exciting for consumers, since you can bet that this will lower fares in many markets.

Bottom line

Frontier Airlines is expanding significantly this spring, with dozens of new routes. This expansion consists almost entirely of new service from the hubs of legacy airlines, with lots of hub-to-hub flying. Historically ultra low cost carriers have tried to create a niche by avoiding competing directly with legacy airlines. However, that’s a trend that has been changing, and this latest expansion by Frontier is the prime example of that.

I’m curious to see how Frontier does with its expansion. At a minimum, consumers should be excited about lower fares from hub airports.

What do you make of Frontier’s expansion?