Cheap airfare: Frontier may become super-discount airline like Spirit
Get ready for the takeoff of another super-cheap airline offering ultra-low fares with loads of passenger fees.
Industry insiders say the new super-discount airline may soon be launched with the help of Indigo Partners, the Phoenix-based private equity firm that invested in Florida-based Spirit Airlines in 2006 and helped persuade its chief executive, Ben Baldanza, to adopt dirt-cheap fares and abundant fees.
Indigo is reportedly negotiating to buy Denver-based Frontier Airlines from its parent company, Republic Airways Holdings. Meanwhile, Indigo has started to divest itself from Spirit, with Indigo owner William Franke and Indigo principal John Wilson resigning from the Spirit board of directors.
“They really are taking the Spirit Airlines playbook from Florida to Denver,” said Henry Harteveldt, a travel analyst with New York-based Hudson Crossing.
Indigo officials did not respond to requests for comment, and Republic Airways representatives would only say that they expect to sell Frontier to a “third-party purchaser” by September.
It would make sense for Indigo to transform Frontier from a typical low-cost carrier to an ultra-cheap airline because Spirit has been so profitable, said Fred Lowrance, vice president and senior research analyst at Nashville-based Avondale Partners.
The airline reported a profit margin of 8.5% in the three-month period that ended June 30, more than twice the rate of many of its competitors, and shares of Spirit have nearly tripled in value since the company went public in 2011.
“That business model has proven successful,” Lowrance said.
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