Thread: Frontier to Cut Back in DEN

Frontier Airlines will cut flights and jobs at DEN because increased taxes and landing fees have made the hub unprofitable, airline CEO Dave Siegel told employees Monday.

Siegel wrote in a letter to employees that Frontier's tax burden has "doubled in the last two years and DEN landing fees are up 30 percent over the past three years. The cumulative effect of these increasing costs is that connecting traffic is no longer profitable for our airline. We are also faced with escalating taxes and airport charges at DEN, where operating costs have risen faster than any other major U.S. airport over the past decade."

The airline also cites the lack of incentives as reason for the move, which it described as "right sizing."
"This may come as a surprise, but we do not receive economic incentives as the hometown airline, adding to our cost burden," the letter reads.
In May, the city of Denver agreed to reimburse Frontier up to $1.6 million for repairs to a mostly unused hangar where the airline said it would open a maintenance facility. The deal included a five-year, nearly $12.4 million lease.
Denver Mayor Michael Hancock also proposed a two-year phaseout of the city's 3.62 percent aircraft-parts tax in his 2014 budget, which the City Council approved. The sales-and-use tax on aviation parts kept many airlines from doing significant maintenance at DIA.
"Frontier Airlines, and the other airlines that serve Denver, will benefit from the phaseout of the city's 3.62 percent sales-and-use tax on aviation parts. Frontier has also benefited from DIA's debt restructuring and recent hangar lease," airport spokeswoman Laura Coale said in an e-mailed statement. "DIA will remain the third-largest U.S. domestic network, and our airline costs remain competitive as compared to other large hub airports. Frontier currently accounts for less than 20 percent of our total passenger traffic."
Frontier employs about 981 people in Denver. The airline leases 14 gates and accounts for about 18 percent of flight traffic at DIA.

United contributes about 40 percent of traffic, and Southwest 27 percent.