Despite losing its bid for Spirit Airlines to JetBlue Airways, Frontier Airlines CEO Barry Biffle isn’t licking his wounds.
Frontier’s largest direct ULCC competitor, he sees this as a win for the carrier. “It’s like [department store] Nordstrom purchased a discount store like Walmart and then closed it down.”
In the closing keynote session at the event, Biffle contended that JetBlue’s higher unit costs, coupled with a long and costly integration of Spirit, will impact customers who will end up paying higher fares for the company to keep it margins up. This creates an opportunity for Frontier, Biffle said. He added: “I don't know that I would want to be that [JetBlue] commercial officer, but I wish 'em luck.”
When asked about the impact of new entrants to the US market, Biffle said that Breeze Airways and Avelo will take “a considerable time to become a threat to us.” Besides operating in a different space of mostly smaller markets, he predicted that it would take them a long time to scale to reach their first $1 billion in annual revenue, much less the $4 billion where Frontier is today.
Looking ahead, Frontier’s fourth quarter 2022 capacity is at 118.7% of 2019 levels, according to figures provided by OAG. However, the ULCC hasn't been immune to the high fuel prices, labor shortages and rising inflation costs plaguing the industry. Cost per available seat mile (CASM) was at an elevated 11.87 cents in the second quarter of 2022 compared to 7.80 cents in the second quarter of 2019.
Biffle said Frontier is getting a handle around getting CASM “back to sub-six cents” and fleet utilization back to 95% of where it was pre-pandemic by the fourth quarter. The front-line labor picture has improved markedly in the last six months, he said, noting that Frontier business partners like ground handlers have been fully staffed since July.
If there’s a recession looming, Biffle is non-plussed: “We've already been through the biggest recession the industry has ever seen.” With pent-up demand to travel and high incomes, he sees no demand destruction for now.
On the network front, Biffle predicted that international will grow to 15-20% of the airline compared with 5% pre-pandemic, pointing to large recent expansions in the Caribbean. Re-engaging the embryonic Volaris/Frontier codeshare agreement will also become a priority once Mexico is upgraded back from ICAO Category Two status by the FAA.
However, Biffle shot down any plans on the table for a new international LCC alliance with fellow Indigo Partners carriers—Canada’s Lynx Air, Chile’s JetSmart and Wizz Air in Europe—saying that no discussions about potential cooperation have taken place.