Frontier Airlines has a good chance at profiting under its new business model in which it charges for everything from carry-on bags to onboard drinks, I argued this week in my debut Aviation Week column.
This might not be the best news for travelers. You've become accustomed to buying an airline ticket that includes almost everything you need. Yes, major carriers began charging for checked bags about five years ago, and that was difficult to understand. But on American, United, Delta and Southwest, you still can bring carry-on bags for free. You get a drink, too. And if you want to select a seat in advance, you can usually do that for no charge on the big airlines.
Frontier used to be a full service airline. But earlier this year, it shifted its model. Now Frontier offers super cheap tickets that don't come with any extras. As a traveler, this might disappoint you. But I argue it's good business.
I give three reasons:
1.) The market for cheap air travel is huge. And though Europe has several established bargain airlines, the U.S. has only two -- Spirit and Allegiant. And both are still relatively small. (Though Spirit is growing quickly.)
2.) Industry consolidation has left an opportunity for no-frills airlines. Fares on big airlines in some business travel markets -- such as Dallas to Chicago or Atlanta to Washington, D.C. -- are so high it has left room for Frontier to undercut the market and still make money. In industry terms, American, United, Delta and Southwest have created a "fare umbrella," and Frontier is able to position itself under that umbrella.
3. The big airlines don't care much. Spirit and Frontier might end up in a fare war, but it's not likely that American, Delta, United and Southwest will react. Those airlines want high-fare paying passengers. They have less need for the passengers Frontier will transport.
Incidentally, in entirely unrelated news, Frontier will unveil a new branding strategy next week. I have no idea what it will look like. But a Twitter follower sent this to me: