The Wall Street Journal
By Jack Nicas
Updated Aug. 24, 2015 9:46 p.m. ET
DENVER—Executives behind the rise of ultradiscounter Spirit Airlines Inc. are now transforming this city’s hometown carrier—Frontier Airlines Inc.—into a Spirit copycat, part of the rapid expansion of a business model that is introducing millions of U.S. fliers to lower fares, more fees and less legroom.
Since the investment firm of Bill Franke, Spirit’s former owner and chairman, bought troubled Frontier in late 2013, the new owners have ousted Frontier’s chief executive, outsourced more than a quarter of its workforce, packed more seats onto planes, removed seat-back TVs, and started charging for carry-on bags, seat reservations and soft drinks. This month, Frontier jettisoned its toll-free number to save money.
The moves have paid off. Boosted in part by cheap fuel, the closely held carrier earned more last year—$129 million—than in the entire decade prior. Now Frontier is embarking on an expansion that aims to more than double its fleet to at least 114 jets by 2022. Mr. Franke is also weighing a public offering for the carrier next year.
But the airline’s customers aren’t happy. This year through June, nearly one-third of Frontier flights were at least 15 minutes late and almost 1% were canceled, its worst first-half rates in at least a decade. One of every 10,000 Frontier customers has complained to the Transportation Department this year for issues including customer service, baggage handling and refunds, 10 times Frontier’s rate in 2012. Only one U.S. carrier’s delays and complaint rates have been worse this year: Spirit.
In Denver, where the Frontier brand was founded in the 1950s, the backlash has been sharp. The hometown carrier had been known for friendly service, leather seats and animal mascots painted on its planes. Flight attendants sometimes handed out warm cookies in the coach cabin.
David Hubbard, a software consultant from Highlands Ranch, Colo., who has flown Frontier for decades, said the new management is ruining the carrier with unreliable operations, uncomfortable seats and a paltry loyalty program. “They’ve already lost the loyal business travelers like myself,” said Mr. Hubbard, who recently stopped flying the carrier. “They bring in people on their reputation and then they’re burning them so badly that they don’t ever want to hear the word Frontier again.”
Barry Biffle, the former No. 2 executive at Spirit whom Mr. Franke hired to ultimately run Frontier, said the carrier recently removed elite-flier perks like complimentary checked bags and free alcohol because “customers were receiving more than they were paying for.” Frontier was losing tens of millions of dollars and was nearing liquidation before Mr. Franke bought the airline, current and former executives said.
Customers are upset, but many are starting to understand, said Mr. Biffle about the changes. “It’s like the stages of grief: there’s shock, denial, and so forth. You eventually move to acceptance, and we’re pretty close,” he said.
Don Moore, a Frontier flight attendant since 2010, said he is still unsure about all the changes. Tighter seating and more outsourced workers are upsetting fliers, but he enjoyed the profit-sharing check he recently received as a veteran employee. “I want to take management’s side but I also want to understand customers,” he said. “As an employee, who am I to say don’t turn a profit?”
In two years, Frontier has pulled about two-fifths of its flights from Denver, which once accounted for half its network, because the market is highly competitive. Frontier is using those planes to expand in cities such as Philadelphia, Atlanta, Chicago and Cleveland.
The moves set up a face-off between Frontier and Spirit, pitting two friends against one another: Mr. Biffle and Spirit Chief Executive Ben Baldanza. They joined Spirit from US Airways in 2005 and became ultradiscount protégés of Mr. Franke after he bought Spirit a year later.
Messrs. Baldanza and Biffle cut costs and fares at Spirit, making it one of the world’s fastest-growing and most profitable airlines, by adding denser seating, flying more each day and selling tickets that include little more than a seat on the plane. In the process, Spirit gained notoriety for irreverent ads, garish yellow planes, seats that don’t recline and a $3 fee for water.
But now Messrs. Franke and Biffle say their thinking on the ultradiscount model has evolved. The men are trying to position Frontier as a mainstream alternative—with friendly service, free cups of water and slightly wider, more cushioned seats—in a bid to attract a broader set of customers who can spend more than the bare minimum.
“You can charge for bags, but you would like people to actually have bags,” said Mr. Biffle, a 43-year-old Texas native who drives a Ford F-150 truck to Frontier’s one-story headquarters.
Mr. Baldanza has long criticized Frontier’s aim to be an ultradiscounter, and he is skeptical of its attempts to adapt the model. In a June interview, he said that Spirit cuts costs ruthlessly to offer cheap fares and that spending more to please customers “is a slippery slope.”
In an interview earlier this month, Mr. Franke, his former boss, said, “I can accept the fact that Ben would disagree because I trained Ben to disagree with what I’m telling you. But that said, I now think there is a kinder, gentler way.”
Mr. Biffle, Frontier’s president, spends a lot of time making that pitch. In a recent meeting at Frontier headquarters, he strategized on how to explain to local reporters a new discounted bundle of extras, including two bags, extra legroom and no change fees.
He compares the extras to toppings on a pizza—the bundle is officially called “the works”—so he hand-delivered two dozen supreme pizzas to local news organizations. “If you only sell cheese pizzas, you can’t make as much money as if you sell a lot of toppings,” he said.
Corrections & Amplifications
One of every 10,000 Frontier Airlines Inc. customers has complained to the Transportation Department this year for issues including customer service, baggage handling and refunds. An earlier version of this article incorrectly said one of every 100 Frontier customers has complained.
Original article can be found here: http://www.wsj.com
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