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Frontier Airlines Poised to Become Spirit Airlines Clone if Negotiations Succeed

Aug 12, 2013 3:30 am

Skift Take

The Spirit Airlines model has proven to be a money maker, and Frontier Airlines is already headed in that direction anyway. If passengers can continue to stomach the fees, then a Frontier turnaround would be in the offing.

— Dennis Schaal

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If Indigo Partners succeeds in acquiring Frontier Airlines, it would follow the path that Indigo blazed with Spirit Airlines. Pictured is a Frontier Airbus A319-111 from April 2007. flickr.com

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 private equity firm that invested in Spirit Airlines in 2006 and helped convince the Florida airline’s chief executive, Ben Baldanza, to adopt dirt-cheap fares and abundant fees.

Indigo is reportedly negotiating to buy Frontier Airlines from the Denver carrier’s parent company, Republic Airways Holdings Inc. 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 Wednesday.

“They really are taking the Spirit Airlines playbook from Florida to Denver,” said Henry Harteveldt, a travel analyst with Hudson Crossing in New York.

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 Avondale Partners in Nashville.

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.

92% increase in travel, tourism jobs analyzed

Hiring for travel and tourism jobs has surged so much in the last few years that the industry has recovered 92% of the positions lost during the recession while the rest of the economy has recovered only 77%.

But some economists dismiss the swell in hiring, arguing that many travel and tourism jobs are part-time or minimum-wage positions, such as waiters.

To address such disdain, the U.S. Travel Assn., the trade group for the nation’s travel industry, has analyzed data to show that most of those travel and tourism jobs generate a middle-class income.

Of the 7.5-million jobs in travel and tourism in the U.S., about 3 million are in food service, such as waiters, with a median salary of about $22,000 a year, said David Huether, senior vice president for research for the U.S. Travel Assn.

The other 4.5-million jobs offer salaries that range from a median annual salary of $27,000 for sales positions, such as travel agents, to $80,000 a year for management positions in hotels and restaurants, he said.

“Jobs in travel and tourism run a huge gamut,” Huether said.

Alaska Airlines tests solar-powered passenger ramps

The green trend is taking hold in the airline industry.

United Airlines announced plans in June to buy 15 million gallons of lower-carbon, renewable jet fuel over a three-year period.

And Alaska Airlines is testing solar-powered passenger ramps.

The mobile ramps used to get passengers on and off planes are equipped with solar panels that power the batteries that drive the ramps’ electric motors. Traditional mobile ramps and passenger stairs are powered by gasoline or diesel engines.

Alaska has been testing the ramps at Seattle-Tacoma International Airport and Norman Y. Mineta San Jose International Airport.

If the weather doesn’t cooperate, the solar ramps can be plugged into an electrical outlet, said Michael Keith, sales manager for Keith Consolidated Industries in Oregon, which built the ramps.

“They are extremely efficient,” he said of the ramps. “There is a lot of savings, not just in fuel but in emissions as well.”

hugo.martin@latimes.com ___

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