ANALYSIS: Frontier shrinks at Denver in shift to secondary cities

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Frontier Airlines has made significant capacity cuts at its Denver hub in the last year as it shifts flying to secondary markets outside its hub.

Data from Capstats shows that in the last twelve months Frontier's available seat kilometres (ASKs) in Denver have declined 20% and the number of flights has fallen 27%.

Frontier is expected to have 2,985 flights and 601 million ASKs at Denver in April 2013, compared with 4,071 flights and 751 million ASKs in April 2012, according to the data.

Frontier's capacity at Denver will increase in July to 694 million ASKs and 3,435 flights, but capacity will still be less than in July 2012, when the airline had 873 million ASKs and 4,653 flights, according to Capstats.

Frontier tells Flightglobal that the cutbacks have enhanced its success in Denver and allowed it to expand in smaller cities like Trenton in New Jersey, where the airline started service last year.

Frontier says it expects to further expand in cities like Trenton, but that such "growth will not necessarily come at the expense of further reductions in Denver".

"We continue to see excellent new opportunities both here in Denver and in other cities," the airline says.

Analysts say the Denver cutbacks are consistent with the plan by Frontier's parent company Republic Airways Holdings to transform the airline into an ultra-low-cost carrier that focuses on underserved, point-to-point flying.

"Frontier is moving generally along a path that will have it end up more in the category of Allegiant [Air] or Spirit [Airlines]," says Bob McAdoo, an aerospace analyst with Imperial Capital LLC who follows Frontier. "They are taking airplanes and putting them in markets where there is less competition, and often reducing the number of flights per week to where they believe the true demand is."

That means pulling aircraft out of the Denver hub and deploying them on new, sometimes untested routes where there is little competition, say analysts.

"They are trying to become an ultra-low cost carrier. That involves routes [other airlines'] haven't explored," says Michael Miller, president of Miller Air Group, of Frontier.

In recent months Frontier has eliminated or announced plans to eliminate flights from Denver to a number of cities.

The airline announced earlier this month that it would cut its flight from Denver to Grand Rapids in Michigan - Frontier's only service to the airport - on 8 September.

Frontier will end all service to Colorado Springs on 7 April. Frontier serves Denver, Los Angeles, Orlando, Phoenix and San Diego from the city.

In January, Frontier eliminated flights between Denver and Akron-Canton in Ohio, Billings in Montana, Provo in Utah, Louisville in Kentucky, Philadelphia in Pennsylvania and Sacramento in California.

Other cities to lose Frontier service from Denver in the last year include Tucson in Arizona, Hayden and Aspen in Colorado, San Antonio in Texas, Wichita in Kansas and Boston in Massachusetts.

Those cutbacks at Denver have come as other airlines, including Southwest Airlines and Spirit Airlines, have added Denver flights.

In 2012, Southwest, which entered Denver in 2006 and now serves 54 destinations from the city, began flights from Denver to Akron-Canton and Dayton in Ohio and Louisville.

In May 2012, Spirit Airlines began flying to Denver, and now has flights from the city to Phoenix/Mesa in Arizona, Chicago, Detroit, Fort Lauderdale, Dallas/Fort Worth and Las Vegas.

Spirit announced in March that it plans to add service between Denver and Houston on 13 June and seasonal service between Denver and Minneapolis-St. Paul on 25 April.

With the cutbacks, Frontier now has 17% of all carriers' ASKs out of Denver, compared to 20% in April 2012, according to Flightmaps Analytics. The two other largest carriers at Denver, United Airlines and Southwest, have 38% and 26% of ASKs, respectively.

Analysts noted that cutting capacity in Denver has freed Frontier to test new routes. Some are out of Denver, but many are point-to-point services from smaller cities.

Frontier began serving Trenton, which is about 30 miles (48.3km) north of Philadelphia and 60 miles south of New York City, in August 2012.

The only commercial carrier at Trenton, Frontier now flies to ten destinations, including Chicago-Midway, Detroit in Michigan, Columbus in Ohio, Raleigh-Durham in North Carolina, Atlanta in Georgia, New Orleans in Louisiana and the Florida cities of Fort Lauderdale, Fort Myers, Tampa and Orlando.

Many of the those flights operate only a few times weekly, a strategy that McAdoo called "a chapter out of the Allegiant book and the Spirit book".

Frontier also serves new cities from Denver, but not daily. They include Jackson Hole in Wyoming, Minot, Bismarck and Fargo in North Dakota, Cedar Rapids in Iowa, South Bend in Indiana, Bloomington-Normal in Illinois, Cleveland in Ohio and Harrisburg in Pennsylvania.

Frontier has also expanded flying to Florida from many smaller cities like Allentown and Harrisburg in Pennsylvania, Greensboro in North Carolina, Shenandoah Valley in Virginia, Bloomington in Indiana, Columbia/Jefferson City in Missouri and Madison and Milwaukee in Wisconsin.

In addition, Frontier now connects a number of Northeast and Midwest cities to international warm-weather destinations like Punta Cana in the Dominican Republic, Montego Bay in Jamaica and cities in Mexico and Costa Rica.

Miller notes that Frontier has shuffled markets relatively fast lately, and that other airlines tend to give markets more time to develop than Frontier.

He added, however, that the airline's goal is profitability, and its managers make decisions quickly to maximise use of aircraft.

"They are trying to make a profit. It doesn't get any more complicated that that," Miller said. "I like what they are doing."

He added that unlike some larger carriers, Frontier has a limited market presence in many new markets, which creates less public relations problems when the airline leaves town.

Despite its Denver reductions, analysts do not expect Frontier will abandon its hub.

"Denver still works as a hub [and] there are clearly markets that still work there," adds McAdoo.