Frontier sees slight uptick in April traffic

Washington DC
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Republic Airways Holdings subsidiary Frontier Airlines recorded a 2% rise in April traffic as capacity declined 1%.

The carrier's load factors increased two percentage points to 84% on 6% fewer block hours.

Year-to-date Frontier has grown traffic by 2% with capacity dropping 1%. Load factors are running 80% on about 7% fewer block hours.

During a 3 May earnings call Republic CEO Bryan Bedford highlighted challenges that rising fuel costs are creating for all airlines. Just 10 weeks ago with forward fuel curves at $3.00 Bedford and Frontier management believed the carrier would break even for 2011.

But curves moving to the $3.50 level for the rest of the year are creating a $90 million increase in Frontier's expenses, which has resulted in the carrier embarking on a $100 million "business improvement programme". Bedford says if the scheme is successful, it will allow Frontier to have a sustainable business model.

Republic plans to place 17 Embraer E-170s flown by Frontier into contract flying with US network carriers, and also is instituting network adjustments to support flat capacity growth in 2011, versus previous estimates of 4-5% growth.

Bedford reasons the fare increases put through by the industry largely cover fuel costs increases to $3.00 per gallon, but as they move to $3.50, "the industry and Republic have a fairly large hole to fill".

He envisions at some point "fare increases will affect levels of consumer demand".