Southwest eyes Mexican service and more Denver flights through Frontier bid

Washington DC
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Southwest Airlines has a particular interest in Frontier Airlines' near-international destinations after announcing it would bid at least $113.6 million for the Denver-based carrier.

Frontier will be auctioned off in bankruptcy court in August after spending more than a year in Chapter 11.

The airline offers a mix of year-round and seasonal links to Cancun, Cozumel, Cabo San Lucas, Puerto Vallarta and Mazatlan. Frontier connects Mexico to its Denver hub as well as Salt Lake City and Kansas City, Missouri.

"That's a very exciting opportunity for Southwest Airlines," Southwest executive vice president of strategy and planning Bob Jordan said during a 30 July media call.

Nothing in the airline's codeshare pacts with Mexican carrier Volaris or Canadian operator WestJet precludes Southwest from considering near-international operations, Southwest executive vice president of corporate services and corporate secretary Ron Ricks adds.

Dallas-based Southwest also plans to expand its network in Denver and other US cities.

Southwest is more interested in boosting competition and bolstering service than taking away opportunities, Jordan explains.

Frontier and Southwest overlap in Denver in about 27 markets, Jordan says, adding there are about six cities that are served by both carriers but for which only Frontier provides nonstop operations.

In addition, there are about a dozen markets that only Frontier serves from Denver, including Dayton, Ohio, and Reagan National airport outside Washington DC, he says.

Southwest also sees potential to grow its network beyond its existing city pairs or Frontier's current markets.

There are "tremendous" opportunities among the "dozens and dozens" of nonstop Denver markets that neither Southwest nor Frontier offer but which have service from one carrier, such as United Airlines, Ricks says.

United accounts for 50% of the market share in Denver while Frontier and Southwest together represent roughly a third of the Denver market.

United is the focus in terms of Denver competition, Ricks says, adding that Southwest "has more resources to bear" against United than fellow Frontier bidder Republic Airways Holdings.

Republic offered a $108 million bid for former partner Frontier.