AirTran Airways and Frontier Airlines have forged an unprecedented link up, creating a new level of co-operation and a "virtual codeshare".

The agreement lets the two thriving low-cost carriers take advantage of the regional loyalty each has developed. Under the deal, passengers can earn and redeem frequent-flyer miles in either carrier's loyalty programme.

Both airlines will also feature a "hot button" on their website to link to the other's site, while call centre agents will make referrals to the partner. The two carriers have little route overlap, with Atlanta-based AirTran strong in the east and Denver-based Frontier in the west.

AirTran chef executive Joe Leonard says: "This isn't a codeshare but it puts in place all the technology we'd need should we want to move in that direction." The agreement "has most of the advantages of a codeshare without its complexity", he adds, predicting incremental annual revenues of $5 million to $10 million for each carrier.

Frontier chief executive Jeff Potter says it "would keep its options open" on a codeshare and has in the recent past preferred organic growth to merger. Prudential Securities airline analyst Robert McAdoo ruled out the alliance as a precursor to a merger.

Frontier is poised to reach deeper into its home region through its new Lynx subsidiary, which will operate from next May 74-seat Bombardier Q400 turboprops throughout the Rocky Mountain West on routes of 650 miles (1,046km) or less. To support this and 20 additional 70-seat Bombardier CRJs it plans to add, Frontier has asked cities and communities within a 1,200-mile range of its Denver hub to submit requests for service and give details on the how the community would support new regional jet and turboprop service from Frontier. "This is a way to get us to consider communities that we didn't even think about," Frontier says.

Its request is not explicitly seeking financial guarantees from communities, although communities may seek federal grants as part of their proposals. This is believed to be the first time that an airline has made such a request. It has received prominent attention in towns such as Minot, North Dakota and Sheridan, Wyoming.

The Q400s give the carrier the flexibility to serve some of the Rocky Mountain leisure destinations that it could not otherwise serve profitably. These include smaller resort and ski towns that are too small for Frontier's Airbus A318/A319s and its CRJs.

Source: Airline Business