Indigo's Franke bets on winning cost formula for Frontier-Spirit airline

Veteran budget airline investor Bill Franke has pledged to avoid what he once called the "path to hell" after masterminding a $2.9b merger of discount airlines - letting dealmaking get the better of tight cost controls that support low fares. The 84-year-old entrepreneur has turned his private equity firm's initial $36m in Frontier Group Holdings into a stake worth $2.4b in the agreed merger with Spirit Airlines - a rare feat in high-risk airline deals. On Monday, Frontier and Spirit unveiled their plans to create the fifth-largest US airline, valuing Florida-based Spirit at about $2.9b excluding debt. After spearheading the low-cost strategy at both airlines - having previously served as a chairman and key shareholder of Spirit and now Frontier - Franke is no in mood to relax the simple formula that underpins his investments on three continents. "The trick is being disciplined about cost structure," Franke said. Franke has long been a pioneer of ultra-low cost airlines like Frontier and Spirit, which occupy a tier of the market below long-established budget rivals like Southwest. Such airlines rely on offering a fare stripped back to its lowest possible level, topped up by charges for extras like booking through a call center, a strategy known as unbundling. The business also keeps a laser focus on serving tourism or visits to relatives, without chasing after business travelers.<br/>