Frontier expects capacity shift to pay off this spring

US ultra-low-cost carrier (ULCC) Frontier Airlines expects its new network strategy focused on overlooked markets with less competition from its rivals will start paying off soon. Parent company Frontier Group Holdings said during its quarterly earnings call on 2 May that it expects capacity to grow 12-14% over the second quarter of last year – and to post a similar full-year capacity increase over 2023. ”Pursuant to the shift to high-fare, underserved markets, a significant portion of scheduled capacity in the second quarter of 2024 is allocated to new markets which the company believes will drive higher RASM [revenue per available seat mile] as they mature,” Frontier says. The Denver-based discounter indicated earlier this year that, due to the over-saturation of US leisure destinations, it was trimming unprofitable summertime flying to such core markets as Las Vegas and Orlando. Frontier say it is making “significant progress to simplify its network and allocate growth to high-fare and underserved” visiting friends and relatives markets, which will eventually drive higher margins. “We expect results in the balance of the year to build on the revenue and network enhancements we’re implementing, most notably the transition to underserved, high-fare markets, revenue diversification and cost savings, including benefits related to network simplification,” says chief executive Barry Biffle. Frontier plans to increase its network’s proportion of out-and-back flights to 80% in time for peak summer air travel, seeking operational simplicity and to reduce the risk of domino-effect disruptions. The company touts its “better-than-expected cost and revenue performance” during the first quarter. It reports a loss of $26m on the first three months of 2024, compared with a $13m loss the prior-year period. Revenue increased 2%, year on year, to $865m from $848m.<br/>