Frontier airlines may be sold and future uncertain

Frontier is expected to be sold by parent company Republic Airways Holdings Inc. by the end of September. It’s unclear how a new owner would regard the Durango-to-Denver route.

Therefore Frontier Airlines’ future in Durango is far from certain, but local leaders believe Durango-La Plata County Airport has grown enough to weather any disruptions from the Denver-based airline.

If an eventual sale of Frontier Airlines means the carrier drops Durango, Roger Zalneraitis, executive director of the La Plata County Economic Development Alliance, says the airport is approaching 200,000 enplanements, and those numbers are starting to draw interest from several other airlines.

Regardless, local officials maintain Durango’s traffic is attractive enough that existing carriers or a new entry would step in to pick up any slack.

Frontier has been responsible for only 16 percent of the passenger traffic out of Durango in 2013. Meanwhile, overall airport traffic has surged, with enplanements on pace to surpass 200,000 this year.

“Where we are now approaching 200,000 enplanements, we’re starting to get the attention of multiple carriers,” said Roger Zalneraitis, executive director of the La Plata County Economic Development Alliance.

Frontier already has pared back its flights to one a day, and will temporarily cease operations after Oct. 29. Frontier is expected to resume service to Durango in early May, although an exact date has not been set, said Kip Turner, the airport’s director of aviation.

Local airport and business leaders said ticket prices could rise if Frontier were to leave Durango altogether. Frontier’s entry into the Durango market in April 2008 forced other carriers to lower their prices to compete with the low-cost airline.

“Frontier was very good when they came into the market in terms of driving our prices down,” Zalneraitis said.

Now with more interest from carriers, competition should provide downward pressure on prices with or without Frontier, he said.

“In the long term, that’s going to help prices a lot more,” he said.

Travelers search for options

Given Frontier’s limited schedule of one daily flight, many business travelers seek other options.

Durango’s second-largest private employer is Mercury, with 417 employees locally, and another office in Denver. Since Jan. 1, Mercury has booked 677 flights from Durango to Denver. Of those, only 86 were on Frontier. The company also booked 653 flights from Denver to Durango, and only 80 were on Frontier.

“United has always had more options,” said Matt Taylor, Mercury’s CEO.

Indeed, United Express’ flights through Republic had more than twice as many passengers as any other Durango carrier for the year through July.

But Taylor said he hopes Frontier maintains its Durango route, for the sake of flexibility and for the airline’s role in keeping prices from inflating.

He also takes Frontier when a United flight is booked.

“Mercury and other businesses in Durango would hope to see ever-increasing flexibility for options out of Durango, and we’re headed in the wrong direction,” Taylor said.

When needing a flight on short notice, Mercury has even chartered a small plane out of Cortez through Cortez Flying Service. Taylor called that an “unattractive option.”

Frontier appears to have ceded the business traveler to competitors, and is pursuing summer leisure travelers, Zalneraitis said. Business travelers need multiple flights to the same destination each day.

“They’re not going to be a business airline,” he said. “You can’t say, ‘I’m not going to make this meeting – I need to wait for May.’”

Besides Frontier, Durango has three major carriers – United, American and U.S. Airways – flying to three hubs: Denver, Phoenix and Dallas.

Traffic out of Durango is up 11.6 percent year to date, putting the airport on pace to fly 208,000 passengers in 2013.

That’s an important milestone.

“Two-hundred thousand enplanements is kind of a magic number that starts getting carriers’ attention,” Zalneraitis said.

Historically, Durango has focused on attracting tourism from markets within a day’s drive – primarily the Front Range, New Mexico, Arizona, Utah and northern Texas. Zalneraitis believes it’s time for Durango to think bigger.

“We never thought about promoting Durango as a national destination,” he said, “That hasn’t been a high priority for us, but there is national potential here.”

Republic pursues deal

Frontier’s parent company, Republic Airways Holdings Inc., is working to sell the airline. Republic has entered into a conditional agreement with an undisclosed buyer. If conditions are met, the deal is expected to close by the end of September, CEO Bryan Bedford said in a July 26 conference call with investors.

Frontier declined an interview request, citing confidentiality conditions in the pending deal. In response to questions submitted by email, Frontier spokeswoman Kate O’Malley said the airline expects to resume the Durango flight in May.

“We do plan to continue to serve the Durango area,” she said.

O’Malley said she could not provide any updates on the pending sale.

Turner said it’s difficult to speculate whether Frontier’s eventual buyer would want to keep the Durango-Denver route.

“It would be almost impossible to guess what new ownership would not or would want to do,” he said.

Frontier’s enplanements in Durango have dropped. The airline’s passenger traffic fell 31 percent through July, compared with the same period in 2012.

Frontier also has pulled back in its hub, Denver. Frontier’s traffic out of Denver International Airport was down 16.2 percent through July.

Frontier is offering fewer flights, and loading up the remaining planes with more passengers, said Patrick Heck, DIA’s chief financial officer. DIA has worked to build up a cash reserve in case Frontier’s flights dry up.

“Yes, we’re concerned about one of our major carriers being sold because we don’t know what direction the new owner is going to want to go,” Heck said.

Any major changes by Frontier also could limit passengers’ ability to connect to the rest of the world through DIA. In part because of Frontier’s network of more than 75 destinations, most of which originate from Denver, DIA offers the second-most destinations of any airport in the country, behind only Hartsfield-Jackson Atlanta International Airport.

“(Frontier’s) is a fairly substantial network out of Denver,” Heck said.

The Durango route “may not be a major driver of a lot of traffic coming to Denver, but all of those taken together are important,” he said.

For Durango’s future, Turner is confident carriers will fight for local passengers with or without Frontier.

“It’s still going to be a very competitive market even in the times Frontier’s not doing daily flights here,” he said. “We’ve really grown into a nice regional market.”