Source: Fortune.com
Summary
Frontier Group Holdings Inc. is expanding its capacity by adding 3 million seats in the wake of Spirit Aviation Holdings Inc.’s demise. CEO James Dempsey said the airline has been positioning itself to capitalize on Spirit’s exit from the market. Frontier is adding capacity in airports such as Orlando, Las Vegas, and Dallas-Fort Worth, where Spirit had a large presence. The airline aims to win market share and achieve economies of scale, but this strategy comes with risks, including increased fuel costs.
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The strategy enters a familiar phase.
Frontier is betting on the underserved market at the bottom end of the aviation industry. CEO James Dempsey is taking a long-term view, despite the short-term risks. The airline’s move is a gamble that customers will still want to fly despite limited options. United Airlines Holdings Inc., Delta Air Lines Inc., and American Airlines Group Inc. are holding back capacity to protect margins. Frontier’s shares are up 12% for the year, while the Bloomberg World Airlines index is down nearly 8%.
One thing is certain: the airline industry’s capacity game is about to get a lot more interesting.
Author: Evan Null
