Ultra low-cost model is 'alive and well,' Frontier Airlines CEO says

By Doyinsola Oladipo

NEW YORK (Reuters) - Frontier Airlines CEO Barry Biffle said on Wednesday that the ultra-low-cost carrier model is "alive and well" in the U.S. amid claims from an industry peer that the model has failed.

The Denver-based airline said it is committed to becoming the leading low-fare carrier in the U.S. and will help fill gaps left by Spirit Airlines, which filed for bankruptcy protection last month for the second time in a year.

Frontier has announced a total of 42 new routes since late August, expanding its presence in some of Spirit's top markets in the U.S., Latin America and the Caribbean.

Biffle said cost advantages for ultra-low-cost carriers continue to widen, so the model is "alive and well."

"You've got too much domestic supply and that is hurting yields across the domestic landscape and that's hurting everyone," Biffle told a travel conference in New York on Wednesday.

Biffle said that in the next one to two years there will be fewer seats across the industry - not just for ultra-low-cost carriers as Spirit shrinks its operations, but for legacy carriers, as well.

Ultra-low-cost carrier capacity is expected to fall 3.7% year over year in the fourth quarter, led by Spirit cuts, according to data from TD Cowen.

United Airlines CEO Scott Kirby has been a vocal critic of the business model of no-frills airlines and has repeatedly questioned their viability.

He called the ultra-low-cost airline business model "an interesting experiment" that has "failed," and likened Frontier to the last man standing on a sinking ship.

"It's just absurd. Look, the people that fly Frontier are not people that spill from (United). They are people that would have never flown (United) in the first place," Biffle said.

Frontier forecast a wider-than-expected loss for the current quarter and has been betting on network changes, capacity cuts and improved product offerings to lift its earnings.

Frontier said financial troubles at rival Spirit Airlines and Southwest Airlines' (NYSE: LUV) decision to end its policy of allowing free checked bags have leveled the playing field to help it grow its market share.

Biffle said the company saw a spike in bookings shortly after it announced a free baggage policy only for bookings to flatline after a week.

"Customers didn't care ... Southwest probably should have been charging for bags 20 years ago," he added.

Frontier plans to roll out first class seating in early 2026 and is aiming to double its loyalty revenue to $6 per passenger by next year.

(Reporting by Doyinsola Oladipo in New York; Editing by Chizu Nomiyama, Mark Porter and Nick Zieminski)

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