Spirit didn’t invent the ultra-low-cost carrier model. It simply followed the playbook established by Ryanair: Advertise rock-bottom prices, and charge passengers fees for everything.
The strategy has made Spirit both wildly profitable, and wildly unpopular. Its profit margins are the envy of most other airlines, even as it was the worst-rated carrier in Consumer Reports’ latest airline survey.
That glaring disconnect could spell opportunity for an airline to emulate Spirit’s pricing but throttle back on the snarky callousness that Spirit (and Ryanair) revel in. A kinder, gentler Spirit, in other words.
Exactly such an airline may be in the making, and its name is Frontier.
Frontier has already taken steps toward redesigning itself along ultra-low-cost lines, recently imposing new fees and scaling back frequent-flyer perks. But those moves would be minor ones if Indigo Partners is successful in its bid to purchase Frontier from the airline’s parent company, Republic Airways.
Indigo is the private-equity company that invested in Spirit in 2006 and is credited with helping Spirit become the company it is today. Republic is known to be interested in selling Frontier, and Indigo is thought to be the most likely buyer.
In preparation for the new venture, Indigo is separating its business interests from Spirit’s. Last week, Indigo owner William Franke resigned his position as chairman of Spirit’s board of directors, and Indigo is in the process of divesting its 12 million shares of Spirit stock.
Such moves would suggest that the purchase is all but certain and should be finalized within the coming weeks.
There’s no question that Franke and his team will transform Frontier into an ultra-low-cost carrier. What remains to be seen is what kind of an ultra-low-cost carrier Frontier will be.
It would be easy enough to simply copy the Spirit model and harvest the profits while turning a deaf ear to customers’ ire. Or they could opt to make Frontier a kinder, gentler version of Spirit. Which might make for happier investors and passengers.
Reader Reality Check
What are your hopes and expectations for Frontier?
This article originally appeared on FrequentFlier.com.
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