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 industry peers that the model is struggling.
The Denver-based airline said it is committed to becoming the leading low-fare carrier in the top 20 U.S. metro markets and will help fill gaps left by Spirit Airlines, which filed for bankruptcy protection last month for the second time in a year.
“You’ve got too much domestic supply and that is hurting yields across the domestic landscape and that’s hurting everyone,” CEO Barry 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 from ultra-low-cost carriers to legacy carriers.
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.
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.
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” which has “failed.”
Frontier said financial troubles at rival Spirit Airlines and Southwest Airlines’ 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.
(Reporting by Doyinsola Oladipo in New York; Editing by Chizu Nomiyama and Mark Porter)
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