Frontier Airlines' assets will be auctioned on 11-Aug-09. Republic Airways and Southwest Airlines will place their original bids of USD108.8 million and USD113.6 million, respectively, and raise these by increments of USD1 million (The Dallas Morning News, 07-Aug-09). The auction winner will then require approval from a bankruptcy judge. Southwest stated if it wins, it plans to operate Frontier separately initially, and later absorbing it into its own operations.
Frontier Airlines assets to be auctioned on 11-Aug-09
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More nuanced network changes for Spirit Airlines as "basic economy" pricing sets in
For the past year Spirit Airlines has alluded to changes in its network structure to include a larger number of smaller to mid-size markets as competitive dynamics in the US market place have shifted. Few details have emerged other than announcement that smaller markets, including Akron-Canton, Ohio and Hartford, Connecticut would join its network.
Now more clarity about Spirit’s strategy is emerging. The airline has declared its future network composition will still feature a mix of larger and smaller markets, but some changes are occurring in frequencies operated. Spirit has concluded there are opportunities to serve a number of markets less than daily while still preserving its cost advantage. Some of those types of changes are occurring in its existing service from Akron, and from new routes debuting from Pittsburgh and Hartford later in 2017.
New basic economy offerings debuting from American and United have generated a lot of industry buzz, but Spirit maintains a belief the changes in fare structures will ultimately firm up the pricing in North America.
US airlines Part 2: LCCs and ULCCs face the same cost overhang as their larger rivals
US low cost carriers and ULCCs observed many of the same trends in the country’s marketplace at the end of 2016 as their large global network rivals – namely, that weak pricing trends in the domestic market were improving. Each airline has its own nuanced view of that general operating environment, but they feel encouraged by what they hope is an inflection point in pricing that will lay the groundwork for a return to positive unit revenue.
Those lower cost and ultra-low cost airlines also face similar challenges to their larger counterparts – cost pressure from new labour contracts and rising oil prices. And like their larger rivals, most of the lower cost US airlines are plotting lower capacity growth in 2017 as a means to improve their respective revenue performances.
For now, pricing improvement that began in late 3Q2016 and a bump in demand after the US presidential election are sustaining the cautious optimism expressed by US airlines as 2017 gets under way. But no US airline is ready to declare that pricing traction in the country’s domestic market is on a sustained upswing.
This is Part 2 of two reports examining the outlook for US airlines in 2017.