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http://www.rockymountainnews.com/dr...2083402,00.html
Frontier officials: Mesa may stop regional flights
By David Kesmodel, Rocky Mountain News
July 2, 2003
Mesa Airlines probably will stop flying regional jets for Denver-based Frontier Airlines in January, Frontier officials said today.
An expanded partnership between Frontier rival United Airlines and Mesa - announced Tuesday - puts restrictions on Mesa's ability to have partnerships with other carriers in United's hub cities, Mesa Chief Executive Jonathan Ornstein said in an interview. He declined to provide details.
Denver-based Frontier has been in talks with Mesa about renewing their 17-month-old Frontier JetExpress partnership - and ratcheting it up - before the current contract expires Aug. 31. They will extend the current arrangement until Jan. 1, 2004, Sean Menke, Frontier's vice president of marketing and planning, said in an interview.
"We probably won't go any further," he said.
Frontier has been talking to other potential regional-jet partners and will continue to be able to do so through Jan. 1, he said.
Restrictions like those place by United "are very common, particularly with United," said Tony Christello, an analyst with BB&T Capital Markets. "They are not going to want to have another major competitor's codeshare partner having the opportunity to take revenue away from them in the same marketplace."
United spokesman Jeff McAndrews declined to comment on the matter.
Under a new 10-year deal, Phoenix-based Mesa will start flying 35 regional jets under the flag of United Express in August, in addition to the 10 turboprop planes it will begin flying for United from Denver International Airport on Sunday.
"I'm sure we will work things out (with Frontier) so it is amicable, whatever the result is," Ornstein said. "We really do like those guys, but it's hard to turn down a deal for 60 aircraft. Business becomes business."
For Frontier, Mesa today flies to eight cities from Frontier's DIA hub with five aircraft. Talks on an expansion of that deal had included the possibility of adding five to 10 jets.
Mesa lost $1.5 million on Frontier JetExpress in the January-March quarter, even after the companies revised the deal.
Frontier on March 1 began paying Mesa set fees for flying Frontier JetExpress routes and keeping all the revenue. Previously, the companies incurred their own costs and divided the revenue on a prorated basis.
Mesa is "now break even or a little bit better" on the alliance, Ornstein said.
Serving fliers with regional jets has become more popular in recent years as carriers look for ways to fly shorter routes that lack enough demand to fill larger, costlier planes.
Frontier officials: Mesa may stop regional flights
By David Kesmodel, Rocky Mountain News
July 2, 2003
Mesa Airlines probably will stop flying regional jets for Denver-based Frontier Airlines in January, Frontier officials said today.
An expanded partnership between Frontier rival United Airlines and Mesa - announced Tuesday - puts restrictions on Mesa's ability to have partnerships with other carriers in United's hub cities, Mesa Chief Executive Jonathan Ornstein said in an interview. He declined to provide details.
Denver-based Frontier has been in talks with Mesa about renewing their 17-month-old Frontier JetExpress partnership - and ratcheting it up - before the current contract expires Aug. 31. They will extend the current arrangement until Jan. 1, 2004, Sean Menke, Frontier's vice president of marketing and planning, said in an interview.
"We probably won't go any further," he said.
Frontier has been talking to other potential regional-jet partners and will continue to be able to do so through Jan. 1, he said.
Restrictions like those place by United "are very common, particularly with United," said Tony Christello, an analyst with BB&T Capital Markets. "They are not going to want to have another major competitor's codeshare partner having the opportunity to take revenue away from them in the same marketplace."
United spokesman Jeff McAndrews declined to comment on the matter.
Under a new 10-year deal, Phoenix-based Mesa will start flying 35 regional jets under the flag of United Express in August, in addition to the 10 turboprop planes it will begin flying for United from Denver International Airport on Sunday.
"I'm sure we will work things out (with Frontier) so it is amicable, whatever the result is," Ornstein said. "We really do like those guys, but it's hard to turn down a deal for 60 aircraft. Business becomes business."
For Frontier, Mesa today flies to eight cities from Frontier's DIA hub with five aircraft. Talks on an expansion of that deal had included the possibility of adding five to 10 jets.
Mesa lost $1.5 million on Frontier JetExpress in the January-March quarter, even after the companies revised the deal.
Frontier on March 1 began paying Mesa set fees for flying Frontier JetExpress routes and keeping all the revenue. Previously, the companies incurred their own costs and divided the revenue on a prorated basis.
Mesa is "now break even or a little bit better" on the alliance, Ornstein said.
Serving fliers with regional jets has become more popular in recent years as carriers look for ways to fly shorter routes that lack enough demand to fill larger, costlier planes.
