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Frontier May Seek Marketing Deal With Major Airline
By Mary Schlangenstein - Oct 11, 2010 4:16 PM ET
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Republic Airways Chief Executive Officer Bryan Bedford. Source: Republic Airways via Bloomberg
Frontier Airlines, a unit of Republic Airways Holdings Inc., may seek a marketing agreement with a major carrier as industry collaboration expands, Republic Chief Executive Officer Bryan Bedford said.
Bedford declined to offer specifics in a telephone interview today or say whether Frontier already is in talks. Airlines use marketing agreements to extend the reach of their route systems, reaping some of the benefits of a merger without the risks.
“We do believe there is a low-cost opportunity where, frankly, we think Frontier could help some of our network partners,” Bedford said. “It’s premature to speculate on who and what that would be.”
Network carriers often use regional airlines such as Republic’s Chautauqua and Shuttle America to funnel passengers from smaller cities into multiple hub airports. Republic added Frontier and Midwest Air Group Inc., which primarily fly out of Denver and Milwaukee, last year.
“The Republic management team has made no secret of the fact they’d do a deal with somebody and they’d be happy about it,” Helane Becker, an analyst with Dahlman Rose & Co. in New York, said in an interview. “It would make total sense if they did something like that in Denver with United or Southwest.”
Frontier competes in Denver primarily with Southwest Airlines Co. and United Airlines, a unit of United Continental Holdings Inc.
‘Fares Already Cut’
AMR Corp.’s American Airlines and JetBlue Airways Corp. agreed in March to a partnership that gives American passengers flying into New York’s Kennedy airport access to JetBlue flights to Boston and beyond.
Hawaiian Airlines Inc. signed a code-share, or marketing, agreement, in September with Delta Air Lines Inc., the second- biggest U.S. carrier. Alaska Air Group Inc. said last month it was expanding a code-share with American on flights between the U.S. West Coast and Mexico.
“It doesn’t have to be consolidation,” Bedford said of changes in the airline industry. “There are other options we are seeing in terms of collaboration.”
Republic is focusing on completing the integration of Frontier and Midwest into one carrier during the next five months. Bedford said he isn’t worried about increased competition from Southwest, the largest low-fare carrier, as it combines with AirTran Holdings Inc.
“Everywhere we fly against those guys, the fares have already been cut,” he said. “Whether we’re competing against two airlines or one bigger Southwest, I don’t really think that changes the market dynamics that much.”
Republic fell 22 cents, or 2.5 percent, to $8.41 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have risen about 14 percent this year.
To contact the reporter on this story: Mary Schlangenstein in Dallas at [email protected]
To contact the editor responsible for this story: Ed Dufner at edufner@@bloomberg.net
By Mary Schlangenstein - Oct 11, 2010 4:16 PM ET
Tweet (20) LinkedIn Share Print Email
Republic Airways Chief Executive Officer Bryan Bedford. Source: Republic Airways via Bloomberg
Frontier Airlines, a unit of Republic Airways Holdings Inc., may seek a marketing agreement with a major carrier as industry collaboration expands, Republic Chief Executive Officer Bryan Bedford said.
Bedford declined to offer specifics in a telephone interview today or say whether Frontier already is in talks. Airlines use marketing agreements to extend the reach of their route systems, reaping some of the benefits of a merger without the risks.
“We do believe there is a low-cost opportunity where, frankly, we think Frontier could help some of our network partners,” Bedford said. “It’s premature to speculate on who and what that would be.”
Network carriers often use regional airlines such as Republic’s Chautauqua and Shuttle America to funnel passengers from smaller cities into multiple hub airports. Republic added Frontier and Midwest Air Group Inc., which primarily fly out of Denver and Milwaukee, last year.
“The Republic management team has made no secret of the fact they’d do a deal with somebody and they’d be happy about it,” Helane Becker, an analyst with Dahlman Rose & Co. in New York, said in an interview. “It would make total sense if they did something like that in Denver with United or Southwest.”
Frontier competes in Denver primarily with Southwest Airlines Co. and United Airlines, a unit of United Continental Holdings Inc.
‘Fares Already Cut’
AMR Corp.’s American Airlines and JetBlue Airways Corp. agreed in March to a partnership that gives American passengers flying into New York’s Kennedy airport access to JetBlue flights to Boston and beyond.
Hawaiian Airlines Inc. signed a code-share, or marketing, agreement, in September with Delta Air Lines Inc., the second- biggest U.S. carrier. Alaska Air Group Inc. said last month it was expanding a code-share with American on flights between the U.S. West Coast and Mexico.
“It doesn’t have to be consolidation,” Bedford said of changes in the airline industry. “There are other options we are seeing in terms of collaboration.”
Republic is focusing on completing the integration of Frontier and Midwest into one carrier during the next five months. Bedford said he isn’t worried about increased competition from Southwest, the largest low-fare carrier, as it combines with AirTran Holdings Inc.
“Everywhere we fly against those guys, the fares have already been cut,” he said. “Whether we’re competing against two airlines or one bigger Southwest, I don’t really think that changes the market dynamics that much.”
Republic fell 22 cents, or 2.5 percent, to $8.41 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have risen about 14 percent this year.
To contact the reporter on this story: Mary Schlangenstein in Dallas at [email protected]
To contact the editor responsible for this story: Ed Dufner at edufner@@bloomberg.net
