Frontier Announces Termination of San Francisco to Los Angeles Service

Frontier announced that it will terminate its San Francisco to Los Angeles service in July. Frontier will also end its service between San Francisco and Las Vegas at that time. Frontier has faced an uphill battle in the San Francisco to Los Angeles market ever since it announced service almost exactly a year ago (Frontier announced it was backing out to its employees one year and one day after it announced service), because the airline has had to compete against established carriers in the market including American and United, each of which has a loyal contingent of business travelers backing them. Frontier had difficulty getting business travelers, the largest and most profitable group of travelers on the route, to switch their loyalty and fly Frontier, even though Frontier offered extensive mileage rewards and more amenities (such as television) than legacy carriers.

Frontier hoped that it could succeed in the market because it would be the only low-fare airline flying the route, and that business travelers looking for a cheaper ticket would utilize the new service. However, stiff competition, not only from legacy carriers, but also from low-fare carriers which operate the north-south intra-California route from a variety of alternate airports, prevented Frontier from being more successful on the route. Frontier had to face competition from Southwest, JetBlue, and Alaska, all of which operate intra-California flights from alternate airports such as Oakland, Burbank, and Long Beach. But competition wasn't the only factor that hurt Frontier's viability on this route. Part of the reason Frontier failed is that it did a very poor job marketing the route. If Frontier wanted to fill planes, it needed to inform passengers that it doesn't just offer service to Denver, but rather to the other end of the state as well. Since most travelers in California know very little about Frontier, given the sheer number of airlines that fly within and to/from the state, it's no wonder that Frontier's service failed. If Frontier was serious about succeeding on the route, it would have launched a marketing blitz to promote the service. Unfortunately for Frontier, their marketing was drowned out by that of other airlines.

However, the failure of the San Francisco to Los Angeles flights should not be taken as a sign that Frontier's point-to-point flights between Mexico and certain California cities are failing. Frontier has succeeded in finding a niche for these flights, and they seem to be successful. Frontier is considering expanding its point-to-point flights between cities in the US and Mexico, and quite frankly, that would be a better use of resources than trying to expand on a route that's already very crowded. Frontier has found its niche with Mexico flights, and it should exploit it as much as possible. Frontier can charge more for the convenience of nonstop flights, and there's less competition on Mexico routes than on most point-to-point routes within the United States. Hopefully, after this failure, Frontier will think harder about where it plans to deploy its planes. It's likely that the Embraer 170 planes on the SFO-LAX route will be redeployed either on regional routes or on longer routes from Denver, perhaps to Canada or Mexico. If Frontier is smart, it should try to find its niche and avoid routes that are already full of competition. That means finding cities that are unserved, or underserved from Denver, and expanding to them.

Frontier's best hopes for expansion right now are in Denver, as it tries to expand its regional operations and create hub with a diverse set of flights, making it more useful for customers. Frontier's Lynx subsidiary shows promise that Frontier will be able to successfully diversity itself because there are many regional markets near Denver which are underserved and which present opportunities for Frontier to quickly gain market share against United. Hopefully Frontier will exploit Denver more before focusing on other markets where the airline is far less well-known and faces a higher probability of failure.

Does this mean that Frontier should stop adding new point-to-point services? No, because Frontier will need to expand from Denver eventually. While the airline may not open a full-fledged hub in another city, Frontier will probably open new focus cities with point-to-point flights within the United States. Frontier tried this in Los Angeles a few years ago where the airline got hammered because it was one airline operating just a few daily flights against competitors that had dozens of flights and far better name recognition among consumers.

Frontier is trying to open a new focus city in Memphis, which I think may be successful. Frontier has found a new market with relatively little competition (Northwest is the only airline with a significant number of flights in Memphis) and an unmet demand for service to some leisure destinations. If Frontier is able to market itself better in Memphis than it did in California and gain a following in the market, then I predict its new flights will succeed. Frontier's Memphis experiment could be indicative of the next wave of Frontier's growth. Since the airline will need to find markets outside of Denver to launch new routes, Frontier would be wise to add markets like Memphis that have competition from relatively few airlines, but also where Frontier has the potential to grow the market and gain market share simultaneously. Other markets in the South, such as Birmingham or Raleigh-Durham might also be appropriate Frontier focus cities, depending on the success of Memphis.

Frontier is making the right choice to exit crowded markets where it can't distinguish itself. Instead, the airline should find niche markets, which it can do with point-to-point flights between cities in the US (outside of Denver) and Mexico, regional flights to underserved destinations from its Denver hub, as well as focus cities which have relatively little competition, but big promise. If Frontier can focus on these three areas, in addition to adding frequencies on current routes, the airline should have a better future with fewer failed routes and a more comprehensive network.