Frontier's impact on Knoxville airfares detailed in study

11/10/2011

Frontier Airlines' entrance into the Knoxville market in June has lowered airfares, but what happens if the low-cost carrier leaves the market?

If Frontier leaves, so do the lower fares, according to Frontier executives and local advocates for lower fares. Frontier apparently is hinting that its flight status at McGhee Tyson Airport could change depending on passenger traffic.

"Frontier Airlines and their success at McGhee Tyson Airport are critical to keeping fares low to Denver and the West Coast," said Danni Varlan, president of East Tennesseans for Airfare Competition, an organization that promotes discount fares among McGhee Tyson air carriers.

The Metropolitan Knoxville Airport Authority and ETAC presented a study to community leaders Wednesday detailing how Frontier's entrance to the local market has lowered fares.

"Frontier has only been here four months but they have had a significant impact," said Bill Marrison, Airport Authority president.

The study, commissioned by the Airport Authority and ETAC, showed that travelers making reservations seven days or less from departure have seen savings ranging from $198 to $707. The price range of tickets has gone from $561-$996 each way to $289-$363 each way, a drop of about two-thirds, Marrison said.

Before Frontier's entry, all but one of the nonstop fares to Denver was above $300 one way, according to the study, noting that the only fare below $300 was a 30-day advance purchase fare at $277.50 one way.

Today, except one fare at $363, all Knoxville-to-Denver fares are below $300, the report concluded.

Without Frontier's strong presence, Knoxville can anticipate a significant increase in airfares, not only to Denver but to connecting cities out West, Varlan said.

Travelers who have been reaping the benefits of the lower fares need to be mindful that it was Frontier's decision to service Knoxville that created the lower fares, she said.

"I'm not sure Frontier is getting the full benefit of everything they have accomplished," Varlan said.

Frontier executives agreed with the assessment.

"We need people to patronize us as we hit the slower periods of the year," said Bob Westgate, senior director of planning and scheduling.

Westgate said Frontier is considering reducing the discount airline's presence in Knoxville to only seasonal service.

Frontier enjoyed a 95 percent load factor throughout the summer, but is feeling the pinch from a drop in bookings for the period after Thanksgiving leading into the next year, he said, adding that Frontier offers passengers options not available on other McGhee Tyson carriers, such as full-sized aircraft and live TV on each flight. Frequent fliers also can earn miles faster on Frontier, he said.

The study comes on the heels of news earlier this week that Frontier may be experiencing financial issues and may be sold by parent company Republic Airlines. Republic bought Frontier out of bankruptcy in 2009.

According to the reports, Frontier lost $102.4 million this year but expects to be profitable next year.

According to Westgate, Republic is not looking to sell its entire stake in Frontier, but is looking to sell about 51 percent of Frontier to an investment group.

Knoxville still has the opportunity to bring Southwest Airlines here, depending on the ongoing consolidation of AirTran Airways by Southwest, Varlan said. AirTran currently serves Knoxville to Atlanta, but it isn't certain that Southwest will make the decision to service Knoxville.

"We have a seat at the table, but that's no guarantee of anything," Varlan said.

Airlines like Southwest are closely watching what happens to Frontier in the Knoxville market and could make a decision based on the success or failure of Frontier, she added.

A number of local organizations that require employees to travel frequently were invited to the community meeting Wednesday held at Scripps Networks Interactive headquarters in West Knoxville. As a company with a large national and international footprint, Scripps Networks employees fly to many destinations from Knoxville. Varlan said she is urging these companies to support Frontier.

"We really need the support of the regular business travelers," she said.

Knoxville-based Regal Entertainment Group also has many employees traveling to western states out of Knoxville, according to Kevin Mead, Regal vice president of internal auditing. Mead said his company spends a lot of money on travel and has a vested interest in keeping fares out of Knoxville low.

Source: Knoxville News Sentinel