Southwest Takes Bite Out of Frontier Revenue

Frontier Airlines has taken a financial hit battling Southwest Airlines in Denver but is filling more seats on flights where the two carriers compete head-to- head, a company executive said Thursday.

"Southwest in every market with the exception of Houston is doing very, very poorly in load factors relative with Frontier Airlines," said Paul Tate, Frontier's chief financial officer. "It appears that this differential is increasing. In other words, their load factors are deteriorating relative to ours."

Load factors measure the percentage of available seats that are filled.

Tate's comments came during a presentation in New York at the Raymond James Growth Airline Conference, which was broadcast over the Internet.

Southwest started service in Denver just over a year ago, dramatically lowering prices on some routes and forcing other carriers to match those fares. That's taken a bite out of Frontier's revenue and hurt its bottom line.

But when fares are the same, Tate said Frontier is winning over more customers on routes where the two compete. The carrier's load factor between Denver and Las Vegas in October, for instance, was 83 percent, while Southwest's was 59 percent, according to Frontier's data.

Southwest said its growth in Denver - from 13 daily flights a year ago to 33 now - speaks for itself.

"That growth certainly doesn't reflect an airline that isn't doing well in Denver," said Southwest spokeswoman Marilee McInnis.

Regardless, Frontier is looking to expand into markets where it doesn't compete with Southwest, such as smaller U.S. cities, Mexico, and nearby mountain and resort towns. Tate said Cabo San Lucas has become the carrier's second mini-hub after Cancún.

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