Strategic Analysis

Strategy

Frontier Airlines’ overall strategy is that the sky is for everyone, and they deliver on this vision through a unique brand of low fares done right. However, they understand that low rates alone are insufficient, so they commit more significantly through the “Done Right” promise. They aim to drive fast growth by having a solid foundation and clear plans to propel long-term value. Frontier remains America’s lowest-fare, lowest-cost airline that features the industry’s youngest, most fuel-efficient fleet, a full order book, and a strong balance sheet. Frontier Airlines’ ultra-low-cost model continues to provide the foundation for long-term growth through the following actions:

Gaining share in the growing leisure segment: Frontier continues to expand and will focus on outperforming other airlines with industry-leading unit costs, profit per plane, and cash generation.
Delivering the lowest fares and lowest costs in America
Expanding Frontier Airlines’ youngest, most modern fleet: with an average fleet age of four years, Frontier burns less fuel than any of the Big Four airlines, which saves its customers money and reduces the company’s carbon footprint.
Offering more sustainable and more affordable air travel: Frontier is 43% more fuel-efficient than other U.S. airlines, which in 2021 resulted in approximately $245 million of fuel savings and an industry-leading 101 available seat miles per gallon compared to an industry average of 71 available seat miles per gallon.
Providing more excellent stability for employees: Retaining and expanding its workforce and capacity will allow Frontier to add new routes and create additional jobs.

Competition: Frontier Airlines is in a competitive service because companies such as Southwest Airlines, Spirt Airlines, and Silver Airlines also focus on low-cost models. However, Frontier has an advantage through its company’s future growth and environmental benchmarks.

Competitive Advantage

The attributes that allow Frontier Airlines to separate itself from competitors are driven by profitability, low cost, and affordable travel.

Focus on Domestic Travel – Frontier is 96% focused on domestic travel and 89% focused on leisure. Frontier has over 140 new Airbus planes on order and will continue to grow to deliver on the mission of providing affordable travel across America.
Robust Business Model – Frontier has the lowest costs and lowest fares of any airline in the US, making it the lowest-cost of the ultra-low-cost carrier. Frontier also has the most (non-fare) revenue of any airline and is growing by roughly 4% annually.
Fly Greener – Frontier standards are environmentally focused and are working hard to reduce our environmental footprint as much as possible and to set a new greener standard for travel.
Average Fleet Age – Frontier operates the largest A320neo fleet with an average fleet age of four years. This results in less fuel, saving customers and reducing the carbon footprint.
Commitment to Families – Frontier allows children 14 years and younger to fly free through the airlines Discount Den travel club on qualifying flights.

Environmental Scan

ESG Rankings According to Bloomberg:

S&P Global ESG Rank: N/A

Bloomberg ESG Disclosure: N/A

MSCI: BB

According to FactSet, Frontier Airlines is below average overall in the Airline Industrial sector compared to its competitors. Further breakdown of the comparison:

Environmental Factors: Neutral

Social Factor: Neutral

Governance Factors: Worse

Business Model & Innovation: Worse

Human Capital: Neutral

Despite relatively low to average ESG ratings, Frontier Airlines is committed to making environmental and consumer-friendly impacts. The information below is taken from the 2021 Frontier’s ESG Report and illustrates their stance on environmental and social factors:

Youngest and Most Fuel-Efficient Aircraft Fleet: Frontier fleet is made up exclusively of Airbus A320 family aircraft and is the youngest, most fuel-efficient fleet in the United States. The A320neo’s planes feature engines designed to deliver optimum fuel efficiency and a 50 percent reduction in noise compared to the previous aircraft. Frontier’s aircraft fleet is 43 percent more fuel efficient than other U.S. airlines.
Reduce Aircraft Weight with an Environmental Focus: Frontier has recently undertaken initiatives to reduce the weight of their aircraft, eliminate paper, and use environmentally friendly products. Lower aircraft weights save fuel and reduce C02 emissions, which not only helps minimize our environmental footprint but also helps reduce cost, which benefits the consumer in the form of lower fares.
Modernized Energy Efficient Headquarters: Frontier 2017 moved its Denver, Colorado headquarters location to a new LEED Certified building designed to achieve maximum energy savings, water efficiency, and C02 standards.
Focus on Endangered Species: Frontiers airplane tails have featured animals from Flo the Flamingo and Powder the Polar Bear to Peach the Fox and Otto the Owl. In 2019 they launched a new initiative to highlight endangered species on their tails. New tails now feature North American endangered species, highlighting the importance of these unique animals whose populations are at risk.
Social Responsibility: Frontier’s business model is based on the principle that flying should be affordable for everyone. Frontier’s family focus, including the unique Kids, Fly Free program, makes air travel accessible for families.
Charitable Foundations: Frontier supports many charitable organizations through volunteerism, in-kind donations, and fundraising. The company’s HOPE league is funded through employee donations and support from colleagues experiencing hardship.

SWOT Analysis

Strengths:

Frequent flier program called Early Returns without other Airlines as partner
The fleet size of 50+ Aircraft connecting nearly 80 destinations
Mergers and associations with different airlines have boosted the image
Youngest Airbus Fleet reduces the maintenance and cost associated with it
Strong relationships with existing suppliers
Strong Brand Equity and Brand Awareness

Weaknesses:

Financial performance in the past was not up to the mark, and many mergers and acquisitions went through.
Planning for rapid expansion, but delay in plane delivery slowed the execution.
Operates with a plane that has a higher passenger carrying capacity. The load factor becomes very important for profit margin.

Opportunities:

Expanding to other parts of the World
Serving the people in the remote area and connecting through a code-sharing agreement
Cargo Business and Operating in Air Shuttle Service

Threats:

Entry of a big player in the market
Rising fuel and aircraft prices
Government regulations on emission cuts and safety norms
Future pandemics and inflation

Future of the Airline Industry

One major challenge the airline industry faces today is employees for the rebound in leisure travel. But, of course, no competitor is as cheap as Frontier. So looking ahead, they will continue to expand capacity and add new routes as America’s ultra-low-cost airline and look forward to creating new jobs and welcoming future employees to the team. But overcoming the struggles of hiring and the uncertainty surrounding the post-pandemic world, Frontier should prepare for the shift moving forward.

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