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Can 3 carriers carry major operations at Denver?

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  • Can 3 carriers carry major operations at Denver?

    Hello,

    I was reading an article in yesterday's Rocky Mountain News discussing about how Southwest Airlines recent success in Denver has led the carrier to gain about a 10% market share in Denver. The article also talks about how Frontier Airlines' market share has also increased to about 23% while United Airlines' market share has plummeted from 53% to 48%. The article talks about how at most airports, three carriers with major operations can't survive. Basically, my question is as Southwest continues to grow, which airline is it going to hurt more UA or Frontier and can each of these carriers sustain such large operations at Denver?

    The article:http://www.rockymountainnews.com/new...igh-in-denver/

    Thank you,

    Rohan

  • #2
    Hasn't Frontier been operating in Chapter 11 for the past 6 months ? This might lead one to think that Frontier is more vulnerable than United, perhaps because Frontier and Southwest compete with each other and for the same market more directly. At the end of the day this might be a situation where a threesome is just too many, but on the other hand there's no theoretical reason why three shouldn't be able to compete at a large hub : you just have to cut your costs and/or capacity to meet the demand. United probably has some marginal advantage over Frontier in having economies of overall scale.

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    • #3
      Be careful when you look at percentage traffic figures. The real numbers are passengers boarded by each operator.
      How has Southwest taken butts out of another operators seats or has the growth been in airport traffic growth?
      Any number of operators can be supported given a large enough passenger base. Does Denver have a base large enough for three? Given that Frontier uses DIA (Denver's Inconvenient Airport) as its major passenger generating station while SWA and UAL use Denver as a hub along with initial boardings, you see a slight difference which leaves Frontier as the most likely to fail (again).
      Don
      Standard practice for managers around the world:
      Ready - Fire - Aim! DAMN! Missed again!

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      • #4

        Hasn't Frontier been operating in Chapter 11 for the past 6 months ? This might lead one to think that Frontier is more vulnerable than United, perhaps because Frontier and Southwest compete with each other and for the same market more directly. At the end of the day this might be a situation where a threesome is just too many, but on the other hand there's no theoretical reason why three shouldn't be able to compete at a large hub : you just have to cut your costs and/or capacity to meet the demand. United probably has some marginal advantage over Frontier in having economies of overall scale.

        Originally posted by Dmmoore View Post
        Be careful when you look at percentage traffic figures. The real numbers are passengers boarded by each operator.
        How has Southwest taken butts out of another operators seats or has the growth been in airport traffic growth?
        Any number of operators can be supported given a large enough passenger base. Does Denver have a base large enough for three? Given that Frontier uses DIA (Denver's Inconvenient Airport) as its major passenger generating station while SWA and UAL use Denver as a hub along with initial boardings, you see a slight difference which leaves Frontier as the most likely to fail (again).
        Thank you for responding. At first it seemed as though Southwest surge in Denver really destroyed Frontier, but in recent months Southwest has begun stealing passengers who typically flew United, due to United's plethora of new fees. That being said Southwest's surge has also led to an increase in the number of passengers using the airport, so as Dmmoore said the passenger percentages could be misleading. I agree that Frontier's business model which places Denver as its only hub, isn't likely the best to be using when facing heavy competition. Even Jet Blue, uses multiple hubs and focus cities. Frontier has been sort of hybrid airline after it redid its business strategy in 2001. The airline basically operated like a full cost carrier, but its fares were lower than United's. Once Southwest came into Denver, Frontier basically couldn't keep its prices competitve and the airline is longer "The Whole Different Animal" it used to be. As of right now, Frontier has done a decent job of sustaining itself during its bankruptcy and hopefully Denver's traffic will be able to support all 3 carriers.

        Thank you,

        Rohan

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        • #5
          Originally posted by Dmmoore View Post
          How has Southwest taken butts out of another operators seats or has the growth been in airport traffic growth?
          Yes.
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