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Mexico's Hot for Low-Cost Carriers

The battle over immigration isn't the only fight going on at the border between the U.S. and Mexico -- an air war could break out before the year comes to an end.

Frontier Airlines (FRNT) is already there, and the other three leading low-cost carriers are eyeing flights to Mexico, the second-biggest international aviation destination from the U.S., trailing only Canada.

Some observers say the low-cost carriers' inevitable next move will be to enter international markets. Frontier, at least, is there. During peak holiday periods this summer, it could offer as many as 86 flights a week to Mexico, or about 10% of its schedule.

There's no indication the low-cost airlines have any interest in trans-Atlantic destinations such as England, the third-biggest international market from the U.S., and those flights involve larger airplanes than any low-cost carrier now flies. Plus, as consultant Mike Boyd says, "We already have plenty of low-fare trans-Atlantic service. It's called 'coach.'"

However, Frontier's expansionism provides a blueprint for how low-cost airlines move into international flying. Last week, even as the Transportation Department said it has tentatively selected Frontier to fly between Los Angeles and San Jose del Cabo, the Denver-based company filed for authority to fly three more routes: Denver to Guadalajara, Kansas City to Cabo and San Diego to Cancun.

Frontier now serves seven Mexican destinations from its Denver hub. It also offers point-to-point service between Cancun and five U.S. cities, including surprising choices like Kansas City and Nashville. Last month, it became the first low-cost airline to begin service to Canada, flying twice-daily Denver-Calgary flights aboard a 70-seat regional jet operated by partner Horizon Air.

At the moment, Frontier's Mexico destinations are all leisure markets. Spokesman Joe Hodas says, though, that the airline is serving an emerging convention business in Cancun and Puerto Vallarta, and hopes to draw more business traffic if the DOT approves the flight to Guadalajara, which "would be our first nonleisure destination in Mexico."
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