Frontier Strikes a Chord in Memphis - TheStreet

Frontier Strikes a Chord in Memphis

The airline moves in on Northwest's hub, and the legacy carrier retaliates.
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The airline industry may have changed radically in the past six years, but there has been no change in the first commandment: Thou Shalt Protect the Hub.

The commitment to principal played out this month in Memphis, Tenn., a hub for

Northwest Airlines

(NWACQ)

.

On Feb. 14,

Frontier Airlines

(FRNT)

, which has its hub in Denver, announced it would begin flights from Memphis to Denver, Las Vegas and Orlando, Fla., on May 12. The next day,

AirTran Airways

(AAI)

said it would begin service from Memphis to Orlando, one of its focus cities, on May 8.

Then, on Feb. 19, Northwest said it would begin service from Memphis to Denver, Las Vegas and Orlando -- plus add new service between Indianapolis and Denver. All flights would begin May 2. So Northwest retaliated, not only matching service from its hub but also invading Frontier's Denver hub.

"You can see what a screwy industry this is," said John Happ, Frontier senior vice president of marketing and planning, in an interview.

While Frontier feels an obvious need to diversify beyond its single hub in Denver, Happ says, the decision to go into Memphis was dictated by a variety of factors, including aircraft utilization. First, Frontier already serves 45 of the top 50 destinations from Denver; it believes Memphis, 61st on the list of destinations, has potential.

Second, the Denver-Memphis flight will continue on to Orlando, giving Denver passengers a second option to reach the popular destination, since an existing flight is often full.

Meanwhile, the flights between Memphis and Las Vegas will be redeye flights, stretching out the day for Frontier's aircraft. The Las Vegas-Memphis flight will depart at 11:45 p.m and arrive at 5:05 a.m. Happ notes that Las Vegas is among the best places to fill a redeye flight for.

"We wanted to mix a hub flight

Denver-Memphis with some other destinations that are high profile," Happ says. "It's easy to get jazzed up about Orlando and Las Vegas." He adds that Frontier has no plans to build Memphis into "a focus city or minihub or anything like that."

Whatever Frontier's intentions, the reactions were swift. AirTran's move was part of a "planned Orlando expansion," says Kevin Healy, vice president of planning. He says AirTran also added an Orlando-Kansas City flight and a second daily flight between Orlando and Milwaukee, the hub for

Midwest Airlines

(MEH)

, an airline AirTran is seeking to acquire. "We are up to 27 nonstop markets from Orlando," he says.

Meanwhile, Northwest said it added its new flights "in response to customer demand." From Memphis, Northwest offers 222 daily departures to 87 destinations. Frontier has to be careful, says aviation consultant Mike Boyd. In Memphis, he says, "They have a gunboat and they're taking on the battleship Missouri."