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."
Going forward, Mexico City "is not out of the question, but we have to get Guadalajara under our belt first," Hodas says. Also, he acknowledged, Frontier has looked beyond Mexico into other Caribbean leisure destinations such as San Jose, Costa Rica. "It's by no means imminent, but it would make logical sense," he says. What's clear is that other low-priced carriers see potential in Mexico. A December expansion of the aviation agreement between the U.S. and Mexico opened 14 cities to increased service, allowing for the recent approval not only of Frontier's service, but also for JetBlue ( JBLU) to fly between Cancun and New York's Kennedy International Airport. The flights, expected to begin in October, would be JetBlue's first to Mexico. The carrier currently flies internationally to Bermuda and to Santiago, the Dominican Republic, and plans to start Aruba service in September. International routes account for about 2% of its flying. In its request for DOT approval of the Cancun route, JetBlue suggested that its low fares would stimulate travel in the market, increasing the number of daily passengers to 832 from 566 in the second quarter of 2005. JetBlue spokesman Bryan Baldwin says the company's long-term international aspirations "are to partner with international carriers in nontraditional ways," taking advantage of the proximity to the roughly 100 international airlines at Kennedy, but without adding the cost of standard code-share arrangements. Meanwhile, AirTran Airways ( AAI) was awarded the authority to begin Atlanta-Cancun service last year, but delayed the startup after Hurricane Wilma. The airline will re-evaluate the situation later this summer. It also flies between Atlanta and Freeport in the Bahamas. Southwest Airlines ( LUV) has a code-share arrangement with ATA Airlines, which serves Cancun and Guadalajara from Midway Airport in Chicago. Southwest is readying its reservations system to accommodate international pricing and transactions by 2009. "Once that is done, an agreement will be in place to code-share on our international flights," said ATA Senior Vice President Josef Loew in a recent interview.
Additionally, privately held Spirit Airlines flies to a dozen Caribbean destinations, including Cancun, primarily from its hub in Fort Lauderdale. At the moment, the carrier don't threaten to make much of a dent in U.S.-Mexico service. Continental Airlines ( CAL), the biggest player in the market, operates 561 flights a week to 30 Mexican destinations, including 523 flights from Houston and 38 from Newark. On Wednesday, in an indication of the benefit that international alliances bring to legacy carriers, Continental said it would code-share with Alitalia on flights between its Newark hub and Mexico City, Montreal, Quebec and Ottawa. The flights will connect in Newark with Alitalita flights serving Rome and Milan. Aviation consultant Bob Mann says the low-fare carriers will tread carefully as they enter international markets, seeking "select markets where you can get relatively quick clearance processes." He says that Canada isn't as attractive as Mexico because the markets are smaller and less leisure-oriented and because Air Canada is a tough competitor.