Frontier Airlines said Tuesday it will begin flying between San Francisco and Los Angeles. The airline’s entry into this highly competitive market is another effort to expand beyond its Denver hub.
Beginning June 29, Frontier will fly five times daily between San Francisco International Airport and Los Angeles International Airport.
Also Tuesday, JPMorgan downgraded Frontier shares to underweight from overweight. In a report, it forecast that, after JetBlue, Frontier will be the least profitable airline in 2007. Frontier shares fell 28 cents Tuesday to close at $6.33.
Aside from some flights to Mexico, all of Frontier’s flights go to or from Denver. Frontier already flies from Denver to Los Angeles and San Francisco.
Frontier says it will be the only low-cost carrier flying nonstop between Los Angeles and San Francisco and that the San Francisco market is underserved in low-fare service.
Low-cost carriers often use smaller airports around San Francisco and Los Angeles.
Frontier faces challenges in its attempt to branch out, as it has in the past. In late 2004, Frontier announced it would pull out of an unsuccessful Los Angeles “focus city” operation. It had flown from Los Angeles to Minneapolis, St. Louis, Philadelphia and Kansas City, Mo.
“It’s a completely different set of economics, different competitive set,” Frontier spokesman Joe Hodas said.
San Francisco’s airport is known for frustrating weather delays. Southwest Airlines moved out of San Francisco’s airport in 2001 to escape the flight delays. Southwest still operates out of Sacramento, Oakland and San Jose.
The northern-to-Southern California market is “a big Southwest market, and it’s a big United market,” said Benchmark Co. analyst Helane Becker. He suspects that Frontier’s attitude is, “If Southwest wants to fly in our market, we’ll fly in theirs.”
The announcement comes as Frontier is negotiating with Denver International Airport to get more gates.
Southwest Airlines is reported to have aggressive expansion plans in Denver after starting flights here in January. JPMorgan said in the report, “We continue to believe that its Denver operations will stabilize around 50 or so departures a day early next year.”
Frontier’s unit revenue is being hurt by United’s growth in Denver, according to JPMorgan, a sign of the damaging financial impact of low fares on airlines that sell them.
Staff writer Kelly Yamanouchi can be reached at 303-820-1488 or kyamanouchi@denverpost.com.
