AirTran Holdings Inc. and Frontier Airlines Holdings Inc. agreed to a marketing partnership that includes linking the low-fare carriers’ frequent-flier plans to help compete with larger airlines.
Travelers on each airline will be able to earn and redeem frequent-flier points on the other carrier, the companies said in a statement today. AirTran, based in Orlando, Florida, and Denver-based Frontier also will refer customers to each other’s ticket-reservations systems. The companies said the cooperation will add $5 million to $10 million each in annual revenue.
The carriers’ flight networks have little overlap, so the accord helps them offer flight to more destinations. They won’t sell seats on each other’s flights, a step taken by bigger rivals such as Northwest Airlines Corp. and Continental Airlines Inc.
“We do not view this as a likely signal that these two carriers might eventually merge,” Robert McAdoo, an analyst at Prudential Equity Group, said of AirTran and Frontier in a note to investors. The agreement is positive for the airlines, while “clearly not a material event in our view,” said McAdoo, who rates AirTran “overweight” and Frontier “neutral.” Wider Alliance The airlines aren’t currently interested in a wider alliance that includes selling seats on each other’s flights, known as code sharing, Frontier Chief Executive Officer Jeff Potter said in an interview. They are keeping that option open, he added.
“We think we’re getting 80 to 90 percent of the benefit of a code-share here at 10 to 15 percent of the cost,” AirTran President Bob Fornaro said in an interview. “It’s a recognition that we’re both very efficient airlines and that we can do this together better than separately.” AirTran had revenue of $1.45 billion last year. Frontier’s sales in its fiscal year that ended in March were $994 million.
AirTran flies all Boeing Co. aircraft, while Frontier uses only Airbus SAS planes, which would make combining the airlines difficult.
