DENVER—Sean Menke stepped back into Frontier Airlines Holdings Inc. Tuesday with a new job as chief executive and fresh ideas aimed at boosting revenue from an a la carte fare strategy to diversifying operations beyond its Denver hub.
Menke, a chief operating officer at Frontier until 2003, will replace Jeff Potter, 47, who is resigning effective Sept. 6 to become CEO of Denver-based Exclusive Resorts, a privately held luxury destination club. Both men will serve on the company’s board.
Menke, 38, rejoins the airline as the industry is addressing key issues such as high fuel costs and ticket price competition that has hit the bottom line for many carriers, including Frontier.
In an interview with The Associated Press, Menke said his top priority is returning Frontier to profitability after three consecutive quarters of losses.
“What I bring is really what I’ve been doing over the last couple of years at Air Canada and that’s being able to see the world from sort of a different perspective,” he said.
One idea is an a la carte fare strategy in which consumers choose to pay more for some services—much like building on a basic automobile with extras—such as seat assignments, multiple bags to be checked and frequent flier options.
“There’s a balance between nickel and diming the consumer and putting a product and a service together that you can ask the appropriate dollars for,” Menke said. “At the end of the day, it really is up to the consumer to choose the product and services that they want.”
Frontier, which has built a successful operation by serving Mexican resorts, also could broaden its international routes and diversify further beyond its hub at Denver International Airport where it competes against United and Southwest airlines, Menke said.
A potential merger or acquisition isn’t in the offing for Frontier, which Menke said works as a standalone operation although if there is interest from another carrier, it may offer its new turboprop operation as a feeder line.
Analysts believe that Menke is a good fit for Frontier, which operates in 30 states and Canada in addition to Mexico, has a fleet of regional jets and plans to start a turboprop operation, called Lynx Aviation, this fall.
“He’s probably about the best Frontier could have hoped for,” Calyon Securities analyst Ray Neidl said. “He’s got lots of experience and a good reputation.”
Aviation industry analyst Mike Boyd said Menke will provide good continuity. “There’s a lot of momentum at Frontier and I think we’ll see some changes going forward,” he said.
Menke will receive $325,000 a year in salary plus stock options and will be eligible for the company’s bonus and equity incentive plans.
Menke worked at a number of carriers including United Airlines and America West Airlines before joining Frontier in 1999 about six years after it was founded.
He was responsible for areas such as maintenance, customer service, planning and flight operations, and is the executive who helped launch Frontier’s successful marketing campaign of animals on aircraft tails that also appear in company commercials.
He was chief operating officer when he resigned in June 2005 to join Air Canada as an executive vice president overseeing commercial strategy where he helped develop the a la carte brand strategy.
The concept is interesting and some carriers are adopting limited but similar strategies, Neidl said. But the analyst has been disappointed with how it has worked at Air Canada, saying that it doesn’t appear to be producing the hoped-for levels of additional revenue.
Frontier’s shares slipped 8 cents to $5.33 in afternoon trading, which compares to a range of $4.51 a share to $8.83 a share in the past year.
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