Frontier Airline’s transition to an ultra-low-cost carrier played out well in its 2015 income statement.
Net income climbed to its highest annual level in more than 15 years, and total operating revenue surpassed $1.6 billion for the first time in the Denver carrier’s history, according to Bureau of Transportation Services released this week.
Domestic passenger traffic also increased for the year to 12.2 million, from 11.3 million.
“We restructured the airline last year, and so we’re starting to see the results of that,” Frontier spokesman Jim Faulkner said. “We’ve opened up a lot of new markets where we saw markets that were overpriced and underserved. So we’ve seen a lot of opportunities in those.”
Frontier changed its scheduling practices to cater to snowbirds and sunbirds and dropped anchor in markets , which previously did not have commercial service. Frontier as it targeted other markets.
Frontier last year also trimmed its operations, and eliminating a 140-person site in Wisconsin.
As revenue shot north of $1.6 billion, up from $1.57 billion in 2014, Frontier’s net income climbed to $145.5 million for the year, an increase of 13 percent.
Although net income notched a new record for Frontier, most of the gains came in the first half of the year. Earnings were down during the third and fourth quarters compared with the same periods of 2014.
of such offerings as seat selection and luggage also resulted in passenger-bag fees accounting for a bigger share of annual revenue for .
Frontier’s revenue from bag fees totaled $220 million in 2015. In 2013, before Frontier began charging for checked and carry-on luggage, revenue from baggage fees, such as a second or overweight bag, totaled $69.2 million.
Frontier ranks No. 5 among airlines that have unbundled luggage fees, with American Airlines landing at No. 1, with $1.1 billion in bag-fee revenue; Delta, with $875.1 million; United, with $672.2 million; and fellow ultra-low-cost carrier Spirit, with $288.7 million.
Like Spirit, Frontier’s baggage-fee revenue in 2015 accounted for a far larger share of overall revenue than it did for other major airlines.
The baggage-fee revenues for both Spirit and Frontier were more than 13 percent of overall revenue. For other major carriers, that share ranged from 0.2 percent to nearly 4 percent, according to BTS data.
Whether that more than 13 percent figure continues this year for Frontier could depend on how customers take to “The Works,” a plan launched last year that bundled some of the perks that went a la carte.
“As customers become more acquainted with the business model, I think you may see them taking that option,” Faulkner said.
Alicia Wallace: 303-954-1939, awallace@denverpost.com or @aliciawallace
