At first glance the fight between Mobile, Alabama and Frontier Airlines makes little sense. Why should a city fight so hard for a single flight and route running empty a couple days per week? The airline wants to drop the service, citing nil demand. But it needs permission from the Department of Transportation to do so, owing to the CARES Act Payroll Support Program rules. Mobile is annoyed at losing a flight option and an airline from its portfolio. But is that enough to justify the objections? Turns out there’s a larger money issue at play.
Frontier’s business model is not one that dallies on route development for long. While some carriers will wait a year or more to see if traffic can grow to support a new operation, Frontier wants to see results quickly. If there are no passengers booking the flights then the route gets pulled and the aircraft redeployed. Never mind the reasoning for the demand drop; that’s much less a factor in the decision making process. And had the Mobile Airport Authority (MAA) not waived landing fees and paid for marketing of the route the issue might be moot. But the city did pay, and now it wants the flights to operate or a refund on its spending.
A troubled recent history for Frontier in Mobile
The DOT bundles Mobile’s two airports – MOB and BFM – as a single market for service obligations. MOB handles nearly all the city’s traffic but Frontier launched flights from the downtown airport in 2019 and has run a trio of routes with varying success since. It is the only carrier at that airport and both the City and the TSA staffed up to support the operations; four full-time jobs and nineteen part-time jobs depend on the flights. But operating from Mobile to Orlando when the theme parks are all closed is a tough sell.
Frontier listed flights for sale on the route in May. The carrier says load factor operated with a 2% load factor for the month, and forward bookings showed a 3% load in June. “This is approximately 10% of the advance booked load for the Orlando market overall in June, and this underperformance is why Frontier listed Mobile as one of its top five priority exemptions,” the carrier indicates.
Although the timing was not ideal, the Authority was pleased Frontier chose to offer a direct flight to Orlando. Once announced, MAA spent several thousand dollars to start a significant advertising campaign that involved television, radio, billboards and social media; $6,000 in the last month…
MAA also waived landing fees and terminal rent for their operation. These initiatives have resulted in Frontier Airlines serving the city of Mobile at no cost to the Airline.
The city fights back, claiming that tickets in the leisure market were only available with a 6-day advance purchase window to start, far too narrow an opportunity for leisure travelers. A limited schedule further reduced demand, with the airport authority claiming it received call from potential travelers wondering why return flights from Orlando to Mobile were not available further out into the Summer. And when the booking window extended the Mobile-Orlando route was not bookable online.
All of this comes across as the typical back-and-forth sniping between disgruntled business partners, doing their best to present a professional and compelling case in public filings. On Monday morning, however, Mobile made clear that money is the motivating factor. Given the fits and starts of the service scheduling and operational reliability, Mobile’s claim is a simple one:
MAA respectfully contends that Frontier did not make a good faith effort to operate out of Mobile, and MAA respectfully requests that Frontier be mandated and ordered to continue service from Mobile to Orlando through September 30, 2020 or to repay MAA for its investment made to ensure the success of Frontier in operating out of Mobile.
Getting the DOT involved and using the CARES Act as a means to arbitrate a service marketing subsidy agreement is certainly not a common occurrence. And it is unclear that the MAA has a compelling position in the fight, at least from a CARES Act perspective. But if Frontier still refuses to operate the flights a lawsuit to recover the funds could be a future step.
More on CARES Act routes and and the airlines affected
- DOT grants exemptions to Delta, Alaska Airlines, Hawaiian Airlines under CARES Act obligations
- JetBlue plans new route network for CARES Act compliance
- Spirit Airlines running triangle routes to meet CARES Act requirements
- Sun Country wins big as United, Frontier lose in latest CARES Act ruling
- Frontier Airlines pushes new route plan for CARES Act compliance
- Spirit Airlines asks DOT again to drop destinations
- JetBlue aims to drop 16 "major hub" destinations from its network
- Allegiant scores leniency from DOT in CARES Act obligations
- JetBlue, Spirit score exemptions to drop service at major US airports
- Cape Air’s ugly April stats (and some possible good news for May)
- United raises ire in cutting hours for salaried employees
- DOT further relaxes airline CARES Act obligations
- United faces lawsuit over M&A employees pay cut
- JetBlue plans return of international markets in June
- American Airlines seeks buyouts of thousands of workers
- Frontier, Mobile bicker over flights to Orlando
- United plans $5 billion loan against MileagePlus
- JetBlue plans to outsource airport operations at (more) smaller destinations
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