Low-cost carrier Frontier Airlines has decided to initiate non-stop flights in 42 U.S. regions with fares starting at as low as $39 for a one-way trip. However, most flights will begin operations in mid-April 2016.
In line with its expansion plans, Frontier Airlines has ordered 18 new planes, most of which will be delivered between May and June. Meanwhile, flights will be available every alternate day of the week for the different routes.
Launch of new routes across popular U.S. destinations like Chicago, Los Angeles, San Francisco, Houston and Orlando will not only enhance travel options for passengers but will also help the carrier offer low air fares.
These popular U.S. destinations are served by legacy carriers like Delta Air Lines DAL, American Airlines Group Inc. AAL and United Continental Holdings UAL. Moreover, low-cost popular airline Southwest Airlines Co. LUV enjoys a dominant position in this space. Meanwhile, the offering of such low-cost non-stop services by Frontier Airlines will most likely intensify competition in the U.S. airline space.
Low fuel price has encouraged most carriers to expand capacity and offer promotional fares to passengers. As per data released by the Bureau of Labor Statistics, air fares in Jul 2015 (on a seasonally adjusted basis) decreased 5.6% from Jun 2015. This decline marked the sharpest monthly drop since Dec 1995.
Such declining air ticket prices continue to impact unit revenue for most U.S. carriers. American Airlines expect unit revenue for the final quarter of 2015 to decline in between 5% to 7% year over year. Even Delta Air Lines expect unit revenue in the fourth quarter of 2015 to decrease by 1.5% on an annualized basis.
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