© 2009 Sabre Inc. All rights reserved. wearelistening@sabre.com

2005 Issue No. 1A MAGAZINE FOR AIRLINE EXECUTIVES

T a k i n g y o u r a i r l i n e t o n e w h e i g h t s

Lufthansa benefits fromclose-in re-fleeting

Cathay’s cargo businessdrives revenue

Frontier Airlines enlistsstrategic partners

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I N S I D E

I N T H E B L A C KA conversation with …

Joe Leonard, CEO and Chairman, AirTran Airwayspage 59

FRONTIERDaysFrontier Airlines, one of the new generation

of airlines that is helping change the airline industry, has

experienced tremendous success during the past decade.

With the help of key partners, the airline has also

positioned itself to excel in the future.

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In its 11-year history, Frontier hasgrown from a small start-up to

one of the airlines that is helping reshape theU.S. airline industry. As it looks forward to thenext decade, the airline has plans for contin-ued expansion. But to take the next step,Frontier decided to enlist the help of severalstrategic partners that will help the airlineachieve its goals.

Frontier marked a major milestone lastJuly when the Denver, Colorado-based airlinecelebrated the 10th anniversary of its inaugur-al flight as well as carrying its 25 millionth passenger. The event represented anothergrand achievement for the rapidly growinglow-cost carrier.

During the past decade, the airline,granted flag carrier status in 2003 by the U.S.government, has grown dramatically from twoaircraft to 44 and expanded its route networkfrom four U.S. destinations to 42, plus fivemore in Mexico. From 2002 – 2003, the air-line’s passenger traffic grew 70 percent to5,137,959 passengers carried. And, mostimportantly, the airline has been profitable infive of the past six years, including 2001 and2002 when the industry experienced anunprecedented downturn.

Frontier has added or announced plansto add approximately seven new cities and 15new routes to its network since the end of2003, representing new destinations as wellas the development of its presence in Mexico,which has been a tremendous growth vehiclefor the airline. Frontier’s point-to-point servicebetween Cancun and Salt Lake City, Utah, andKansas City, Missouri, began last July; its service between Cancun and Nashville,Tennessee, and Austin, Texas, began inNovember; and in February, the airline com-menced service between Cancun and St. Louis.

As one of the new wave of low-cost car-riers, Frontier, which promotes itself as “awhole different animal,” has managed to suc-cessfully provide an enhanced customer expe-rience while maintaining low fares. Frontier,which provides live television for each seat onits fleet of new Airbus A319 aircraft, has beensuccessful by focusing on providing comfort-able, affordable and flexible service.

Frontier, like its fellow new generationairline peers, represents “a whole differentanimal” for the airline industry by combining

low fares with customer amenities.Capitalizing on its slogan, the carrier’s advertis-ing and branding campaign features nationaltelevision ads that animate the animals paint-ed on the tails of the carrier’s aircraft as theylightheartedly tout Frontier’s advantages. Thecampaign, Chief Executive Officer Jeff Pottersaid, “has exceeded all of our expectations.”

“The best measurement of its successis the fact that since we launched the cam-paign, we have produced record-breaking load

factors for the 10 months from June 2003through March 2004,” Potter wrote in thecompany’s annual report.

With its passenger growth, the airlinealso added six mainline gates and severalregional jet pads at its main operations atDenver International Airport. Frontier alsorecently signed an amendment to its purchaseagreement with Airbus to acquire 15 addition-al Airbus A319 aircraft with purchase rights forup to an additional 23. The carrier also

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By Dan Davenport | Ascend Contributor

Frontier Airlines, the second-largest

carrier at Denver International Airport,

has grown dramatically in its 11-year

history from two aircraft to 44. In a

two-year period, the airline’s passenger

traffic grew by 70 percent.

announced plans to lease 14 additional A319s, which will be delivered during the nextfive years.

And, in another sign of strength, it sig-nificantly improved its liquidity as a result of asecondary offering of 5,050,000 shares ofcommon stock in September 2003 that gener-ated net proceeds of US$81.1 million.

Even with the success of its firstdecade, Frontier officials are not resting ontheir laurels, and the airline is already taking anumber of steps to prepare for continuedfuture expansion.

“Frontier has achieved a great deal ofsuccess during its relatively short history bybeing responsive to market needs,” said SeanMenke, chief operating officer for Frontier.

“Over the past 10 years, we have madenumerous fundamental changes to our busi-ness model, and our rapid growth has createdmany new challenges and added complexityto our operations. I expect the next 10 yearswill be even more turbulent.”

As it looks forward, Frontier has begunto select partners that can lead to additionalrevenue-generating opportunities that willhelp the airline continue its successful journeydespite the increasing complexities of a rapidly changing industry.

Last year, Frontier launched an affinitycredit card program with MasterCard andJuniper Bank that has also exceeded expecta-tions and has helped drive the airline’sEarlyReturns frequent flyer program enroll-ment to more than 1 million members, accord-ing to the airline.

In 2003, the carrier formed a long-termpartnership with regional jet operator HorizonAir, which began service as FrontierJetExpress early last year. Through the agree-ment, Frontier added nine 70-seat BombardierCRJ-700 aircraft to its fleet. Partnering withHorizon Air will enable Frontier to provide ser-vice to seven additional destinations inArizona, California, New Mexico, Oklahomaand Texas.

The airline also maintains a codeshareagreement with Great Lakes Airlines, which

provides Frontier’s service to 34 regional markets in Colorado, Kansas, Nebraska, NewMexico, North Dakota, South Dakota, Texas,Utah and Wyoming.

It has also formed marketing sponsor-ships with high-profile sports teams includingthe Colorado Avalanche, Denver Nuggets andthe University of Colorado athletics. Frontieralso formed relationships with five of the trav-el industry’s leading wholesalers to providepackaged trips to all of its Mexico destina-tions, including Mazatlán, Cancun, PuertoVallarta and Los Cabos, based on their abilityto provide the greatest flexibility in schedulingand the highest level of customer service.

One of the keys to the airline’s contin-ued ability to remain profitable involves

increased use of new-generation informationtechnology to provide the infrastructure anddecision support for continued growth.

In April 2004, Frontier selected SabreAirline Solutions as its primary IT partner. Aspart of the new relationship, Frontier is imple-menting 14 solutions, including the SabreSonic™

Passenger Solutions, as well as utilize thecompany’s consulting services.

Frontier will use the SabreSonic solu-tions’ reservations and departure control func-tionality as well as its inventory managementand check-in capabilities.

“The SabreSonic solutions significantlyenhance our ability to provide an improved andconsistent level of service to our customersacross all touch points,” Menke said. “Forexample, the SabreSonic solutions’ interfacebrings all key and relevant information aboutour customers to the point of sale or point ofservice. On the Web, SabreSonic ™ Web willallow our customers more self-service func-tionality. This type of technology falls right inline with our strategy of offering a differenttype of experience for our customers.”

In addition to the SabreSonic solutions,Frontier will implement systems in key opera-tional areas such as resource management,loyalty management, fares management, market data and analysis, planning and sched-uling, flight operations, crew management,

and passenger processing.“We are confident that Sabre Airline

Solutions’ decision-support tools will improveour ability to make the right decisions morequickly, and the breadth of functionalityoffered in the SabreSonic solutions will pro-vide the flexibility we need to execute futurepassenger sales and service strategies,”Menke said.

Frontier believed selecting a single pri-mary IT provider would bring benefits beyondthe value of the products themselves. Withthe challenges facing the industry, many air-lines are attempting to simplify their opera-tions by reducing the number of technologypartners and seeking tighter integration acrosstheir business. As costs remain under pres-

sure, there is an increased need to ensure thatevery technology selected delivers real value.

“Sabre Airline Solutions brings a uniquevalue proposition to the marketplace,” saidPaul Tate, chief financial officer for Frontier.“Set aside the significant value we will getfrom each of the products, this breadth anddepth of capability from one supplier will helpus keep our operation more efficient, integrat-ed and simple — and ultimately that meanslower costs.”

Frontier implemented the SabreSonicsolutions during the first quarter, and productsfrom the expanded technology program will beimplemented during the next few months. Withthe simultaneous implementation of severalimportant systems, the airline has selectedSabre Airline Solutions Consulting to help ensurethat its business processes are tightly connectedwith the new technology. The consulting teamwill also assist with change management.

Through its strategic partnerships,Frontier has poised itself for another decade ofcontinued growth as it helps revolutionize theindustry.

Dan Davenport is senior director of global sales operations for

Sabre Airline Solutions. He can be contacted at dan.davenport@sabre.com.

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“Frontier, like its fellow new generation airline peers, represents ‘a whole different animal’ for the airline industry…”

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In keeping with its marketing campaign, “A whole

different animal,” Frontier’s livery features images

of various wildlife including rabbits, sea lions,

horses and whales on its aircraft tailfin.

Frontier has grown its route network from four U.S. destinations to 42 cities

in 23 states plus the District of Columbia. The airline also serves five destinations

in Mexico, including Cabo San Lucas, Cancun and Puerto Vallarta.

Last year, Frontier celebrated its 10th anniver-

sary by carrying its 25 millionth passenger.

The airline has a fleet of 44 aircraft including

37 Airbus A319s and seven Airbus A318s.

The airline plans to expand its fleet through

the lease and purchase of up to 52 new Airbus

A319 aircraft.

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“Frontier has achieved a great deal of success during its relatively short history by being responsive to market needs.”— Sean Menke, Frontier COO