MIAMI — In his job as CCO, Shurz is responsible for network planning, pricing and revenue management, marketing, product and brand definition. He joined Frontier in 2009 as senior vice president of commercial, where he managed the airline’s route planning and aircraft scheduling.
Before coming to Frontier, Shurz served as vice president of network planning at Air Canada, where he oversaw scheduling, revenue management, and strategic forecasting functions for Air Canada and Jazz flights. He also served as a senior director of airports for Air Canada. He held a number of positions in the planning division at United Airlines and also worked for the Chicago Transit Authority. He spoke to Airways magazine about the airline’s evolution into an ultra-low-cost carrier, the introduction of the Airbus A320neo, how to be a customer-friendly ULCC and its changing route network.
Note: This interview was completed in Q4 2016.
Airways: It’s been three years since Indigo bought Frontier Airlines. What has changed in that time?
Daniel Shurz: The biggest change is that we’ve cut our costs by 30 percent, which has transformed our business performance. We went through a significant transformation between 2014 and 2015. We increased our aircraft utilization from 10 to 13 hours a day. We increased our seat density, going from 138 to 150 seats on the A319 and from 168 to 180 seats on A320s.
We’ve also been releasing A319s at end of their leases and getting more A320s and A321s. We’ve consolidated our technology platforms to make things easier to run. We moved to Navitair, which has made things simpler and costs less money. We also outsourced functions that aren’t core to our business, including our call center. There’s been a significant reduction in our costs and calls are answered more quickly, which gives better service to our passengers. Across our business, we’ve been focused on efficiencies and reducing our overhead costs.
AW: Why was the A320neo such a good fit for Frontier’s fleet?
DS: It’s environmentally friendly, with a 15 percent reduction in fuel burn. In the first few weeks, our aircraft are seeing those levels and we’re happy. Even though fuel is cheaper, it’s still a significant cost for the business.
AM: How does Frontier balance being an ultra low-cost carrier while still trying to be customer friendly?
DS: This is a company that’s being run with the idea that we want to be the lowest cost. But that’s not the only thing that matters and it’s not what we’re all about. We have the view that the business will succeed by getting the customers to come back, so of course, we offer low fares. For example, we lowered our costs by outsourcing the call center, we got a more quality product for our customers and were able to deliver a better customer experience.
Another interesting thing is that Frontier has the least uncomfortable middle seats in the industry. The middle seat on Frontier is two inches wider than the middle seat on the 737 and it doesn’t cost us a cent. The cost of this is a tiny amount, but it’s noticeable when you sit in our seats and then compare it to one of our competitors. So it’s all about making decisions as you go.
We intend to deliver an industry average with on-time performance. We run an efficient operation and are a high-utilization operation, but to deliver those two pieces, the schedule is designed carefully maintain operational integrity.
We care about delivering the best experience. We want to do low fares right. We want customers to come for our low fares. If we deliver the operation in the right way and offer the experience the right way, they come back.
AM: When you look at the big three ultra-low-cost carriers — Frontier, Allegiant Air and Spirit Airlines — there are similarities. What makes Frontier different from these two competitors?
DS: We have changed into a low-cost carrier with the expectation and attempt that we would deliver a good product and a good customer experience. We are more similar to Spirit than we are to Allegiant. Allegiant remains a low-utilization operator. But Spirit operates a simpler business in many ways. Compared to them, we have a much newer fleet and we operate a high-utilization business. We have a larger domestic route network in terms of cities and are pushing for customer convenience and a better experience. So the differences are visible and clearly there, but we are cut from a similar cloth.
AM: What’s going on with the Denver hub?
DS: We still consider ourselves Denver’s hometown airline, as we are the only one based in the city. Our largest crew base and our largest line maintenance operation is here in Denver. When Indigo bought the company, we had 90 percent of our flying in and out of Denver. Today, we are a company that has 40 percent of it flying in and out of Denver. What we’ve done is eliminated excess capacity in the Denver market. We have updated flying in Denver just as we have updated flying in the rest of the Frontier system.
We are using bigger planes with lower costs, we have got the right level of frequency and it’s been a transformation. We have removed loss-making and break-even flying. We allocated those airplanes as part of a nationwide plan of turning Frontier from a regional airline just coming out of Denver to what it is today — a truly national airline.
AM: As a result of going from 90 percent to 40 percent flying out of Denver, you have added flights to cities like Chicago, Cleveland, Cincinnati, Orlando, Philadelphia and Atlanta. What was so attractive about these cities to Frontier?
DS: We looked for opportunities in cities where there were high fares, where there has been a reduction in capacity or competition or where specific opportunities present themselves. So there’s a mix of stories.
In Chicago and Atlanta, there wasn’t much potential opportunities to get in there in the past. They’re big and competitive markets. In Atlanta, it was created by mergers and Southwest reducing production. In another case, we stopped domestic service in Cleveland in January 2013. When United announced they were closing their hub, we were ready for this great opportunity.
Cincinnati is a unique situation. It did not have a low-cost carrier, but it had low-cost service in the surrounding cities of Dayton, Ohio, and Louisville, Kentucky. This was a good opportunity to try a wide variety of markets.
We need our flights making a 20 percent margin. So to the extent that there is sufficient demand in the market and there’s an opportunity created by the lack of capacity, then that’s what we have been trying to find. We’ve been able to do that and we’re doing well across our system.
AM: When you are looking at expanding and balancing your own network, is there something that you’re looking to do as well or just focus more on competing with carriers on existing hub-and-spoke routes?
DS: What we’re looking to do is build from the cities where we have a good year-round potential to operate. And one of the big changes in Frontier’s network is more year-round flying. For example, Denver was always a great summer market. But in the winter, although there is a skiing industry here, Denver doesn’t do as well. My problem was, as a leisure airline, people don’t want to fly from somewhere cold to somewhere else cold.
So we designed the rest of our network around point-to-point routes that makes sense. We have had significant growth, and the most significant in the network has been in Orlando and Las Vegas. What that’s allowed us to do is take a lot of airports already in the network and find just one route for most airports to Denver. We are finding better year-round markets and connecting cities that are already in the network to improve cost efficiency.
We are not trying to recreate a Southwest-type route network schedule because we do not go with the high frequencies.
Since this interview was completed, Frontier has taken delivery of several A320neo aircraft and currently operates nine of them. Last month, Frontier unveiled a major network change by introducing dozens of new routes and destinations.
Note: This interview was completed in Q4 2016.