Frontier Airlines Loves to Compete With United Continental
Throughout its 20-year corporate history, Frontier Airlines has operated a hub in Denver where it competes directly with United Continental (NYSE: UAL ) . These days, Frontier executives really like competing with United.
This isn't that surprising, as United has the highest cost structure among all major U.S. airlines. As a result, Frontier is concentrating the bulk of its growth in 2014 on markets where United is the top carrier. By offering low fares on heavily traveled routes from cities like Cleveland and Washington, Frontier can be sure to under-price United and thereby gain new customers.
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This is surprising. I thought one of the things companies did when they enter bankruptcy is reduce labor costs and reduce your cost structure. No wonder UA wants to cut $2B.