A version of this article appears in the September 1 issue of Aviation Week & Space Technology.

Under new ownership, Frontier Airlines shifted earlier this year to become the third U.S. ultra-low-cost carrier. But with rivals Allegiant Air and Spirit Airlines already established, can Frontier succeed? 

The answer is likely “yes,” as the U.S. market is not saturated with bargain airlines as is Europe’s or even Asia’s. It helps that what was once the most powerful of no-frills carriers—Southwest Airlines—is acting more like a major network airline, with relatively high costs and a focus on high-yield markets. And with three other carriers—United, Delta and American—also chasing high-value customers, there is room at the bottom.  

Equally helpful is the fact that Spirit and Allegiant, while consistently profitable, remain niche carriers. Fort Lauderdale, Florida-based Spirit is growing—it intends to have 143 aircraft by 2021—but for now has 58 Airbus A320-family aircraft, which the carrier flies mainly on high-volume routes between major North American cities. (Spirit intends to have 65 aircraft by year-end.) Las Vegas-based Allegiant, meanwhile, not only is still small (70 aircraft), but its niche is flying to vacation destinations from cities Frontier is unlikely to serve such as Bismarck, North Dakota; Owensboro, Kentucky; and Belleville, Illinois. 

While the Frontier brand started in 1950, this iteration began in 1994 when investors restarted the carrier in Denver after Continental Airlines closed its hub there. Frontier was a niche, mostly full-service North American network airline for nearly 20 years and developed a loyal following in Denver. Republic Airways, which had been a contract operator for Frontier, bought the entire airline in 2009 when it was in bankruptcy, but sold it last year to Indigo Partners. Republic said  it wanted to focus on regional business. Indigo is led by former America West Airlines CEO William Franke. 

The Indigo team has presided over Frontier’s newest strategy: focusing on larger airports such as Washington Dulles and Cleveland. After United said earlier this year it would no longer operate a hub at Cleveland, Frontier added 14 destinations there, including Dulles, Phoenix, Chicago O’Hare and New York LaGuardia. United retains a hub at Dulles, but Frontier is growing there too, with plans for 18 more routes by mid-November.

The Washington network proves why Frontier’s model should succeed. While it will serve some leisure destinations from Dulles, Frontier will also fly to many legacy airline hubs and former hubs, including Minneapolis/St. Paul; Atlanta; Chicago; Detroit; Cincinnati; Charlotte, North Carolina; and Memphis, Tennessee. Fares are high in those markets, making them ripe for Frontier to undercut competitors and still profit. For a two-day trip from Dulles to Atlanta in October, Frontier shows up lowest, with a roundtrip fare of $125—or $330 less than Delta and United. Even accounting for extra fees for items such as carry-on and checked bags and beverages, leisure customers will still save money. The economics are similar for other new Frontier routes between large cities, such as O’Hare to Atlanta, O’Hare to Denver and Dallas to Las Vegas.

“Frontier can go into the biggest market and carve off the lowest fare pieces that the legacy airlines don’t want,” says Hubert Horan, an Arizona-based aviation consultant. “They will take Wednesday afternoon and Saturday evening.”

There are, however, concerns about Frontier’s big-airport strategy. Most of the new flights operate between 3-5 times each week, probably not enough to scare legacy competitors. But if Frontier added two daily flights between Dulles and Atlanta, United and Delta might react differently, perhaps with bargain fares and frequent-flier program promotions. Frontier, which recently made its frequent-flier program less passenger-friendly, might not be able to respond. 

Spirit is another concern. It does not fly to Cleveland and Dulles, but often prefers major airports and has sizable operations at O’Hare, Dallas/Fort Worth, Houston Intercontinental and Detroit Metro. Eventually, Spirit could decide it wants to compete with Frontier in more markets. Or Frontier, seeking its own growth, may try to compete with Spirit on key routes. That could spark difficulties. “If all this competition ends up doing is cannibalizing the existing markets for ultra-low-cost carriers, that could lead to trouble,” says George Hamlin, a Fairfax, Virginia-based aviation consultant. 

But Spirit CEO Ben Baldanza told Aviation Week he was not particularly worried about Frontier. “Frontier says they want to be like us,” Baldanza said. “But the reality is their costs are significantly higher than ours. They have said some things, but until we see them coming anywhere close to our costs, we’re not really worried about Frontier.”