Frontier and United Airlines: Competition Heats Up in Denver
Frontier Airlines understands its customers and competitive situation very well. Frontier accepts that it
cannot compete effectively against United Airlines for business travelers flying in and out of Denver,
Colorado. United is simply too big, has far more planes, and flies to too many destinations multiple
times throughout the day. So who are Frontier’s primary customers? Frontier’s primary customers are
the price-sensitive, nonbusiness travelers who purchase plane tickets for vacations or to visit friends and
family. Who pur- chases the tickets for these types of trips? In a word, women. These same women
often have kids in tow who can also have a say in airline ticket purchase decisions. Never underestimate
the influential power of children. It has been estimated that 4- to 12-year- olds influence the spending of
nearly $700 billion a year in the United States.
Based on Frontier’s understanding of its consumer decision-making processes, the air- line focuses on
what it calls “one comfortable class of service”—coach. To begin, most of Frontier’s jets are much
newer, on average a decade newer, than those of its competitors. As a result, the interiors of the aircraft
are in excellent condition, which positively influ- ences passenger safety perceptions. Second, Frontier
offers one inch to two inches more legroom than most other airlines, which might not sound like much,
but it truly makes a difference, especially when traveling with children. Third, Frontier’s in-flight
entertain- ment system offering 24 channels of live DIRECTV in each seatback is a life saver when it
comes to keeping the kids occupied. Finally, Frontier’s Emmy-award winning advertis- ing campaign
featuring unique animal images such as Grizwald the Bear, Jack the Rabbit, and Larry the Lynx that adorn
the tails of 60 different Frontier aircraft were intentionally designed to be very family friendly.
In fact, the airline has video that documents mothers and children peering through terminal jetways to
catch a glimpse of which one of Frontier’s namesake animals is proudly displayed on the tail of today’s
flight. Further evidence of the success of Fron- tier’s use of animal mascots was provided during a fiveweek advertising campaign that allowed customers to vote on a name for a new animal mascot. The
company’s website collected over one million votes that were cast online, which netted increased traffic
to the airline’s site by 50 percent compared with the previous year.
Frontier further caters to its customers now by offering three different classes of coach seating:
Economy, Classic, and Classic Plus. Economy seating offers the lowest price for passengers if the
customer is willing to make some concessions. For example, passengersflying economy receive seat
assignments at check-in, are charged $20 for their first checked bag and $30 for their second checked
bag, and DIRECTV is available for pur- chase. In contrast, Classic seating offers advanced seating
assignments, first and second checked bags are free, free DIRECTV, 125 percent EarlyReturns Mileage,
and a two-for- one lift ticket at Winter Park or Copper Mountain ski resorts. Finally, Classic Plus offers a
fully refundable ticket, advanced seat assignment, stretch seating (where available), pri- ority boarding,
first and second checked bags are free, free DIRECTV, free snacks and beverages, 150 percent
EarlyReturns Mileage, and the two-for-one lift ticket at Winter Park or Copper Mountain. Ultimately, the
three classes of seating allow customers to cus- tomize their own decisions about price and service
options as opposed to being offered a standardized service product from the airline.
For its efforts, Frontier Airlines has been voted the “Best Low Cost Carrier” by the readers of Business
Traveler magazine, and one of the Top Five Domestic Airlines by readers of Travel & Leisure magazine.
Given Frontier’s understanding of its customers and the adaptations it has made to its service product to
suit the needs of its target mar- ket, the airline truly lives up to its marketing slogan, “A Whole Different
Animal.”
As a major competitor to Frontier Airlines in the Denver market, United Airlines flies to more than 200
domestic and international destinations and operates more than 3,300 flights a day. Although the
airline’s hubs are strategically located in Chicago, Denver, Los Angeles, and San Francisco, United’s
47,000 employees live in every U.S. state and in many countries throughout the world. According to
United.com, “The company’s portfo- lio of products offers the right service to the right customer at the
right price.”
United Airlines dominates the business travel market that flies in and out of Denver. United’s major
strengths are the number of destinations served, multiple flights to single destinations throughout each
day; different types of aircraft that offer first-class, business class, and coach seating classes; and a
dedicated and professional staff, including gate per- sonnel, pilots, flight attendants, and baggage
handlers.
United also benefits from the lower price sensitivity of its business travelers. Business travel is typically
not paid for by the passenger but by the passenger’s employer. Conse- quently, price is often not the
most important criterion for selecting an airline, whereas flight schedule and timeliness become more
important decision-making criteria.
Despite United’s success in the business traveler market, it has not been as successful in the
nonbusiness market as the airline would like. After sitting down with several focus groups to determine
how nonbusiness travelers purchase their airline tickets, the follow- ing multi-attribute matrix was
developed:
As managers examined the decision-making matrix, they tried to answer the questions that follow. You
have been hired as an outside consultant to assist in determining the
correct course for United’s future marketing efforts as they pertain to nonbusiness travel- ers. Please
help United answer the following questions.
Discussion Questions
1.
According to the data collected from United Airlines and presented in the preced- ing multiattribute matrix, describe five useful pieces of information for United’s future managerial decision
making.
2.
According to the data collected from United Airlines and presented in the preced- ing multiattribute matrix, which airline is preferred by nonbusiness travelers?
3.
Compared to the airline preferred by nonbusiness travelers, which attributes should United
Airlines seek to improve? Which attributes should receive the most immediate attention?
4.
After flying with United Airlines, passengers were asked to record their perceptions about their
experience pertaining to each of the decision-making criteria. The results are displayed in table form
here (expectation scores were obtained from the original multi-attribute matrix). Given this information,
determine the size and direction of the satisfaction gap and whether customers were dissatisfied,
satisfied, or delighted.
5.
If United’s customers’ expectations are misaligned with their actual perceptions, what can
United do to correct the situation so that in future purchase decisions, accurate rankings are entered
into the consumer’s multi-attribute matrix?
6.
Discuss the pros and cons of United Airlines actively pursuing nonbusiness customers.
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