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Bill Franke, co-founder of Indigo Partners and chairman of Frontier Airlines Inc., speaks during an interview in New York, Oct. 28, 2022.
Jeenah Moon | Bloomberg | Getty Images
SCOTTSDALE, Ariz. — For decades, William Augustus Franke, Frontier Airlines‘ chairman and a serial airline investor, made a killing selling cheap plane tickets and charging fees to check bags, to pick seats and for everything else. Now, he says first-class seats and other traveler comforts are in order — at least in the United States.
Frontier is planning to roll out first-class seats next year on its Airbus fleet. It’s also joined a growing list of airlines adding SpaceX‘s Starlink Wi-Fi on board as it seeks to return to steady profitability.
“We’re not trying to have a Singapore Airlines first class,” Franke, 89, told CNBC in late June at the model airplane-filled offices of Indigo Partners, the private equity firm he founded. “What we’re trying to do is give the consumer an option,” he said, calling it at once upscale and competitive.
The ultra-low-cost airline model that Franke, who goes by Bill, pioneered has faced a reckoning in recent years. A jump in pilot salaries, maintenance costs and operating expenses, along with a boom in premium travel, have hit long-profitable and fast-growing budget carriers. Maintaining strong growth and keeping costs low were sacrosanct for that sector for years.
Another pillar was not giving things away for free. At the 2017 Dubai Air Show, where he made a record Airbus aircraft order for the empire of airlines he invested in, Franke likened some consumers to teenagers and “spoiled brats,” saying they expected to get low fares and what are now add-ons without paying for them, CNBC reported at the time.
“They had been flying with all the amenities for ever and ever and that’s what they think they ought to get,” Franke said at the time.
But since then, larger, more powerful rivals like United Airlines and Delta Air Lines have copied the model for their cheapest tickets. They’ve started offering bare-bones fare options and adding fees for everything else. This year, they even brought that pricing strategy to their first classes and plush, long-haul suites to increase revenue, stripping customers who choose that option of a free seat choice, among other restrictions.
Franke has owned, operated or invested in budget airlines around the world, from Chile to Hungary to the Philippines to the U.S. He was an early investor in European budget carrier Ryanair.
His legacy stretches across the airline industry: Many top airline executives, including the CEOs of United Airlines and American Airlines, worked under him earlier in their careers.
Franke also ran Spirit Airlines until 2013, before becoming the chairman at Frontier at the end of that year.
He tried to merge the two carriers in 2022 but Spirit shareholders voted for another offer, all cash, from JetBlue Airways. That deal fell apart after a federal court ruled it violated antitrust laws in January 2024.
Struggling on its own, Spirit collapsed in May, the biggest U.S. airline failure in decades, leaving Frontier as the largest discounter in the country.
Franke said he’s far from out of the game and remains a major Frontier shareholder.
“We see startup ideas probably one a month,” he said.
‘They still focus on price’
A Frontier Airlines airplane taxis past a Spirit Airlines aircraft at Indianapolis International Airport in Indianapolis, Indiana.
Luke Sharrett | Bloomberg | Getty Images
Franke started flying frequently when he was a little kid because his father worked for the State Department and was based in Paraguay.
He said a lot has changed since. “Consumers are much smarter today” than they used to be, armed with new data and tools like artificial intelligence that help them better compare fares and options, he noted.
“None of the airlines are quite sure what AI … is going to do to your decision to book,” he said.
But “price and schedule are still at the top,” Franke added.
“For a lot of consumers, whether the ticket costs $200 or $125 is not going to be the decision-maker, but for a lot of people it is still,” he continued. “Middle class, younger flyers, they still focus on price.”
But the ultra-low-cost and low-fare model has struggled in the United States. It’s based on keeping costs minimal and maintaining rapid growth, both of which have been more difficult since the pandemic. Higher fuel prices since the start of the Iran war have been an added challenge.
Spirit is the obvious casualty, with its CEO saying it “ran out of runway” after facing increasing challenges, but Frontier has only been profitable one year since 2019 and JetBlue hasn’t been profitable since that year.
“We’re not forecasting next year, but the airline is certainly on the right trajectory to return to sustainable profitability,” Frontier CEO Jimmy Dempsey said on a July 29 earnings call. He became the carrier’s chief executive in December, succeeding Barry Biffle who headed the airline for close to a decade.
Airlines, including Frontier, have been jacking up fares to cover costs. August airfares were up more than 23% over last year, according to federal data released Sept. 11.
Frontier isn’t alone in wanting to add pricier and roomier seats. Allegiant Air recently announced it would add a first class to its currently single-cabin planes, and JetBlue Airways is adding a domestic first class. Meanwhile, larger competitors are growing their premium cabins.
Franke said the new upscale moves don’t fit everywhere, and that efficiency remains key.
“In the U.S. market where you have mature large airlines — Delta, United, American — who are changing the interior of their aircraft on a regular basis, it could well be that a low-cost or a lower-cost airline, in order to properly compete, needs to make adjustments to its business model,” he said. “That doesn’t mean you have to do that in an emerging market like Hungary or Peru.”
All roads lead to Tempe
Franke’s legacy extends beyond the low-cost model. Many of the leaders of the modern U.S. airline industry can trace their roots back to Franke and to Tempe, Arizona, where America West — which through mega-mergers evolved into modern-day American Airlines — was based.
Franke, who had studied and practiced law, got into the airline business more than 30 years ago. The then governor of Arizona tapped him to save America West when it was mired in bankruptcy in the early 1990s and he became chief executive in 1993.
His proteges include American Airlines CEO Robert Isom; Isom’s predecessor, former American Chief Executive Doug Parker; and United Airlines CEO Scott Kirby.
Franke’s former employees told CNBC that they keep up with him regularly.
Isom told CNBC in an interview in late June that Franke is “pretty good at giving jabs.” For many years, they would bet on college football, specifically, games between Stanford University, where Franke studied, and Notre Dame, where Isom studied.
“His rule was fast pay makes fast friends,” Isom recalled, showing CNBC some of his winnings: Chilean pesos with Franke’s business card attached by paperclip and, in another win by Isom, euro coins taped to a sheet of paper with “PAID IN FULL” written out by his former boss.
Kirby told CNBC at an industry conference in Rio de Janeiro in June that after The Wall Street Journal profiled him this spring, Franke told him it made him “throw up in his coffee when he opened his newspaper.” Franke didn’t comment on that, but said he recalled the exchange.
Even still, Kirby called Franke a mentor, and clarified that he was “a hard-ass mentor.”
“All of us, our formative years were working for Bill, getting screamed at by Bill. … He should take more credit for that,” he said. (Franke said he didn’t yell at him. “That’s just not me.”)
Franke was demanding, especially when it counted, his alumni said.
Steve Johnson, American Airlines vice chair and chief strategy officer, and another Franke America West alum, likened Franke to a second father.
Johnson was a partner from 2003 to 2009 at Indigo when it owned Spirit. During the summer 2008 fuel spike that saw prices hit more than $147 a barrel (more than $200 in today’s dollars), Spirit was running out of money but had a portfolio of fuel hedges, a series of contracts that locks in future pricing.
He was about to head to a California-bound plane that summer when Franke called him about the fuel and told him to “sell it now,” Johnson recalled. They did and generated about $30 million. Oil prices later crashed.
“It turned out to be just exactly what Spirit needed,” Johnson said.
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Indian equities extended their recovery as softer crude prices and global yields improved risk appetite. Analysts have identified five stocks, including ACME Solar, Medanta, Tilaknagar Industries, Uno Minda and PWL, with bullish technical setups.
Authors including John Grisham, David Baldacci, Jodi Picoult and Jonathan Franzen sued OpenAI and Microsoft three years ago for copyright infringement.
A court filing unsealed Thursday details internal messages and testimony laying out how OpenAI employees—including executives—talked about the company’s use of pirated books to train an early ChatGPT model, as well as their technology’s potential impact on authors. The filing was made in support of the authors’ request that a federal judge rule in their favor ahead of a trial.
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Chiltern Railways has been brought into public ownership after 30 years as a private company.
It is the 10th rail company now under the Great British Railways (GBR), the government’s programme of public ownership, which it says will save money and improve services.
Chiltern Railways, which was privatised in 1996, operates services from London Marylebone to Buckinghamshire, Oxfordshire and Warwickshire, as well as destinations in the West Midlands.
The government said the transfer into public ownership would tackle overcrowding by introducing 25 additional daily services from December.
The start of the first day of public ownership saw some disruption, with Chiltern warning the line between Birmingham and Marylebone, external was “expected to be much busier” due to the late notice of the West Coast Main Line closure affecting services at London Euston.
The operator said it would run more trains than usual between the stations with significantly enhanced capacity.
The Department for Transport (DfT) said the additional weekday services under GBR would provide 10,000 extra seats.
They would include half hourly services during weekdays on the Chiltern Main Line between London and Birmingham, as well as more weekend services.
Rail minister Lord Peter Hendy met staff at Marylebone Station on Thursday alongside the first Chiltern train in the GBR livery.
“The most difficult thing on Chiltern is that it’s shorter capacity and those extra trains and those extra seats will make a real difference to people travelling on this line up here from Marylebone every day,” he said.
Sensex and Nifty both traded in the green before the CAS began at 3.20 pm. The indicative prices of both the benchmark indices sharply tumbled, with Sensex plunging nearly 1,000 points within a few seconds, before making a sharp recovery. While Nifty managed to recover all losses during the CAS, Sensex ended with marginal losses in the red despite a sharp rebound.
Overall, Sensex lost around 20 points or 0.03% to close at 74,295 while Nifty 50 gained 76 points or 0.33% to end the session at 23,346 on Friday. Broader markets sharply outperformed, with Nifty Smallcap 100 and Nifty Midcap 100 indices rising up to 1.7%.
Also read | Dividends and stock splits: IRCTC, BEML among 150+ stocks with record dates this week. Check full lis
Here’s how analysts read the market pulse
Indian equities extended their recovery as moderation in crude and global yields improved risk appetite, despite concerns around the continued geopolitical uncertainty. Investor sentiment was further supported by positive global cues following largely anticipated policy actions from major central banks, said Vinod Nair, Head of Research at Geojit Investments.
The rebound was broad-based across sectors, although IT stocks declined amid profit booking, as concerns lingered that prolonged higher-interest-rate could weigh on global tech spending, he added. While the recent moderation in oil prices and yields has provided near-term relief, the sustainability of the market recovery will depend on further easing of global macro risks and a meaningful revival in foreign investor inflows, the analyst further said.Also read | CAS chaos continues: Sensex indicative price tumbles nearly 1,000 points in seconds, closes in red but Nifty ends above 23,300
US Stocks
US markets ended mixed on Friday as investors weighed easing crude prices against the US 10-year Treasury yield hovering around 5%. The S&P 500 gained 0.17%, while the Nasdaq Composite advanced 0.39% on strength in technology stocks. The Dow Jones Industrial Average, however, slipped 0.18% as elevated bond yields kept broader sentiment cautious.
European markets
European markets closed sharply lower on Friday amid concerns over elevated interest rates and continued geopolitical uncertainty. Germany’s DAX fell 1.60% to 25,304.06, while France’s CAC 40 declined 1.49% to 8,065.02. Britain’s FTSE 100 also ended lower, with weakness across major European equities despite a retreat in crude oil prices.
Most active stocks in terms of turnover
HDFC Bank (Rs 2,868 crore), Bharti Airtel (Rs 2,655 crore), Adani Gas (Rs 2,565 crore), Infosys (Rs 2,319 crore), RIL (Rs 1,867 crore), Lenskart Solutions (Rs 1,810 crore) and Syrma SGS Technologies (Rs 1,806 crore) were among the most active stocks on NSE in value terms. Higher activity in a counter in value terms can help identify the counters with the highest trading turnovers in the day.
Most active stocks in volume terms
Vodafone Idea (Traded shares: 35 crore), Meesho (Traded shares: 8.34 crore), Yes Bank (Traded shares: 7.36 crore), Groww (Traded shares: 7.3 crore), Pine Labs (Traded shares: 6.68 crore), Suzlon Energy (Traded shares: 6.35 crore) and IFCI (Traded shares: 6.05 crore) were among the most actively traded stocks in volume terms on NSE.
Stocks showing buying interest
Adani Gas, Poonawalla Fincorp, Welspun Corp, Bombay Burmah, Supreme Petro, Supreme Industries and Jyoti CNC Automation were among the stocks that witnessed strong buying interest from market participants.
52-week high
Among the ones which hit their 52-week highs on NSE included Jyoti CNC Automation, Syrma SGS Technology, JSW Infrastructure, Apar Industries, ACME Solar Holdings, Emcure Pharmaceuticals and PVR Inox.
Stocks seeing selling pressure
Stocks which witnessed significant selling pressure were Tata Chemicals, Go Digit General Insurance, KPIT Tech, Tata Technologies, New India Assurance, Zydus Wellness and TCS..
52-week low
Among the ones which hit their 52-week lows on NSE included Go Digit General Insurance, KPIT Tech, Tata Elxsi, Gillette India, Syngene International, Bayer Cropsciences and Voltas.
Sentiment meter favours bulls
Out of the 3,653 stocks that traded on the NSE on September 18, Friday, 2,387 stocks witnessed advances, 1,154 stocks saw declines while 112 stocks remained unchanged.
Disclaimer: The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here
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Saudi Arabia stocks lower at close of trade; Tadawul All Share down 0.26%
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