Frontier and Hageland join forces

Frontier and Hageland join forcesTwo major carriers partner for smoother rides
By Rob Stapleton Alaska Journal of Commerce

When Bob Hajdukovich, director of operations for Frontier Flying Service, picked up the tow bar on the nose wheel of a Hageland Aviation Service's Beechcraft 1900 and positioned it on the company's aircraft tug earlier this month, it signaled a new era for the Alaska aviation industry.
Two of Alaska's top air carriers, Hageland Aviation Services Inc. and Frontier Flying Service, signed an agreement on Jan. 14 to operate under a single holding company under the name FrontierAlaska, effective March 1.
Hageland and Frontier call it the “Combining of Forces.” The combination signals potential changes in the future of carriers operating in rural Alaska.
“We are watching the Hageland-Frontier deal real closely,” said Kevin Adams, with the U.S. Department of Transportation, the government agency responsible for certifying airlines.
Joining forces will make the team the largest commuter airline carrier in Alaska. Hajdukovich will act as its president.
It is not a merger, but is the creation of a holding company that allows the two carriers to operate independently in a partnership agreement. The two airlines agreed not to duplicate flight service destinations into rural Alaska and will use a common ticketing and reservation set-up, referred to as code sharing.
Frontier will operate the routes into the main hubs with larger airplanes and Hageland will operate into rural areas with smaller aircraft, said Mike Hageland. “Each will operate in areas where we have infrastructure.”
“Even if it means shutting down a building that we don't need because of duplication, that's still an overall savings,” Hajdukovich said.
Industry officials have long predicted that a merger or a combination of airlines to cover villages and service to rural Alaska hubs may be more cost effective.
“We have been competing in the same markets and this will allow us to use our assets more effectively,” Hajdukovich said.
The deal has an immediate downside. In shared markets, the new company will take a loss of 15 percent in carrying U.S. mail.
But once combined, Hageland will be paid a higher rate to move mail in some markets, and benefits from Frontier's passenger enplanement history, numbers that are key to getting independent shares of mail.
The biggest reason for combining the two airlines is adaptability, Hajdukovich said.
“We are taking best types of aircraft and putting them into the markets that make the most economic sense to use, “ he said.
The two airlines will continue to operate as two separate companies, according to Hajdukovich and Hageland. Both said there would be no major management changes at either airline.
“Where we can find common synergies, we going to find the best ways to handle them and affect them,” Hajdukovich said.
Hageland and Frontier have been in fierce competition in Aniak, Kotzebue, Nome and Barrow for the last two years. Hageland said combining forces will help both airlines.
“Really, the only areas that will be affected are Aniak, Kotzebue, Nome, and Barrow, where we will meld the two airlines together to make one good one,” Hageland said.
Both company Web sites will have the logo and a connection to the FrontierAlaska site, which will offer reservations and ticketing on both airlines.
“If you go to the FrontierAlaska Web site you can book a flight from Anchorage to Hooper Bay. On the tickets it will say Anchorage to Bethel, Frontier Flying Service, and Bethel to Hooper Bay will be on Hageland aircraft,” Hajdukovich said.
Passenger ease and flight transition are on the minds of both airlines.
“We can feed the Anchorage and Fairbanks traffic right from our terminal,” Hageland said. “We will share terminal and ramp space where it makes sense.”
Neither have ruled out combining the operations under the holding company, but only if it makes sense.
“We will have to transition, not immediately but through a lot of discussion and strategy,” Hajdukovich said. “This is a game of survival. When the first thing you get is less mail and less revenue you better start figuring things out pretty quickly.”

Source :http://www.alaskajournal.com/stories/012708/tra_20080127001.shtml