Daniel Shurz, SVP at Frontier Airlines
On Thursday, January 27th, I had the privilege to interview Daniel Shurz. Mr. Shurz is the Senior Vice President of Commercial at Frontier Airlines. He has over 20 years of experience in the aviation industry working for United Airlines, Air Canada, and Frontier Airlines. This interview has been edited for length and clarity.
Joshua Kupietzky: How did you start your career in the aviation industry?
Daniel Shurz: I grew up in the UK, born in the mid-1970s in a family with one car close to a railway station. We used the train because my mother was a hospital-based doctor, and she often needed the car. We used the train somewhat regularly as a family and that was my first interest in transport. What I can tell you is the first timetable I came to know was the train schedule for the line I lived next to—I was age six. And then I went to school in the UK system (primary and secondary). Secondary in the UK is roughly the combination of middle and high [school] in the US. At age 11 I started commuting 25 miles a day to school in central London by train and by tube. I found it very interesting. I liked seeing the trains, but I was also interested in how the timetables work. I would come home and talk to my dad about it, and he was like, “There is no point in telling me about this. You need to write to the people who run the railway.” So I wrote to the head of the southeast region of nationalized British Rail. And that started what became, during my seven years of secondary school, I wrote 142 letters. I got responses, and they started involving me in the timetables. So that's what started my interest; I don't know what it was about timetables that was fascinating. In my summers or during school holidays I would rewrite the whole timetable for Kings Cross routes. I rewrote the whole timetable, creating my own version that did not have any demand data to base it on. And then when I had done it once I would start all over again. This was pre-internet, pre-anything else.
I was interested in planes, but never as interested in trains, which were an everyday part of my life. Somewhere around the age of 13 or 14, I started getting interested in airlines. Same thing: I remember one summer, I would have been 14, it was the summer after Lockerbie… Pan Am had some incredible deals to the US in the summer of 1989 because it was right after the Lockerbie tragedy. There were some great summer deals back then and I was in Seattle Airport. I remember coming home on the Seattle London flight. I walked the whole length of the terminal to pick up every timetable I could pick up from every airline. It was my interest. It was my passion. I loved it.
My undergraduate degree was in chemistry. The UK is a bit different; the university education is not quite as vocational as can often be seen in the US. I did my summer jobs working for a pharmaceutical company. I thought, by the time I got to start my third year. I'm going to go and pursue my interest in transport if this doesn't work out; I can always go and use my degree for what it was intended for. So I started in the airline industry. I'm a dual citizen, and I applied to both British Airways and to airlines in the US. I knew people at American and United, and I started my career at United Airlines in Elk Grove Village, where it was headquartered then. I started in schedule planning, in what we call future schedules. I started in September 1996, so it has been just over 25 years working now. It was a great place to learn. I worked in future schedules, I worked in long term domestic planning, international planning, I worked briefly in finance, and I came back into network planning as a manager.
Then I left United for the Chicago Transit Authority [CTA]. A colleague of mine had gone there, and obviously with my previous interest in trains it was somewhat natural. I worked for the CTA for four years—two and a half years working as a special assistant to the EVP of Operations. Special assistant doesn't mean so much to the average person, but it was a project job, and I worked on a number of different things. I looked at how they cut back services in the early 1990s as ridership dropped and their funding dropped. And the bus system was quite simple. You didn't run the bus, you didn't pay the operator, you saved the money. On the rail system they were cutting the frequency and lengthening the trains. I couldn't tell you the numbers today, but I can tell you in 2001 when I started, if you're running an eight car train 90% of the cost of running the train was the power, 10% was the operator, and we were spending all this money. So you doubled the length of the train, you doubled the amount of power used. And we were paying all these operators to sit around during the middle of the day and get two and three hour lunches because we had so many operators not needed. I figured out we can increase our service for free. We can go back to cutting the trains in half and the operators, who are being paid to do nothing, might as well be paid to drive trains. Another one of the two big projects I worked on was reaching a settlement in a class-action lawsuit against CTA for violations of the Americans with Disabilities Act. I was project manager for that settlement, and in particular project manager for a project to install automated voice announcements on the bus fleet—announcing the stops. Prior to that, the drivers were supposed to announce stops, and they didn't do a very good job of it, to be honest. The second big project was a redesign of the lake shore corridor. I was involved in the redesign of the lake shore Corridor Express bus routes both on the north and south sides of the city. And then my second job there, one some people think was a strange job but I loved it, was managing a bus garage. I was the general manager of a garage that doesn't exist anymore—Archer bus garage on the southwest side. It was an old street car barn that was built in 1908 then functioning as a bus garage, and a fascinating opportunity to work from an operational experience, obviously. Not surprisingly, compared to office-based jobs and headquarters-based jobs, there is a much more diverse workforce and I loved a lot about that process. I found it fascinating. I lived in Lincoln Park. I remember my first my first session in the garage with the operators. I said to the operators, “You know what, you're driving buses on routes of times a day when I would be scared to be out there. I'm supposed to tell you to be nice to people, but I'll just tell you don't get into arguments with people.” It's a very, different environment. And then I got my MBA part-time at the University of Chicago while I was working at CTA, and my wife and I wanted to try living somewhere different. We ended up getting a job at Air Canada. I worked there for four years first as Director of Business Development, working for the CEO Montie Brewer, and then as VP of Network Planning for two and a half years. Obviously, Canada is a much smaller market that only has one legacy airline. At the time, Air Canada had been through the Canadian equivalent to Chapter 11 [bankruptcy]. They pursued the CCAA [Canada’s Chapter 11 equivalency] process. What drove it for them was the Hong Kong-driven swine flu during the SARS epidemic, which had had really destroyed Asian demand for Canada, which was much more China-centric by the point I joined the airlines. And now, I have been at Frontier for twelve and a half years. Actually, yesterday was ten years in my current job amazingly enough. Prior to Frontier I worked at four employers for about four years each, and I've been ten years in one job, which is partly what happens when you get older but partly it tells you the difference. This is the growth sector of the industry.
JK: You mentioned you worked at Air Canada before working at Frontier. What was the hardest part of making the transition from a business-oriented legacy carrier like Air Canada to an ultra low cost carrier like Frontier?
DS: The biggest switch is understanding a fundamentally different business model. Air Canada is a relatively high-cost airline with a healthy amount of business travel, which needs high fares to offset those high costs. When I came to Frontier, we were a low cost carrier, not really an ultra low cost carrier. One thing that has been interesting about working here is the transition of the airline during the time I've been here. There are two primary forms of leisure travel in the US. There is vacation travel and there is visiting friends and relatives [VFR]. Because this is a country with a relatively high level of migration, there's naturally a high degree of domestic VFR travel. You hear that term referred to in some examples. Often in terms of the short-haul international to some countries nearby, some of those markets are driven by VFR but there is very strong domestic travel. And the other part is vacation travel. Because we're in a country where people, on average, traditionally have not gotten very much vacation time, we need to take more VFR travel.
The Frontier I started at had some business travel, but it was a small amount already. I started here as VP of Network and from the network perspective purely, you go where you have the revenue to justify the flying. It matters understanding where you will be able to find demand, but it doesn't if you can understand the differences in the business. We hire people from more traditional airline backgrounds, but we try to find the people that we think are gonna embrace the difference in the business models. If you start at traditional airline A and you believe that they are wonderful, don't leave traditional airline A. Don’t come and work for a ULCC. We do treat the customers differently. There's no premium cabin. You can't fly across oceans. That's all that's all true and highly, highly visible.
I wanted to learn. I wanted to work for a low cost airline. I wanted to see what happened. I came at the tail-end when Frontier went through Chapter 11 bankruptcy protection. They entered Chapter 11 In April of 2008, driven by the combination of high oil prices. I joined in the beginning of June 2009, when it was clear to my then-boss and CEO Sean Menke that the company was going to make it out of bankruptcy. We were taken out of bankruptcy on October 1, 2009 owned by Republic Airways Holdings, who had become a debtor in possession during the bankruptcy because they had a regional contract with Frontier that Frontier canceled. They essentially had a debt to Republic and got bought by the airline. They owned us for four years, and then Indigo Partners in Phoenix bought the airline in December 2013. They accelerated the transition to being a ULCC and transition to becoming the US’s third ULCC. It was a lot of work in 2014, and 2015, but we've fundamentally transformed the business, and we went from being essentially a breakeven airline when Indigo bought us to a business that in 2019 was one of the most profitable airlines in the country. One of the problems with Frontier was that geographically we had all the eggs in one basket. We were a Denver-based airline that flew everything in and out of Denver. Today, we're a nation-wide airline. We serve over 120 destinations. We are in every major city in the country. We are in a lot of midsize cities. And you're talking to me during the first scheduled period (the winter 2021-2022 schedule) when Denver's not our largest station. Today, Orlando is the largest station in Frontier’s system. And so that's further proof of the complete transformation of this business.
JK: Frontier, like all carriers, has retooled its network since the start of the pandemic. What has worked and what hasn't? Do you see your network targeting more business or VFR (visiting family and relatives) travelers as you continue to emerge from the pandemic? What lessons has the pandemic taught you about its network and the mix of leisure and business travel?
DS: We were fortunate in that we went into the pandemic, as I like to say, at 95% leisure and 95% domestic. No one was ever banned from traveling in the United States; you could always travel. In April 2020, almost no one wanted to, but there were no rules in place to say you can't do it. We run an airline designed for people who pay with their own wallet. We don't have someone else paying for travel; they often want a nicer experience. We also knew we didn't have to redesign the airline as significantly, because we don't have so many airplanes flying internationally that can’t fly internationally in any large number and we didn't have a business-focused network. We, like almost everyone else, almost immediately grounded a substantial portion of the fleet when COVID hit. We grounded our 321s and our previous generation 319s and our 320s CEO aircraft, and just kept our 320 NEOs flying, which had the advantage of being the most fuel efficient aircraft we could fly.
It was March 2020 as we were trying to pull apart the schedule. We were too complicated an airline in terms of network design and crew, and as a result in terms of crew design. We had far too much of the network flying in three, four, and five day crew trips. And the more complicated the crew design, the more likely difficulties arise. The summer of 2020 was initially driven by the push that we don't know what's going to work, we don't know how demand is going to recover, we don't know what's gonna go or what's going to happen.
We basically built the airline around the idea that we would fly everything as either one day crew pairings or at most two day crew pairings, where the crew did one overnight. And when we started this, we had a lot of airplanes not being used very intensively. One of the ways we made that simple was to have 12 hours of rest for crews between one duty day to the next. We would get the plane parked at night and 12 hours later the airplane would start up again and the same crew who brought the airplane in would take the airplane out and continue the flight. So I'll give you an example: Florida is the most substantial state for Frontier, like it is for our two ULCC competitors. We now have three crew bases open in Florida: one each in Miami, Tampa, and Orlando. But when we went into pandemic, we had Orlando and we were just opening Miami, and we still have quite a few flights to the Gulf Coast of Florida. You can't, generally speaking, fly from Orlando to where we want to fly to the gulf coast and fly back to Orlando within one day. The maximum crew day for pilots under the FAR 117 crew duty rules is nine hours, and it's nine hours hard. If you are going to go to nine hours and one minute to fly the aircraft, you've got to land the aircraft so you don't get past that nine hours. So we schedule our crews to work no more than eight hours and 15 minutes. So we could not do those four legs in one day. Instead, you do two legs in one day and two legs the next day with the plane sitting 12 hours, or three legs in one day and one leg the next day and then the crew would continue onto something else the next day. We just started to think about the network from a very modular way so that we knew how it could be crewed.
We, unusually for an airline our size, have nine crew bases for 112 airplanes today. That's a lot of crew bases with a small number of airplanes per crew base, but what it allows us then is that flexibility to build flying out of the crew bases to make sure crews can complete their flying within one or two duty periods. And we've been able to make most of the flying in the airline work that way. There's been a few examples of things that we could not figure out how to solve, but we've been able to figure out most of them. And look, we've seen the benefits commercially. The benefit is if something's not working in a modular approach, you just take that bit of flying out and replace it with something else.
Look, we are fast growing, so we will grow into those crew bases. We have already announced we intend to open another crew base later this year in Phoenix. We have a lot of planes on order, over 230 aircraft on order. And with that much growth coming, that's going to be the continued opportunity to open new bases that makes us more of an attractive employer from a pilot and flight attendant perspective, and we're taking much better advantage of that with this approach. We've experimented here and there. We put in some additional leisure destinations last summer in the Denver network—more secondary, maybe tertiary leisure destinations in some ways. At the rate we grow we make mistakes all the time, the trick is just not to let them sit as mistakes for too long. If you're not making money, move on. But we went back to Anchorage last summer, which we pulled out when we were transforming to a ULCC because of too much competition. We went back in and we'll be back in the summer with twice a week service from Denver, where the airplane sits the 12 hours and the crew comes back with the airplane the next morning, and we do it on lower demand days each week, so we're not hurting utilization of our peak days of the week. It is showing much better signs for the summer already, partly because it was on sale earlier, and it is a destination customers tend to book earlier. [We have now dropped Anchorage because of fuel].
Where we have had most success I would say during the pandemic is we have further invested in both Orlando and Las Vegas bases. Las Vegas has been interesting through the pandemic. You have a governor in that state who's taken COVID pretty seriously overall, but Vegas attracts a type of customer on average who probably isn't as risk-averse. We've seen strong performance from Vegas, and during the pandemic we've become the third largest airline in Las Vegas overall. And Florida, with a governor who wants the state to be open, has had broadly strong recovery—notably in 2021 as we sort of saw the vaccines and recovery kick in last spring.
One of the challenges in getting customers back. If you're going somewhere where rules change every few weeks, why are you going to book a trip? Florida has been good because since last summer, everything's been open. So we've grown to a larger scale in Orlando, as I said, a lot larger than Denver this winter. We have 80 nonstop destinations from Orlando, including a successful launch and relatively rapid expansion of our international network in Orlando. The Orlando and Las Vegas story plus the modularity are my sort of success stories out of COVID.
JK: And my next question is how has the continued spread of the Omnicon variant changed airlines’ calculus for 2022? Have you scaled down flying destinations, and do you think you'll be on more stable footing once this passes?
DS: I'll repeat what you've heard on earnings calls this week. It's just another delay. The first quarter is going to be a lot weaker than we would have anticipated in October or November. You can see it. If you look at this week's TSA data, look at how low the screening numbers were this week, and there's been a real drop in demand in January that persists into February. We think things will improve from there. Cases are dropping and you can see evidence that more of the population wants to come to the conclusion that we have to just live with this. Full recovery will come when the vast majority of the population just believes this is another endemic disease that's out there. In reality, what the industry saw was a pretty healthy Thanksgiving and a healthy Christmas period. January and September are our two weakest months generally in a non-covid environment. They are good months for business travel, but they occur right after peak leisure travel periods, and the leisure travel you get people to make in January is incremental. Naturally, March is spring break, and will be stronger anyway. COVID is going to come down. We have a view similar to the other airlines. It's going to continue getting better from here. Look at everything else going on across the country; people want to get everything back to normal. I think travel just follows a little bit later than everything else, because there's this combination of concern about travel or planes themselves. And there's knowing that everything will be open. If you want to take a vacation trip in particular, it matters that everything will be reliably open. Why would you want to go to all the big cities in this country during the pandemic, even if you felt safe? You wouldn't be able to do all the things you normally want to do.
JK: In the United States, there are three main ultra low cost carriers‚—Frontier, Spirit, and Allegiant. There are definitely some similarities, but overall what differentiates Frontier from these other two competitors?
DS: I think the best way to talk about differentiation here is look at our tagline: “low fares done right.” We intend to offer extremely good value to customers and a product they want to come back to us again for, which means delivering them basically on time to their destination with their bags and getting them home the same way. I think we take that seriously. I told you about adding modularity to operational reliability. We got through 2021 without an operational meltdown. We are a low cost airline. Go find me the other airlines with truly low costs that managed to do the same; so that is one thing. I hate saying these things, because I don't know what tomorrow is gonna bring and this is an industry where I don't want to tempt fate. But I think that is really the difference.
The other thing is we tag ourselves Americans Greenest Airlines. We burn a lot less fuel today. We have made a lot of decisions, notably around our fleet but sort of around a mindset. You can fly a lot more. You can fly a lot more efficiently. You can burn a lot less fuel on your journey. If you choose to fly on an airline that is as efficient as we are. We fly 43% further on one gallon of gas than the average of the US industry. That's a huge difference. Is the difference between us Spirit and Allegiant? No, but we're more efficient then both of them. 68% of our fleet today is NEO aircraft. It’s the fastest adoption obviously on this continent of the NEO variant. The engines delivered the fuel efficiency they were supposed to deliver. The promise from CFM was 15%. We get 15% more efficient so there’s that. There is the seat density. We run the maximum seat density we can run on our airplane. We are more efficient because of that. We go for lightweight seats. We don't have power outlets, we don't have Wi-Fi, we don't have ovens, we don't have any of the other things that make plants heavier. It all adds up and yes it delivers a more efficient journey. And we are going to get better. In July this year we take delivery of our first A321 NEO. The new door configuration means the plane will have 240 seats. And so it's a wide body seat count on a narrow body aircraft. And on a per seat basis the 321 is much more fuel efficient than the 320. So this advantage is just going to keep growing. You get to fly on the youngest fleet in America. I think that is the combination. It is low fares done right, it is delivering that, it is the efficiency, it is the youngest fleet. Also yes you are right there's a long list of things that make us very similar. And we recognize that. The big opportunity for ULCCs is not competing with each other. It's the opportunity to stimulate markets and the opportunity to use our low costs to deliver low fare travel across more and more of the United States.
JK: The new startup US carriers Avelo and Breeze are going into semi-rural markets. Will you have a competitive response to these new carriers?
DS: The market has space for them. So honestly, we'll do what we're doing, and we'll keep focused on what we're doing. And they'll do what they do. And we'll see how they succeed. I think they are both interesting additions to the market. We will see how they do.
JK: We started talking about your background in the aviation industry. What advice do you have for young people trying to start a career in the aviation industry?
DS: If you find this industry interesting and you understand some of the basics of what we do—we're looking for people like that, we're constantly looking for people like that. I gave you my amazingly geeky, nerdy background; that's not the majority of people who come work in this industry. Like so many businesses, we're moving in the direction where analytical skills matter. If you want to come into management, the best opportunities exist if you're strongly analytical. Being insightful and incisive is also just a key part of it.
