Monday Business Roundup

Frontier Airlines Continues to Flourish

By Richard Martin, 5-21-07

Like a caterpillar morphing slowly into what one hopes will be a butterfly, the restructuring U.S. airline industry continues at its slow pace. United Airlines said last week that it will trim domestic flights again this year, reducing its “mainline domestic flight capacity” by about 2 percent. While United remains the largest carrier at Denver International Airport, it faces severe competition from low-cost carriers like Southwest Airlines and Denver-based Frontier Airlines. “Clearly, we’re under pressure in Denver,” United’s chief revenue officer John Tague told reporters last month, “and we expect that to continue.”

Meanwhile Frontier continues to grow even as it cuts back on select under-traveled routes on the West Coast like its Los Angeles-to-San Francisco flight, which it will drop this summer. Last week Frontier began flying from Memphis to Orlando. Along with its short-hop subsidiary Lynx Aviation, Frontier plans to expand service along the Front Range and to other Rocky Mountain destinations, sparking something of a bidding war as cities compete to lure direct Frontier flights from Denver. Durango is offering the airline an incentive package totaling $257,500, while Sioux Falls, S.D., is putting up $250,000.

Meanwhile Frontier plans to inaugurate its first flight off the North American mainland, applying for federal approval to start non-stop service from Denver to San Jose, Costa Rica.

In other business news:

-- Angry investors could finally see some of their money back this fall from the “market-timing” engaged in by mutual fund traders at Janus Capital Group Inc. and Invesco Funds Group. Four years ago New York State attorney general began an investigation into the mutual fund industry that resulted in large fines including a combined $425 million from the two Denver-based investment houses. The Securities and Exchange Commission is due soon to finalize plans to divide up the money paid by the two companies among harmed investors.

-- A pair of prominent Aspen attorneys could be looking for other lines of work soon if the Colorado Supreme Court chooses to disbar them. A patent dispute between Alan Feldman and Jeffrey Wertz, of the Allen, Wertz and Feldman law firm, and Barker Gang Garage owner Dennis Barker, who filed a grievance against the lawyers in September 2005, is expected to result in a formal complaint from the Supreme Court as early as this week. Disbarment is one possible outcome.

-- Another investment scandal unfolding in Denver could result in the loss hundreds of millions of dollars in “1031” transactions, or tax-deferred real-estate exchanges. The The Richmond, Va.-based 1031 Tax Group filed for bankruptcy last week, a year after acquiring Denver’s Investment Exchange Group, which acts as an intermediary for such deals. Tax-deferred exchanges, which often look like any other real estate sale except that no capital gains tax is paid, have become increasingly common over the lat 20 years.

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