CHICAGO, April 2 (Reuters) - U.S. no-frills carrier

Frontier Airlines is focusing on growing its network in

"high fare" markets like Seattle and Detroit at the expense of

its footprint in leisure markets such as Las Vegas and Florida

in a bid to lift earnings, its CEO told Reuters.

The Denver, Colorado-based ultra-low-cost carrier has failed

to report a profit in three of the last four quarters despite a

travel boom. Frontier's struggles, along with some other

discount carriers, has some analysts raising questions about

their business model.

Frontier CEO Barry Biffle pinned the blame on excess

industry capacity in key leisure markets that has depressed

airfares. Frontier's fare revenue per passenger fell 22% in 2023

from the previous year.

"What happened last year in Florida was the equivalent of

Costco, Sam's Club, Walmart, and Target all opening up on the

same block," Biffle told Reuters.

Frontier is trying to boost revenue by tapping into growing

demand for premium travel, adding more seats with extra legroom

and business fares targeted at small companies. Biffle said

demand for premium seats has been growing at a double-digit pace

and currently accounts for as much as 12% of the seats on

Frontier's flights.

These products also mark a shift away from the traditional

business model of ultra-low-cost carriers which offer a

no-frills experience at rock-bottom fares and charge heavily for

ancillary services.

With consumers more willing to splurge on travel, demand for

premium cabin has gone up. While U.S. carriers generally

do not break out revenue from different cabins, premium cabins

accounted for 39% of Delta Air Lines' ( DAL ) passenger revenue

last year, up from about 38% in 2022.

Delta told Reuters last year that it expected contribution

from premium cabins to increase by one to two percentage points

each year for the next several years.

Biffle plans to reduce the share of Vegas and Orlando in

Frontier's network by one-third by this summer and add more

flights to cities like Indianapolis, Seattle and Detroit where

it faces less competition from low-fare carriers and can charge

more.

"When we look at our route profitability, we make the most

money where we compete with legacies," he said, referring to

United, Delta and American Airlines ( AAL ). "Where we

don't make money is where we compete with Southwest, JetBlue and

Spirit."

Biffle expects the changes to boost pre-tax margins to a

range of 10% to 14% in 2025, up from about 1% last year.

Savi Syth, airline analyst at Raymond James, called

Frontier's margin target ambitious, saying the company would

need a big jump in revenue.

"It seems like the right strategy, but it might take time to

fully be realized," said Syth, who expects the airline to report

a pre-tax margin of 5% in 2025.

Biffle acknowledged limitations of some of these products as

Frontier serves fewer business-oriented markets. It is

overhauling its network to allow almost all of its planes to

return to their stations every night, with a goal to save $200

million in costs this year.

Frontier's shares have gained 34% this year, after falling

47% last year, and compare with a 2.3% decline in the NYSE Arca

Airline index.