A couple weeks ago, Frontier announced that it would reduce benefits for those who book flights through third parties. Reaction was all over the map with some saying it was great and others saying it was terrible. In my mind, this is a very clever move though it doesn’t come without risk.
Those who have booked travel on Frontier’s website know that for every itinerary, there are three fare categories – Economy, Classic, and Classic Plus. I’ve written about this bundling strategy and how I like it before, but there is a problem. You can’t see these packages anywhere but on FlyFrontier.com.
Travel agents can manually sell the higher packaged fares but it’s a pain. The bigger issue, however, is that online travel agents simply don’t show the option at all. As always, those sites are designed to just show the cheapest possible fare and that’s it.
But of course, people use these sites, and Frontier wants to still be a part of them. So it came up with a very creative solution to the problem at hand.
Damaging Full Content Agreements
Many airlines have been forced to make deals with the devil. In this case, the “devil” is third party global distribution systems (GDSs). In the early days of the internet, airlines started to offer web-only fares and the GDSs started to panic. If they couldn’t push the lowest fares to people, then they would start losing relevance. So they came up with a plan that is today often called a “Full Content Agreement.”
In these agreements, the GDSs agree to charge lower rates to the airlines in exchange for an agreement to get access to every fare (excluding things like corporate discounts, of course) for distribution to the public. The airlines signed on because the reduction in fees made it worthwhile, but the GDSs have used this as a way to hold airlines hostage.
While airline websites continue to evolve and show different ways to sell air travel, the GDSs stick to the same old tired price-and-schedule display that really does a great disservice to travelers who are increasingly looking for better value and not just cheap fares.
Getting Out of the Chains
These agreements hamstring airlines, but what Frontier has done is looked at ways around them. Now, you will get the same cheap fare whether you book on FlyFrontier.com or on any third party site as required, but what you get for that fare will change. If you book through a third party site, you won’t get a seat assignment until check in, you will only earn half the frequent flier miles, and fees including change fees are higher. For example, change fees on lowest fares are $50 if booked at FlyFrontier.com but $100 through other channels.
This means Frontier can honor the Full Content Agreement while still finding a way to push people to book directly, where the airline can save almost $25 per ticket on a simple roundtrip connecting domestic itinerary. Clever, right?
The Risks Involved
But what’s the risk here? Well, in their usual fashion, third party sites don’t disclose much beyond price and schedule. It’s useless for doing an actual comparison. I went to Travelocity to try to book a ticket on Frontier and it didn’t tell me any of this stuff. All it said on the seat selection screen was “Seat Selection Unavailable. Contact the airline to request your seats.” Right, but when you call the airline, you will be told you can’t do it. (At least Orbitz shows a seat map that shows all seats as being “priority” and not for basic assignment.) And nobody said anything about earning reduced frequent flier miles.
The risk is that there will be customer service issues for those who find that they aren’t getting some of these benefits they could have had if they booked directly. Those people might be mad when they find they can’t reserve a seat in advance. But for Frontier, an airline that is really pushing forward as an ultra low cost carrier, this is a necessary change. It can’t keep paying the incredibly high GDS fees, but it also can’t afford to just turn that spigot off immediately. Instead, it can use this plan to encourage people to book directly, slowly shrinking the number of people who don’t.
There will be an impact with corporate travel agents as well here especially since they rely on their GDSs for client reports. But there is away to book directly at FlyFrontier.com and designate the travel arranger. So that blunts the impact a bit. It will still be a concern.
In the near term, this could result in a spike in complaints, but I don’t see a better way to do it. They can’t charge more on third party sites, so this plan is the best option out there when it comes to reducing dependence on those very expensive distribution options.
