Frontier Airlines just announced something that’s quite surprising on the surface. In the US we have airlines offering various degrees of services included with ticket costs. On one end of the spectrum you have Southwest, which offers passengers two free checked bags, and doesn’t charge any ticket change fees.
On the other end of the spectrum you have Frontier and Spirit, which charge for everything, ranging from seat assignments to carry-ons.
Frontier Airlines is lowering change and cancelation fees
On the surface, Frontier’s latest announcement comes as a surprise. Frontier Airlines has announced that they’re greatly reducing ticket change fees. Frontier says they’re doing this because they want you to book with confidence.
Here’s how Frontier describes the changes:
While the big guys are increasingly penalizing their customers with high fees to make changes, Frontier is reducing the cost. In fact, if you are making changes 90 days or more ahead of travel you will pay NO FEE to make a change. If you want to make a change between 89 and 14 days, you’ll pay a reduced fee of only $49. If you are making a last-minute change less than 13 days before travel, it will be our normal $99 fee change.
Here’s a chart with their new fees:
As you can see, Frontier is completely eliminating change and cancelation fees 90+ days prior to departure. Between 14 and 89 days of departure, the fees are roughly being cut in half. Then the fees stay the same when changes are made within 13 days of departure (Frontier has historically charged $99 for any ticket changes or cancelations).
In theory, it’s logical for an airline to have reduced change and cancelation fees if making changes in advance. That’s because if you cancel early, the odds of the airline reselling the seat are quite good. Somewhere around 90% of domestic airline tickets are booked within three months of departure.
What’s Frontier’s real motive here?
Frontier Airlines is bucking the trend by lowering fees right now. Are they making this change truly because they think they’ll be able to get more customers thanks to this policy? Personally I’m skeptical of whether or not that’s the case, or at least am skeptical of whether or not this is their primary motive.
You can definitely differentiate yourself by not charging fees, as we’ve seen from Southwest. But at the same time Frontier charges fees for just about everything else, so…
What’s Frontier’s real motive here? My guess is that they do hope to capture some more advance bookings using this policy. But more importantly, I think the real motive here is that Frontier relies on fees to make money. Their base fares are really low.
Let’s say someone books a $20 ticket four months in advance. They decide they’re not going to take the flight anymore, but they have no incentive to cancel, since there would be a $99 fee to cancel a $20 ticket. They’re likely to just no show, and the seat will go out empty.
I imagine on a full flight, Frontier could get significantly more revenue if they could resell that seat. Not only could they probably get a $20 fare (or better), but they are also likely to make more money in fees from someone actually taking the flight (checked bag fees, carry-on fees, seat assignment fees, buy on board fees, etc.).
This is a positive move on the part of Frontier, and I commend them for it. Maybe I’m a skeptic, but my guess is that their primary motive here is actually increasing revenue by lowering these fees. Their fares are so low that it’s not even worth canceling tickets when there’s a $99 fee. So by being able to resell the seats they have better odds of having someone actually fly with them, which gives them access to more ancillary opportunities.
What do you make of this move by Frontier?