MIAMI — Frontier Airlines has been fighting to control distribution costs for several years now. The latest cost-cutting move saw the carrier switching to a new reservations management system internally over this past weekend and also removing itself from participation in the Airline Reporting Corporation (ARC) accounting partnership.
ARC allows airlines and travel agencies to settle ticket sales quickly and efficiently, streamlining the booking process. With Frontier no longer participating in the ARC system travel agents will be required to book via a dedicated web portal rather than a traditional agency interface.
For consumers the net effect is that many online travel agencies (OTAs) will now only show the lowest, non-refundable fares. More flexible options will require booking via the Frontier website. This approach echoes efforts made in 2013 by the company to drive more bookings to its direct channels.
At that time benefits like frequent flyer points earning and complimentary seat assignments were generally restricted to the direct sales channel rather than third-party bookings. In some cases, those tickets were also subject to higher fees for certain ancillary products such as carry-on bag fees. Moreover, because of the shift to the Navitaire platform last weekend, the major OTAs such as Orbitz, Expedia and Priceline had to remove Frontier flights from their offerings during the migration. They are expected back online early this week once the OTAs update the integration settings to Frontier’s systems.
Distribution costs are a touchy subject for airlines. Low-cost carriers like Frontier are perhaps a bit more aggressive in these battles but even American Airlines has had a pitched battle with Orbitz over the years whereby the carriers flights have come and gone from the OTA’s listings. Frontier is a smaller carrier and its products will still appear for the price-sensitive consumers shopping on the OTAs which shouldn’t hurt bookings too much.
Then again, most airlines seem to prefer business travelers over leisure customers because of the generally higher yields, so the overall value proposition of Frontier’s move here remains to be seen. The carrier has also announced frequent and significant changes to its route map, adding and dropping cities and routes with higher than normal frequency over the past few months. These changes can also make it difficult for business customers to rely on the carrier for service.
But, in the end, these moves mean lower costs for the company. And as it continues its migration towards the ultra-low-cost carrier (ULCC) model that’s exactly what Frontier is looking for.