All in the [Fare] Family

Frontier has launched its new “fare families” – and taking a cue from the recent inauguration festivities – there has been ton of PR and a slew of Rah Rah press about this. The system is very reminiscent to Air Canada’s structure of different bundles of goods for different prices – which is no surprise since Sean Menke (Frontier’s CEO) was a former Air Canada Exec.

If you need a Frontier AirFairs Primer:

Economy Fares: Lowest price, seat assignment 24 hours from departure, bag fees ($15 for first bag, $25 for second bag), Change fees, miles

Classic Fares: $20 higher than Economy, Advance seat assignment, 2 bags free, Direct TV included, lower change fees, 125% miles

Classic Plus: $60+ higher than Economy, Fully refundable, no bag fees, no change fees, free snacks and beverages, 150% miles.

A few notes, observations and comments:

• Frontier notes with obvious pride that almost 40% of travelers have chosen to pay more to the “Classic or Classic Plus” levels over the Economy. However – look at the pricing: Classic is priced only $20 more than Economy, however you get your bags for free, which is a $15-$40 value. As a result – most people with luggage will only be paying $5 for an advanced seat assignment, Direct TV and 25% more miles. The real key here is how many people checking at least 1 bag upgrade?

• Sabre estimated 12 – 18 months to implement this. Wow. It’s of interest to us that Frontier still uses Sabre as their pricing engine, and Datalex as the shopping engine / Internet Booking Engine (IBE).

• It’s no wonder that Sabre recently bought EB2 in order to shore up shopping and IBE capabilities. We’re not sure if EB2 is enough to get Sabre over the hump though – seems like they have a long way to go to get back to being competitive in this space.

In the end – FMV bets that several of the technology companies will rapidly try to extend their reach to avoid just this type of situation. Sabre needs to greatly improve their shopping / IBE offerings in connection with their PSS / host offerings. It’s a pretty glaring weakness in the online channel that is so important.