Frontier Airlines Bets Big on Ultra-Low Fares

By late March of last year, Darcy Lundstrom knew she wouldn’t be boarding any of the flights she’d booked for April and May. The girlfriend getaway to Las Vegas, the vacation with her daughter to Orlando, Florida, and the visit with family in Fargo, North Dakota, all seemed pointless and risky once the COVID-19 pandemic had closed tourist attractions and public health officials preached the gospel of isolation.

So when Frontier Airlines emailed the Loveland resident and offered her $250 in bonus credit for the three itineraries she’d booked, on the condition that she cancel her upcoming trips and accept their $959.98 value in credit, she jumped at the opportunity. As a frequent Frontier customer and annual subscriber to the company’s Discount Den, which offers access to the airline’s lowest fares, she figured she’d have no problem logging some sort of travel within the credit’s two-year time limit.

Indeed, this past summer Lundstrom decided she had to see her family, and, in June 2020, she tried to use her Frontier credit to get a ticket from Denver to Bismarck. The transaction wouldn’t go through. She reached out to customer service and learned—for the first time, she says—that her credit had to be redeemed within 90 days of issue. It had expired shortly before her booking attempt. “That 90-day restriction was not listed in the original email,” says Lundstrom, who did eventually find it in small print in a subsequent email from Frontier. She failed, however, to persuade that customer service agent, or any of the others she called and messaged, to reinstate her credit. Her $1,209.98 was gone.

Hundreds of travelers registered complaints like Lundstrom’s on social media throughout the summer. One Facebook group called Frontier Airlines Petition For Compensation became a forum for livid passengers who claimed they were defrauded. Some, like Lundstrom, didn’t know about their credits’ 90-day expiration until they tried, too late, to use them. Others claimed that the credits allowed for only one redemption—meaning that if travelers didn’t use the entire dollar amount when they booked a trip, they inadvertently forfeited the remainder of their credits. Consumers also swapped strike-back tactics, which included emailing Frontier Airlines executives, petitioning credit card companies for refunds, and registering complaints with Colorado Attorney General Phil Weiser.

Douglas Conry of Pueblo did all three. He’d accepted a Frontier Airlines travel voucher for his April 2020 itinerary from Denver to Puerto Vallarta, but every time he tried to make future reservations to Mexico, he found that the country’s ban on incoming travelers prevented the system from processing international flights. Once reservations reopened, Conry discovered that his voucher had also passed its 90-day window of validity. Frontier never made clear that the voucher would expire in 90 days, Conry says, although he adds that the stipulation may have been made somewhere in the fine print. Conry spent weeks petitioning Frontier’s customer service agents for an extension. “One of them, a manager, actually told me that he was given very strict guidelines from corporate that once the credits expired, they were not to be reinstated.” The airline also thwarted Conry’s attempt to remove the charges from his Capital One credit card. Capital One had initially agreed to remove the charges but ultimately denied Conry’s request, he says, after Frontier convinced the bank it had made a good-faith effort to compensate him.

His complaint got more traction in Weiser’s office, which aggregated Conry’s report with similar tales of loss, frustration, and anger from more than 600 other infuriated travelers. “The complaints literally jumped off the page,” Weiser says. Since the beginning of the pandemic, his office has heard more grievances against Frontier Airlines than any other company.

Weiser couldn’t do much about the situation, though. Federal law gives only the U.S. Department of Transportation (DOT) enforcement authority over airlines—not states’ attorneys general. On September 1, 2020, Weiser asked then Transportation Secretary Elaine Chao to investigate the claims against Frontier. “I urge you to carefully review Frontier’s practices and, if you find such practices to be unfair or deceptive, to use your authority to protect consumers. My office is prepared to work with you to support a thorough examination of Frontier’s practices,” Weiser wrote. The DOT responded to the Colorado attorney general but ultimately proved unhelpful.

Undeterred, Weiser built a bipartisan coalition of 39 other attorneys general that has called on Congress to give them enforcement authority, along with the DOT, over airlines. “The law says that it’s up to the DOT to protect consumers and enforce safeguards, but if that proves ineffective, Congress can give parallel authority to the state AGs,” Weiser says. He cites antitrust laws as establishing precedent for distributing the enforcement authority between state and federal governments. Says Weiser, “I’d like to enforce some stuff that the DOT is supposed to enforce but doesn’t.”

Dated October 1, 2020, the attorneys general’s letter asked Congress to make federal relief payments contingent on airlines’ willingness to extend full refunds to passengers who canceled their travel because of the pandemic. Through the March 2020 Coronavirus Aid, Relief, and Economic Security Act, the airline industry received $60 billion for payroll support, and that act’s extension the following fall provided another $28 billion in emergency funds. “Yet during COVID-19, it was revealed that not all airlines are acting in a manner that is fair to consumers,” the attorneys general wrote to Congress. The renegade, they claimed, was Frontier Airlines, which accepted $170 million in federal grants and $183 million in loans.

Congress never acted on behalf of the consumers, as the attorneys general had urged, and so some passengers have sought redress through a class-action lawsuit alleging that the airline had breached its contracts with passengers. “Instead of fulfilling its obligations under federal law and honoring its passengers’ contractual rights, Frontier engaged in various schemes to avoid its obligation to provide refunds, including by issuing vouchers that it knew that customers could not use,” says Shanon Carson of Berger Montague, the Philadelphia-based law firm that’s representing the plaintiffs who, collectively, allege millions of dollars in losses. “This is an unfair business practice and a breach of the contract of carriage.”

Frontier Airlines denies any wrongdoing in its handling of passengers’ credits and refunds. “Throughout the pandemic, we have acted in good faith to care for our passengers compassionately and fairly,” says Jennifer De La Cruz, Frontier Airlines’ director of corporate communications. “At all times we have remained in full compliance with DOT rules and regulations governing flight changes, cancellations, and refunds. We strongly dispute any suggestion to the contrary.”

It appears as if Frontier doesn’t expect disgruntled passengers to dim its post-pandemic future. On the contrary, Frontier is betting that surging demand from leisure travelers, which represent 89 percent of the airline’s customers, will send its financial standing to unprecedented heights.

In March of this year, the company raised $266 million in an initial public offering (IPO) that swelled the company’s value to $4 billion. “We design our route network to capture low-fare demand among leisure travelers and our three largest bases are Denver, Orlando and Las Vegas, which draw a significant proportion of leisure travelers,” Frontier Group Holdings wrote in its filing with the U.S. Securities and Exchange Commission. “We believe the restrictions and health concerns that have depressed demand during the pandemic are also likely to lead to increased levels of pent-up demand for leisure travel once the effects of the pandemic decrease. As a result, we expect to see a significant recovery in our performance as the U.S. market recovers.”

The pandemic isn’t the first time Frontier has incensed consumers, only to soar on unimpaired. Back in 2016, the airline faced a public relations disaster after December storms hammered the nation but only Frontier passengers waited for hours—and some longer than one day—in Denver to reclaim lost luggage or continue their itineraries beyond the airline’s hub. Then in May 2020, the airline offended passengers, and even members of Congress, when it launched its “More Room” promotion, which gave travelers the option of paying extra to leave the middle seat beside them open. (Southwest, by contrast, had blocked out middle seats as a matter of course.)

Such faux pas rise above the routine inconveniences that travelers have come to expect when flying Frontier, which promises ultra-low fares, and not much more. Cramped, uncomfortable seats; baggage charges; flight delays and cancellations—they’re all typical of the Frontier experience. Hence the airline routinely ranks at the bottom of customer satisfaction surveys and has even inspired a 1,700-member Facebook group called I Hate Frontier Airlines.

“There are so many wonderful things about Denver and Colorado,” Lundstrom says. “And for Frontier to be home-based here, it’s just embarrassing. I wish they were from anywhere but here.” Yet she continues to consider Frontier’s fares when she shops for flights. Which raises the question: What would motivate Frontier to stop mistreating its passengers? Perhaps the airline has discovered that ultra-low prices have the power to lure people back even after they’ve sworn to quit Frontier forever. Maybe the airline has learned it can kick sand in passengers’ eyes and they’ll still keep coming back for more.

There was a time when Frontier Airlines epitomized the glamour of air travel. “Our passengers were treated as guests,” says former Frontier Airlines pilot Billy Walker, who flew Frontier planes from 1967 to 1986. Travelers wore suits, dined on lobster, and sipped Champagne.

Frontier captains were among the best in the industry, many having trained to become military pilots during World War II. Because the Stapleton International Airport–based airline served destinations across the Rockies, its pilots had to be confident navigating blizzards, mountain turbulence, and icy equipment. “Passengers with the original Frontier could feel secure in reaching their destination safely,” says Walker, citing the company’s record of safe takeoffs and landings, one of the best in the business at the time. Today, an array of museums and fan sites attests to the cult popularity of the first incarnation of Frontier Airlines.

That story began in June 1950, when Arizona Airways, Challenger Airlines, and Monarch Airlines merged to create Frontier, a regional carrier that focused on Rocky Mountain cities from Billings, Montana, to El Paso, Texas. But its economic strength suffered in the 1980s, prompting People Express Airlines to purchase it in 1985, followed by Continental Airlines just one year later.

Nearly a decade after that, executives from the original Frontier Airlines hatched a plan to reincarnate the company by snapping up the Stapleton gates that Continental had recently abandoned. From 1994 to the early 2000s, Frontier 2.0 enjoyed growth and profitability—and the debut of animal mascots that continue to identify the brand today—but its decline during the Great Recession attracted yet another buyer.

In 2009, Republic Airways Holdings began Frontier’s transformation into a low-cost carrier that charged fees for baggage and snacks. The metamorphosis was complete after Indigo Partners, a private equity firm that counted former Spirit Airlines chairman of the board William Franke as managing partner, acquired Frontier in a $145 million deal in 2013. The following year, Franke hired Barry Biffle, Spirit’s former chief marketing officer, to be Frontier’s president.

“Barry is an industry innovator in the ultra-low-cost segment who, importantly, also recognizes the unique opportunity we have to create the first customer-friendly and customer-focused ultra-low-cost airline in the United States,” Frontier Airlines’ CEO, David Siegel, told the Denver Business Journal in 2014. Since then, Frontier customers have apparently received less flattery than Siegel projected; passenger complaints have risen in tandem with Frontier’s profit margins. Between 2015 and 2019, the airline doubled its ridership to more than 22 million passengers and ballooned its net income to $251 million on operating revenue of $2.5 billion. That’s due, in part, to Frontier’s adoption of thinner, ultra-light seats, which save the airline millions of dollars in fuel costs and allow the airline to pack more passengers into its Airbus jets than most other U.S. carriers. Those passengers, apparently, aren’t delighted with the resulting experience: Frontier ranked last among low-cost airlines in the 2019 North America Airline Satisfaction Study.

Frontier’s growing ridership and profitability suggest that passengers care more about low fares than their personal comfort or even reliability: According to Bureau of Transportation Statistics data, Frontier was last among U.S. airlines for on-time performance in 2019. So why would the airline bother with good customer service if price is the main driver for consumers?

Cost is actually an essential component of consumer satisfaction, according to Jon Picoult, a customer experience expert. “The low price offered by a discount retailer can make customers feel good, because they’re proud to have snagged a great deal,” says Picoult, the founder of Watermark Consulting and the author of the forthcoming book From Impressed to Obsessed: 12 Principles for Turning Customers and Employees into Lifelong Fans. People who identify as bargain-lovers often embrace flawed products if they know exactly what they’re getting: Witness the shoppers that gravitate to IKEA’s “as-is” section of damaged goods offered at super-low prices.

Frontier Airlines has enjoyed a similar appeal. “It doesn’t promise a regal experience,” says Henry Harteveldt, a travel industry analyst. “It’s very upfront about the spartan kind of airline that it is. And the unbundled pricing gives the consumer more choice and control over how they spend their money, because they can purchase only the things that they feel add value to their trip.” Market studies conducted by Harteveldt’s firm, Atmosphere Research Group, have found that nearly 70 percent of leisure travelers actually prefer the unbundled pricing model.

But full disclosure is essential. When customers believe they’re promised one thing (like credit for travel within two years) but receive another (a voucher that expires in 90 days), they feel swindled—and may alter their purchasing and referral habits accordingly, Picoult says. “Passengers who felt victimized by an airline’s COVID-era refund policies,” he adds, “will conceivably steer their business away from the offending carrier where possible.”

That “where possible” caveat is key, because travelers face limited choices among carriers, particularly on international routes and among smaller American cities that are monopolized by just one airline. Such oligopolies prevent consumers from withholding their business from certain companies, says Anastasiya Zavyalova, a Rice University researcher who studies reputation management. When scandals involve a company’s capability or integrity, consumers often stop buying from those companies. “But when there are fewer choices, customers often go for convenience and price rather than values, and we see that with the airlines specifically,” she says. “The airlines are pushing the limit [on customer satisfaction] knowing that if customers don’t have any choice, they can get away with it.”

Unlike travelers from other cities, where air service may be dominated by one or two carriers, Coloradans enjoy an unusually wide range of choices. Three major airlines—Frontier, Southwest Airlines, and United Airlines—have hubs at Denver International Airport (DIA), and that competition often lowers average fares from this destination, Harteveldt says. Thus, even people who despise Frontier and refuse to fly with the airline end up benefitting from its existence in Denver, if only because it reins in fares on the carriers that they do book out of DIA.

Harteveldt predicts an uptick in leisure travelers this summer. Without the business travelers United is accustomed to serving, the airline is fighting to attract the leisure passengers that are starting to resuscitate the industry. This past April, United launched a Denver campaign of attack ads against Southwest Airlines (“United: Cozumel nonstop. Southwest: Cozumel eventually.”) United could also increase the number of seats it offers through its Basic Economy program, which it launched to compete with Frontier and Southwest by trimming costs and traveler conveniences.

The competition for leisure travelers has become so robust, in fact, that new carriers are entering the sector for the first time since 2007, when Virgin America began operations. In April, Avelo Airlines began operations out of Burbank, California, with fares starting at $19 for one-way flights. Breeze Airways, the brainchild of JetBlue founder David Neeleman, launched in May. Both newcomers will target leisure travelers who are eager for post-pandemic family visits and vacations. And both plan to exploit smaller, secondary airports (such as Grand Junction, now served by Avelo) that the biggest players overlook.

Along with increasing competition, Frontier will face increased scrutiny as a publicly held company. “IPOs sometimes force companies to act more mature than they did when they were privately owned,” Harteveldt says, “because institutional investors like JP Morgan and Deutsch Bank are extremely thorough in their research and will look at DOT complaints and other signs of trouble that go beyond the financials.” Such misdeeds become red flags that typically weaken a company’s financial reputation, Zavyalova says. Indeed, investors’ fault-finding tendencies may explain why Picoult noted a discrepancy in the stock value of airlines with high and low customer satisfaction ratings. According to Watermark Consulting’s Airline Customer Experience ROI Study, carriers with the greatest customer satisfaction saw double the cumulative return on their stocks’ values compared to airlines that passengers rated poorly.

If Frontier doesn’t strategically improve its customer experience, Picoult says, it risks disappointing investors—as Ireland’s Ryanair, another ultra-low-cost carrier, discovered after years of mistreating its passengers. “Ryanair CEO Michael O’Leary once called his customers idiots and floated the idea of charging people to use the lavatory,” Picoult says. By 2013, bookings fell and the airline shocked investors with its first profit warning in a decade. Only then did O’Leary resolve to improve Ryanair’s customer experience, saying, “We should try to eliminate the things that unnecessarily piss people off.”

Ryanair’s example suggests that consumers do, in fact, have the power to force airlines to be nice—but only if they make principled purchases. In the end, Frontier’s cheap fares may prove irresistible even to passengers who believe the airline stole from them.

Douglas Conry won’t be among them. “I am not going to give them any more money,” he says. “All they care about is making a profit. They don’t care about the consumer. So, no, I will not fly Frontier ever again.”

His boycott will begin immediately after his January 2022 trip to Puerto Vallarta, which he eventually succeeded in rebooking with reinstated Frontier flight credits. Then he remembers his 55,000 frequent-flier miles. “I might use those,” Conry says. He’s also got a $200 credit for future travel with Frontier, and he doesn’t want to let the company keep that money. Then, finally, he’ll walk away.