Travelers looking for a cheap flight might think they’ll get the best deals by purchasing tickets from sites such as Expedia (NASDAQ:EXPE) or Orbitz (NYSE:OWW), where they can compare prices as they shop. But as airlines try to entice customers away from such online travel agencies, you might find that the best deals are located on the websites of the airlines themselves.
That’s certainly how Frontier Airlines, a subsidiary of Republic Airways Holdings (NASDAQ:RJET), hopes you will feel following a series of changes it introduced Wednesday. Frontier hopes to deter customers from purchasing flights through outside vendors — which often charge airlines $10 to $15 per ticket in commission — by not assigning such customers a seat until they check in, charging them more in fees and only rewarding them half the frequent flier miles.
Concurrently, Frontier is also lowering the number of frequent flier miles needed for a free flight to 5,000 in an effort to promote brand loyalty.
And Frontier is not alone in this fight. The first salvo in the battle between carriers and online travel agencies was fired by Southwest Airlines (NYSE:LUV), which withholds its fares from third-party sites. AMR Corp.‘s (PINK:AAMRQ) American Airlines followed Southwest in December 2010, when it prevented Orbitz from selling tickets for American or even displaying its fares in response to the site’s failure to list possible extras and upgrades. Following AMR’s move, Expedia made fares for American difficult to find before all three parties reached an agreement.
Other carriers, JetBlue Airways (NASDAQ:JBLU) and Spirit Airlines (NASDAQ:SAVE) among them, have been less confrontational while seeking to lure customers directly to their websites with coupon codes for lower fares.
For many airlines, the decision to limit sales from third-party sites follows a difficult cost-benefit analysis. While online travel agencies are ultimately costlier for the carriers, they still provide a bulk of total ticket sales.
– Ryan Hauck, InvestorPlace