Frontier Says Its Online Booking Fee Is “Optional” — But Avoiding It Costs $25 At The Airport

Several ultra low cost airlines charge online booking fees when they sell tickets. That seems strange – surely it saves them money to sell tickets over the internet rather than in person! – but there are fees for everything, so why not?

Frontier calls this ‘convenience fee’ for booking tickets online a ‘Carrier Interface Charge’. It’s an extra fee to interface with the Frontier Airlines website for the purpose of giving them money in exchange for transportation.

• Carrier Interface Charge: Up to $23 per passenger, per flight segment (Non-Refundable)
  • The standard fares we display online may include a charge per passenger, per segment, that is assessed on tickets purchased through the website
• • The Discount Den fares we display online may include a charge per passenger, per segment, that is assessed on tickets purchased through the website.

In some sense this shouldn’t matter to the passenger. It’s part of the total fare for the trip. That’s what you’re making the purchase decision on.

The reason they do it is tax arbitrage. Any money on a ticket that can be moved out of the base fare and into fees isn’t subject to the federal 7.5% excise tax on domestic airfare. The trick, though, is that in order to do this the fee has to be optional. So checked bag fees, seat fees, and anything else you can avoid by not taking advantage of the service isn’t subject to the tax.

In other to do the ‘online booking fee’ trick, the airline has to offer a way for the passenger to avoid it. And the way they do this is to offer ticketing at the airport.

• Almost nobody does this. You have to actually travel to the airport, if you drove you have to pay for parking, and then you have to stand in line.

• You’re going to be behind pretty much everyone trying to check in for a flight. They may offer only limited hours. And the staff there may not even know how to do what you need. Often they may just tell you to book online.

• But the option exists, which makes the fee optional.

Except… Frontier has also been charging a fee to purchase tickets at the airport! In fact, one customer complained to the Department of Transportation about it, and Frontier confirmed to DOT that their policy is to charge $25 for airport bookings.

Frontier states $25 booking fee at airport is valid
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u/YankeePride11 in
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Sometimes, though, the airline will acknowledge that the fee gets charged in error.

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The airline outsources airport staff to contractors like Menzies, Airport Terminal Services, UNIFI and G2. Many of these are just lowest-cost bidders. My sense has long been that you don’t hire Menzies unless your primary consideration is cost rather than quality of service. That’s expected of Frontier! But it also means you may get inconsistency.

The dirty little secret of the airline industry is that U.S. law encourages airlines to charges higher fees rather than fares, indeed to find new ways to add on fees like checked bag fees and seat assignment fees.

• Members of Congress frequently rail against airline fees
• Yet do nothing about them – refusing to even recognize that it’s their legislation that helps create the incentives behind the fees in the first place.

Frontier Airlines kept $5.4 million in TSA security taxes for themselves that they charged customers for, when the customers did not travel. They didn’t turn the money over to the government. And they lost in court over it.

I suspect playing fast and loose with the rules in their favor may not ultimately end well for them here, too. Charging passengers for in-person ticketing to avoid the fee for web ticketing seems ripe for a class action lawsuit. It also seems like tax fraud.

It’s time to end the differential tax treatment of fares versus fees. That just creates bad incentives. I have no real opinion on the optimal level of taxation. Airlines are heavily taxed (although tax-loss carry forwards from bankruptcy are a separate issue) but that’s also just part and parcel of so much of aviation being government-provided and subsidized. Regardless of the level of tax chosen, there’s no reason to create market distortions with the distinction between fares and fees.