Anyone looking to call Frontier Airlines now needs to check their available phone minutes before dialing.
The Denver-based ultra-low-cost carrier last month did away with its toll-free customer service number in favor of a Salt Lake City phone number — a long-distance call for any landline user outside that part of Utah.
The airline says the change saves about $160,000 per month — which equates to about $1.9 million per year — which can be passed along to customers.
“We’re passing along the savings directly to our customers,” airline spokesman Jim Faulkner said. “Also, we find that most of our customers use their cell phones with free (long-distance) calling plans. So far, we haven’t seen a lot of feedback on the switch to this new number, and it’s been in operation since the end of June.”
The airline has taken several cost-cutting measures since beginning its conversion to the ULCC model, including outsourcing about 1,160 below-wing baggage handling and customer reservations jobs. It also announced last week the creation of “The Works” — a flat-rate bundle of services designed to “end the nickle and diming” of which the airline has been accused in the past.
For an airline that is focused on cost cutting, eliminating toll-free numbers makes sense, Airline Weekly analyst Seth Kaplan said.
“This is the airline saying: ‘Why should we pay for something a lot of people don’t care about anyway anymore?’ Of course, some people will care,” Kaplan said. “But the ultra-low-cost model, which they’re mostly adopting, is all about not accepting any costs unless those costs clearly drive revenue, and this is one where they probably had a hard time figuring out where it was translating to meaningful revenue.”
Frontier president Barry Biffle admits the ULCC model isn’t for everyone. Instead, he said, it’ s aimed at budget-conscious customers who want to travel on the cheap.
However, there may be a point that the cuts run too deep and put the airline at risk of alienating several target customer groups, said Stephanie Brooks, director of marketing of communications at University of Denver’s Daniels College of Business,
“It’s cutting off access to people who are still using landlines, people who are older, or even those who are lower income and may not have a lot of minutes on their cell phone,” Brooks said. “It’s creating an unnecessary hurdle for people who may already be economically disadvantaged.”
Cost-cutting measures such as this are part of Frontier’s goal to decrease its cost per available seat mile, or CASM, to less than 6 cents, excluding fuel, Faulkner said.
CASM is an industry-wide measurement used to determine airline profitability, and is calculated by dividing the operating costs of the airline by the cost of one seat flying one mile, whether it is filled or not.
For example, a Frontier A320 with 168 seats that flies 1,000 miles has 168,000 available seat miles.
According to figures Biffle has previously presented publicly at airline industry events, Frontier’s 2013 CASM, excluding fuel costs, was 7.89 cents, which decreased to 6.69 cents in 2014.
An Airline Weekly estimate, using data from the U.S. Department of Transportation and industry market intelligence service Diio Mi, calculated Frontier’s first-quarter CASM at 9.8 cents, with fuel costs included.
Based on current fuel rates, that CASM would decrease to about 6.5 cents without fuel included, Airline Weekly estimates.
Although many U.S. airlines still have toll-free numbers, other ULCC carriers, such as Spirit Airlines and Allegiant, have opted to discontinue their 800 numbers.
This trend could be sending mixed signals, Brooks said.
“If you’re trying to attract people who are budget conscious or on a limited income — they could be college students, lower income working people and elderly people — it’s sending a conflicting message that ‘we are the airline for you, but we’re not here for you when you need us,’ ” Brooks said. “It’s a cost savings that on its face seems like a good idea, but it’s really going to hurt customers in the end.”