Comments on: Unintended Consequences from Frontier

By: ross2308

ross2308 — Wed, 07 Jan 2009 01:55:52 +0000

I am so glad you posted this – I've been semi-curious about this all day and the way you summed it up was just perfect. My initial reaction was "fucking airline industry" but clear Frontier did the "right" thing here – amazing that this isn't being reported more straight forwardly – then again the media just loves to slam the airlines these days.

Thanks Brad, great post.

By: Michelin Jeanty

Michelin Jeanty — Wed, 07 Jan 2009 01:55:52 +0000

This is ridiculous. Someone srew up badly here. I don't care how much a company owe, to hold its cash flow is insane. Is there any law that prohibit this kind of vicious behavior? Is there some type of agreement that allow this? It has to be.

By: John Minnihan

John Minnihan — Wed, 07 Jan 2009 01:55:52 +0000

The unanswered question is whether First Data can legally do this. I'd love to see Frontier's contract with them - since this is going to BK court, perhaps we *will* see it.

T&Cs either allow this or they don't. Which is it? Frontier has stated that FD "unexpectedly..." did this. Nowhere was it stated that this change was in violation of the contract's T&Cs.

If the T&Cs allow for this type of "unexpected" material change, I'll bet that Frontier isn't the only airline that will face this issue. Who's next?

By: BlackSwan

BlackSwan — Wed, 07 Jan 2009 01:55:52 +0000

This is nothing new for First Data, at my previous job they did the same thing and put the company out of business. They said they wanted to guard against chargeback risk, but 4 years later, the possibilities of chargebacks are over, and that money has "disappeared".

By: steve_bergs2127

steve_bergs2127 — Wed, 07 Jan 2009 01:55:52 +0000

You could go back a step in this little saga. On the public radio show Marketplace last night, they reported that First Data's action was caused by some financial analyst who downgraded his assessment of Frontier's creditworthiness. So this analyst caused the bankruptcy filing and, possibly, your little visit to "airport hell."

By: bfeld

bfeld — Wed, 07 Jan 2009 01:55:52 +0000

The real “entertaining thing” will be when we find out that the analyst got his “analysis” from a 23 year old “analyst” who has already spent over 100 hours this week playing with Excel models. At least I’m home now.

By: Dave

Dave — Wed, 07 Jan 2009 01:55:52 +0000

I wonder whether First Data got burned in the ATA debacle because they (ATA) actually did stop flying. All those customers that had tickets that weren't honored would process chargebacks to try and get their money. If so, that would explain the behavior – essentially the credit card processor is left holding the bag if an airline actually shuts down.

By: bfeld

bfeld — Wed, 07 Jan 2009 01:55:52 +0000

While I’ve flown a zillion miles on United I get tired of spending 3x the price for a ticket so I’m happy to fly Frontier whenever it’s convenient. Even better, I love flying Southwest!

By: alek

alek — Wed, 07 Jan 2009 01:55:52 +0000

Dave's implication is correct - the credit card company is exposed if the airlines goes under because they are then on the hook for the chargebacks. So First Data's behavior makes sense (if they deem the risk has increased) and so does Frontier's response to "freeze" the current business relationship.

As a fellow Republic of Boulder'ite, I also like Frontier (my kids love the animal tails and Direct-TV), so it would be sad to see 'em really go under. Plus I have already have travel booked in May (not too worried about that one) and August (things could change by then). And we use their Branded credit card for the miles.

I thought you were a Premier Exec 1K Global Services Big Cheese on United ... so how come you are flying Frontier Brad?

By: Brad Feld

Brad Feld — Mon, 14 Apr 2008 19:25:04 +0000

While I’ve flown a zillion miles on United I get tired of spending 3x the price for a ticket so I’m happy to fly Frontier whenever it’s convenient. Even better, I love flying Southwest!