I don't recall all the details of the Fengler paper, but the core idea is that you trade-off accuracy wrt market quotes vs. smoothness. More importantly, no smoothing at all may not be possible if you want an arbitrage-free interpolation. For example, a cubic smoothing spline with smoothing=0 is just a regular cubic spline, which gives you no control at all over arbitrages. It is the fact that the spline does not interpolate exactly the quotes that gives you the freedom to deal with arbitrages.
Alternative techniques are:
* The good old mixture of lognormal distributions. There are some caveats, but it's reasonably good at fitting a wide variety of quotes. It is described in appendix of Model-free stochastic collocation for an arbitrage-free implied volatility, part I
* Model-free stochastic collocation for an arbitrage-free implied volatility, part I and II
. Part I deals with polynomials (may be enough depending on how crazy are your quotes), part II with B-splines.
* Andreasen-Huge one-step local vol parameterization
* An arbitrage-free interpolation of class C2 for option prices
: similar to Andreasen-Huge technique, taylored to piecewise linear discrete local vol representation.
All are more involved than a cubic spline interpolation, and require some least square minimization.