Expedia Inc. is starting the new year with a break-up, suspending sales of tickets for flights on American Airlines after the two sides were unable to resolve a commercial dispute.
Expedia’s Saturday announcement is the latest twist in the spat involving American and online giants that have revolutionized how travel is sold over the Internet. On Dec. 21, American yanked its fares from Chicago-based Orbitz Worldwide Inc.
American seeks greater control of the way it sells tickets and other services and is demanding new contract terms and technology that would drive down its cost of doing business with online travel agencies like Expedia, Orbitz and the global clearinghouses that provide the ticket data they peddle over the Internet, analysts said.
Expedia said it had been unable to reach an agreement with American and blasted the Texas-based carrier’s new ticketing strategy as “anti-consumer and anti-choice.” Added the world’s largest travel company: “We remain open to doing business with American Airlines on terms that are satisfactory to Expedia and do not compromise our ability to provide consumers with the products and services they need.”
American noted that its fares were still available on Egencia, Expedia’s corporate travel website, as well as Priceline.com and other competitors to Expedia and Orbitz. American said it would honor sales booked via Expedia, but advised customers who change travel plans to contact American directly rather than online agency.
The commercial clash between the two companies first went public in late December, when Expedia hid American’s pricing information from its search matrix, a move it said that was intended to show solidarity for long-time rival Orbitz.
American criticized the move as discriminatory and countered by offering discounts of 15% or more to travelers who regularly booked American and American Eagle flights through Orbitz and Expedia.
Sales had not suffered because of the contract spat, American said, adding that it didn’t anticipate much fall-out from Expedia’s decision to end sales on Jan. 1, either.
“Because Expedia had already de-emphasized AA fares on its site and those sales largely shifted to other outlets, we don’t anticipate significant incremental impact from today’s action,” American said in a statement, Saturday.
American is pressuring travel agencies and ticketing clearinghouses to use an electronic pipeline created by the airline, called AA Direct Connect, to handle all transactions with the carrier.
The XML-based technology would enable American to tailor deals to specific customers. A frequent business traveler stuck in a coach seat might be offered a free Wi-Fi connection, for example.
Southwest Airlines and JetBlue Airways have traditionally kept tight control over their distribution channels, using their own Web sites as their primary points of sale. But as they seek to attract more business fliers, both carriers have signed agreements to share some flight information with travel managers via the clearinghouses.
Atlanta-based Delta Air Lines this month terminated relationships with several smaller travel Web sites. Chicago-based United Airlines and corporate sibling Continental Airlines haven’t pulled content from any Web sites.
Consumer advocates worry that if other major carriers follow American’s lead, traditional and online travel agencies like Orbitz, Expedia and Priceline could lose the ability to display the best available fares to bargain-minded consumers.
At stake, they claim, is the complex technology that has revolutionized how consumers shop for flights over the past decade, providing price transparency that has made it easy for travelers to compare fares — and difficult for airlines to hike prices.
“As soon as the information isn’t all there, you can’t compare apples to apples, the complete costs of all the offers in the marketplace,” said Kevin Mitchell, chairman of the Business Travel Coalition, which represents corporate travel buyers. “That will absolutely drive all the fares up.”
jjohnsson@tribune.com
I would never book anything through a site like Expedia or Orbitz again. booking through 3rd party sites likes these doesn’t guarantee you cheaper prices and sometimes, if trouble pops up, people who book through these sites have fewer recourse. if you need to rebook a flight or reserve a hotel room for a different date, there’s no guarantee the hotel or airline will work w/ you. I’ve never had a case where a ticket for the same flight was cheaper on Expedia than on the airline’s own site, but the reverse has often been true where I found hidden, cheaper fares on the airline’s site. I think sites like Expedia and Orbitz are fine for people booking multiple things (flight+hotel+car) and who don’t want to go through the legwork of booking separately-i.e., using them as a true online travel agent
It doesn’t matter to me because I refuse to pay for their ridiculous baggage fees. If Southwest doesn’t fly to where I want to go, I’ll drive or stay home.
“If Southwest doesn’t fly to where I want to go, I’ll drive or stay home.”
Guess you can’t fly to Hawai’i or overseas…
I’m with Larry. Southwest all the way.
Never deal with a third party which is not in the position to help you.These 3rd party travel sites can’t solve a dispute between you and the airline,hotel,cruise line or car rental.All people do when they use these sites is insert a middle man into the process.
I still don’t understand the big hubbub about Southwest. Sure they don’t charge for bags, but they charge for seat assignments. In addition, every time I check a fare on Southwest.com, I can always find it on United or American direct for at least $100 less and often up to $200 less. Makes the baggage charge worth it to me.
The issue here is information asymmetry. Airlines prefer opaque pricing to price transparency. They also prefer to optimize pricing by delivering customized offers to passengers based on their previous ticketing behavior. The more sales data and customer behavior information that any third party or direct seller maintains, the greater potential control they have over the sale – in the absence of price transparency.
Consumers will need to use meta-search engines such as Kayak or OneTime to get more price information on routes. Google’s acquisition of ITA may also eventually help consumers easily obtain transparent price info, assuming Google can implement the technology into an online purchase portal or find other ways of monetizing the service.
First it was the store front travel agencies that disappeared, now it seems online “travel agencies” would disappear next. They fight with the product that they’re selling. Duh!
“First it was the store front travel agencies that disappeared, now it seems online “travel agencies” would disappear next.”
Incorrect! Traditional (what you call store front) travel agencies have not “disappeared”, they reinvented themselves into niche providers, thereby serving their clients even better. Try getting any type of “customer service” directly from the airlines these days if you have an issue with your reservation.
Furthermore, it seems to be the airlines who are picking the fight. At the end of the day, by way of vacation packages, traditional travel agents still account for a large portion of the airlines ticket sales–including those that are booked through the providers themselves.
It will be the airlines who will come to regret alienating these providers. Most people looking for discount fares will go to a site like this to compare pricing. Rarely do these types of customers visit each airline’s site directly.
One truism in business is that companies “rather make 50% of something than 100% of NOTHING!
I find it absurd that Expedia and Orbitz would try to force American to subscribe to their model. Expedia and Orbitz just invalidated their own sites by this move, because I am not going to search their site and then do other searches. I just won’t use Expedia and Orbitz. Bad move on Expedia and Orbitz….I would expect neither of them will be long term businesses.
Just use Kayak and be done with it. I think these guys will do just fine with AA’s XML interface!