Online travel agencies score big with shoppers

By Julie Johnsson
Posted Feb. 14 at 11:02 p.m.

Online travel agencies remain a big hit with shoppers, new survey data show, but the sites’ popularity could fade if contract battles with airlines leave them with fewer airfares to lure bargain-chasing consumers, researchers warned.

With airfares soaring and the economy stuck in the doldrums, consumers continue to flock to travel sites to plot dream vacations and research deals and steals, a market that’s expected to total $104.6 billion in 2011, according to market research firm PhoCusWright Inc.

But a contract skirmish between American Airlines and Expedia Inc. and Orbitz Worldwide Inc. is forcing travelers to alter how they shop online as they make summer vacation plans.

Tim Templeton, a Laguna Beach, Calif., resident who earns about 40,000 American frequent-flier miles annually, used to scan fares at, and But he’s had to lengthen his searches since American’s fares disappeared from Web sites operated by Chicago-based Orbitz and Expedia more than a month ago.

Templeton now also searches and, which reached a contract agreement with American last month.

“The whole revenue game is changing quite a bit and turning against the consumer a little bit,” Templeton said.

The flap could cost Expedia and Orbitz traffic and cast American as the villain for trying to shake up how travel is sold, analysts said. Consumers like being able to compare flight options and prices on a single site and are far more satisfied with online travel companies than they are with airlines, according to a study to be released Tuesday.

Shoppers gave the highest consumer satisfaction scores recorded for the online sector in 2010, 78 out of a 100 possible points, according to the American Consumer Satisfaction Index, a leading measure of consumer confidence prepared by University of Michigan researchers.

That score is up 1.3 percent from 2009 totals and the third straight annual increase for the online travel sector, which has seen a resurgence as consumers were pinched by the recession and higher airline prices, said Larry Freed, CEO and president of ForeSee Results, an Ann Arbor, Mich.-based research firm that is the ACSI’s e-commerce partner.

Expedia finished atop the sector for the third straight year, followed by Travelocity, Orbitz and Priceline. Travelocity showed the largest increase among online agencies, while Priceline showed the greatest decline. Freed suggested that consumers may be tuning out Priceline’s aggressive pricing as the economy recovers, a notion that Priceline spokesman Brian Ek dismissed.

Airlines and the online agencies have a “love-hate relationship,” Freed said. “It will be interesting to see how that plays out. The travel sites are providing a service, but they can’t provide it without the airlines.”

Airlines have been among the most unpopular industries tracked by the index and scored a 66 in the most recent survey results, released in June. That disparity may explain the backlash to American’s efforts to get its distribution partners to slash fees and install Direct Connect, a new technology that puts the carrier, rather than the industry’s middlemen, in charge of sharing fares and fee-based services.

In addition to its fights with Expedia and Orbitz, American is enmeshed in legal battles with Sabre Holdings and Travelport, which act as clearinghouses for travel transactions. and Priceline have announced deals with American.

Other agencies have signed agreements with the carrier but are afraid to go public because they have “seen the fate that has befallen us,” said Cory Garner, director of distribution strategy for American. The nation’s No. 3 carrier has been pounded in the press and by shareholders for its strategy.

Comparison shopping for air travel won’t disappear, though it may be transformed. American’s fares on Priceline are indistinguishable from those of other carriers’, said Garner, and will eventually be broadened to include fee-based services like priority boarding passes, which aren’t sold on other travel sites.

“One of the beauties of Direct Connect is that the experience doesn’t change initially,”Garner said.

So far, no other major carrier has followed American’s lead. US Airways signed an agreement with Expedia last month that analysts describe as a “hybrid” between traditional contracts and American’s approach.

The travel industry “is on the beginning of a huge wave of change in air ticket shopping,” predicted Douglas Quinby, senior director of research at PhoCusWright. “At the same time, the airlines cannot forget the consumer. … If an airline pushes too much, it’s only going to benefit one of their competitors.”

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