Online Travel Trouble: American To Ditch Kayak; Is Orbitz Next?

by: Erick Schonfeld posted on: July 23, 2008 | about stocks: AMR / OWW    
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After years of ceding the upper hand in online travel to booking sites like Kayak and Orbitz (OWW), American Airlines (AMR) is about to fight back. According to the CEO of a competing travel site, American Airlines is about to pull its airline listings out of Kayak and is considering doing the same with Orbitz. If it does so, other airlines such as Continental (CAL) and Northwest (NWA) may follow suit.

Airlines don’t like the booking sites because they have to pay them a referral fee for every ticket they sell, as opposed to capturing the full fare when travelers book on their individual sites. Even though that only amounts to a few dollars per ticket, every dollar counts to the troubled airlines—especially now with fuel prices going sky-high and the consumer spending going down.

American Airlines has a particular beef with Kayak because it tends to show AA flights through its partnership with Orbitz instead of directly from American. That means American has to pay a double tax, once to Kayak and once to Orbitz. (The deal between Kayak and Orbitz, charges the competing CEO, was meant to drive up traffic numbers on Kayak as it was potentially seeking an IPO prior to raising $200 million instead last December).

The decision to sever ties with Kayak supposedly has already been made. The only question is whether Orbitz can salvage its relationship with the airline. This should strengthen competing travel sites, especially newer ones that link directly to the airlines like Mobissimo and Yapta.

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Erick Schonfeld

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This article has 5 comments:

  •  
    buffalogordo
    n
    Jul 23 05:55 PM
    The consumer is really the loser when they use Kayak or Orbitz. Use them as a reference - but go directly to the airline website to buy your ticket. You will pay at least 5 dollars less for each ticket.
  •  
    CLH
    Jul 23 06:30 PM
    buffalo---yes you are right. Orbitz will soon be gone. The airlines need the money.
  •  
    long time
    airline
    employee
    Jul 24 12:41 AM
    Website sales is one thing, the liability and responsibility for the booking made by their agents is another. I get calls from passengers and website sales reps requesting waivers and favors for things THEY have done themselves all the time, the facts are quite simple and clear in those cases. The booking agency (Orbitz, Travelocity, Site59, Hotwire etc.) are responsible for their mistakes, referring them back to the airline is a disservice to the customer in that I cannot grant their requests. What will inevitably follow will be a conference call with a representative from the website AND the passenger requesting what has already been denied.
    With that being said, there IS a path for requesting exceptions/ corrections within the airline that the website rep. can reach, they choose not to because their mistakes are tracked and they are held accountable for educating their employees to prevent further incidents that should never have happened in the first place.
  •  
    drmalaka
    Jul 24 02:09 AM
    Great, make your service a little worse. Force the customer to search each individual airline website to find our flights. What a horrible industry. Add in the unions and they have no chance to survive. I was on a US Airways flight the other day, what a piece of crap plane, seat cloth tearing, ripped window shade.

    The problem with airlines is they compete on price and not service, so they cater to the traveler with the least money. Well, that and the unions of course. Bankruptcy can not come too soon for them all.
  •  
    notsosmart
    Jul 24 10:57 AM
    My Website
    fortunately & luckily i have not been on a plane since 11 mos.before 9/11. the twa(bankrupt) service was so bad i decided to just quit flying. lo & behold-life goes on.i feel for the people that have to fly.
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