Battle Escalates Between Airlines and Online Agents

Ponca City writes "The Epoch Times reports that online travel booking giant Expedia has removed American Airlines from its travel website over disagreements with American's fee structure in the latest incident in an escalating battle between airlines and online travel agents. Although American gets roughly two-thirds of its revenues from third-party travel agents like Expedia, American has been looking for online agents to cut their fees as one way to lower fares — something that Expedia was not prepared to do. Expedia released a statement that American's action 'will result in higher costs and reduced transparency for consumers, making it difficult to compare ticket prices and options with offerings by other airlines,' while American urged customers to book directly on American's website for the lowest prices. Meanwhile Google is waiting in the wings with its recent proposal to purchase ITA Software, the developer of the Internet's leading technology to compare flights fares. 'Though 49 percent of travelers purchase travel online, it is still time consuming and slow to search for travel options online,' says a statement from Google, defending the ITA acquisition which is being opposed by Microsoft on anti-trust grounds. 'We plan to work with ITA to create a new, easier way for users to find better flight information online.'"

Comments

Not really

[shoehornjob]

Expedia released a statement that American's action 'will result in higher costs and reduced transparency for consumers, making it difficult to compare ticket prices and options with offerings by other airlines

Southwest has been doing this for some time now. Sounds like a bunch of FUD from Expedia.

Re:Not really

[Low Ranked Craig]

I'd have to agree, and as it turns out Southwest is one of the few profitable airlines. When I have to fly I try Southwest first, then Jet Blue. If I can get their on either of those I drive or I don't go. Actually these days with all the shit going on at the airport if it's too far to drive I don't go.

Re:Not really

[MoonBuggy]

To an extent it's true. If American Airlines no longer show up on comparison sites, I'd say it's very likely that it'll be harder to compare prices - the rest of their statement follows from that fact, but it somewhat hinges on the fact that people treat airline tickets as a commodity item (within a given route and class, obviously). If all you see is a price comparison, chances are you'll pick the cheapest and doesn't matter who gets you there. It's certainly the way I used to think, but having happened to do the same long haul run on a few different carriers this year I was quite surprised at the magnitude of difference in the experience. It's hard to succeed as the "more expensive but better service" airline if all people see are numbers. On the other hand, though, it's hard to succeed as the "expensive and crap" airline if all people see are numbers.

There are definite merits to Expedia's argument. Although the airlines have multiple reasons to dislike the comparison sites, and the published reason might sound reasonable (and even beneficial to the consumer), cutting out the middle man is only a good idea if the middle man isn't providing a beneficial service. In this case, greater access to information is the service, and I think we probably do want that to be available. By taking away the commissions, you take away the possibility for comparison right across the market.

Re:Not really

[MBCook]

You're got good points, but there are so many ads about price comparison it seems like there's a great chance American is just shooting themselves in the foot with this one. I haven't flown in years, and it wouldn't occur to me to go to an airline's site unless I knew they were the only ones who served the route or I had just heard about how incredible they were from someone I trusted.

I totally understand the quality argument. Midwest Express is supposed to be quite nice in the areas they fly. On the other hand, I remember flying on some airlines in the 90s that aren't around anymore that were just horrible.

If American thinks its quality is so much better, let them show it. Why not partner with Expedia to add "Air Experience" rating next to each price, where the ratings are based on passenger and secret shopper testing. That way you could see that American is charging $200 (with a 4 star rating) and Discount-O-Jet is charging $175 (with a 1.5 star rating) and make your choice. It would also give Expedia something to promote over the competition.

Of course, that would be a 'put up or shut up' move, and if American isn't as good as they want everyone to think they are, it could really backfire.

Side note: Remember travel agents? There used to be people, in offices, that you went to to book airplane tickets. Only they could see the prices. They used to be everywhere. In the past 15 years, it's a job that has completely disappeared. I get the feeling AA wants to go back to that world, where they could schmooze the agents to get more customers.

Re:Not really

[Lincolnshire Poacher]

My tip for long-haul flights: phone ahead of time and book the vegetarian meal ( regardless of whether or not you are a veggie ) . Not only is it usually more extensive and of much better quality than the "standard" meals but it is often cooked first, so you can be tucking-in to some decent nosh whilst the other passengers' stomachs are still rumbling.

On the bright side...

[fuzzyfuzzyfungus]

I sense the emergence of some job openings for programmers and software engineers skilled in the art of swiftly building, and iterating as needed, scraper agents to aggregate numerical and geographic data from multiple multi-step forms driven websites...

Re:On the bright side...

[FormOfActionBanana]

the meta-search site www.kayak.com pretty much does this...

Don't take The Epoch Times too seriously

[Rix]

It's the propaganda wing of the Falun Gong cult.

Expedia eats up profit margins for the hotels

[Harald Paulsen]

According to a hotel manager I know expedia wanted 1/3 commision on hotel rooms.

Sure, he appreciated the extra business, but at the same time it was a major cut in their profit margin.

And expedia (and other hotel booking services) now wield so much power that it's hard for hotels to say now. More so for hotels that are not part of a chain that can afford to say no.

Re:Expedia eats up profit margins for the hotels

[jelizondo]

From one who spent 25+ years on hotel management in different places (USA, Mexico, Grand Cayman, Netherland Antilles, etc.) the "normal" commission earned by a bookie, be it a Wholesaler (Tour Operator), Retailer (Travel Agency) or Booking Engine, is 30%.

Some hotels limit that to 12-15% for certain markets in order to remain competitive, but generally, one third of the rack rate is the norm. That is why you should insist in getting a discount on rack rate, no matter how you book it. As we say in the industry, no one pays rack, except the foolish or desperate.

On the other hand, if your hotel shows less than 30% of Sales as GOP, you're doing something wrong...

Expedia vs Kayak

[salmonz]

It's Expedia. Who cares? Just use Kayak.com

Try your brick and motar travel agent

[Midnight Thunder]

You may be surprised, but in certain cases going to your local travel agent can get you a lower price. If they don't, compare what they are offering you and be sure to let them know you can get it cheaper online. A real-life travel agent can reduce their commission, while a web site won't.

Re:Try your brick and motar travel agent

[ftobin]

Seriously, has this really ever worked for you? If a brick and mortar site can offer a cheaper price, how come they aren't publishing their price online via some method (perhaps not Orbitz, but something similar). When you've entered a travel agent or other brick and mortar site, you're in a world where it becomes difficult to price-compare. There is little incentive for them to have low prices once they control your environment.

It's rare, very rare, when I can find a cheaper price for anything at a brick and mortar site.

Re:Try your brick and motar travel agent

[DavidTC]

Scott Adams refers to airlines a 'confusopoly', where companies don't compete on price at all, because no one knows what the hell is 'reasonable'. All markets have imperfect information, but airlines have managed to take imperfect information to an art form.

Even with comparison sites, it's always 'search for a specific trip and find specific prices now'. How much were those prices last week? Next week? How much are prices for the trips you're not seeing? How much are the prices to neighboring cities? Why is it cheaper to fly through two other cities?

What. The Hell. Is. Going. On?

You want to know how to cause a riot if you have magical powers? Go to an airport, have the price everyone paid for their ticket float over their head. Watch some people get very angry, very quickly.

In fact, that would be a rather funny airline protest movement. Everyone just wears the price of their ticket taped to their shirt. That's it. Just get 5% of fliers to do that.

Within hours, there'd be goddamn screaming fits at ticket counters.

And nothing of value was lost

[$RANDOMLUSER]

It's funny that this story comes out now, as I was just considering changing my sig to "Have a pleasant, comfortable flight - or fly American Airlines." I'm really considering starting a blog about how BAD american Airlines has become.

I just flew on American Friday night from Honolulu to Chicago; 45 minutes out of Hawaii, the captain turned the "Fasten Seats Belts" light back on - at the first excuse for a mild bump - and then left it on uninterrupted for the next 7.5+ HOURS - in smooth. clear air - all the way until we landed - 36 hours later, and my feet and ankles are STILL swollen. I had noticed on the way out that American seemed to have developed this policy of keeping everybody fastened in at all times, but the ride home confirmed that in spades. American CLEARLY has developed a policy to keep you seated at all times, your personal comfort and blood clots be damned. I also noticed that they've changed the "...and we suggest you keep your seat belt fastened while seated..." part of the stdrap.h to "...we REQUIRE you to keep your seat belt fastened while seated...". Fuck you, you're just cattle (who has already paid your money) at the other end of a toggle switch. And we have "federal regulations require you to obey us" on our side.

It's clear to me that they've changed the policy both as a convenience to the flight attendants and as a sop to their cowardly lawyers in case some passenger bumps their knee during a flight and decides to sue.

On they way out, it cost $25 per checked bag, and one, which was over 50lbs (52.7 to be exact), cost an ADDITIONAL $50 over that.

Of course, there's no free food anymore, but they'll SELL you a chicken sandwich for $10, or a can of Pringles for $4.50. What I found interesting was that they don't take cash anymore - just credit/debit cards - I guess that "...all debts, public and private..." printed on the money doesn't mean anything if you're an airline.

All in all, flying American recently is the worst (modulo TSA related fun, which is a different rant) in-air experience I've had in the last 35 years, and that includes the flight from Nairobi to London on Air India - which was about as bad as you would expect.

Re:And nothing of value was lost

[Compholio]

The "all debts public and private" line on US currency doesn't apply since the purchase of food from American Airlines is not a debt.

It is if they render goods or services before being paid - which they do. I've always seen them give people their items before taking the person's card.

Re:And nothing of value was lost

[trampel]

Is this really specific to American Airlines?

I noticed on a recent transatlantic Delta flight that the fasten seatbelts lights were on all the time, but nobody seemed to care and the flight attendants certainly didn't enforce it. Or, are you saying that in the 7.5h on your flight nobody went to the restroom.

The baggage fees and nickling&diming for food are indefensible, but it seems they are standard practice in the airline industry these days.

I'd love to see an airline that treats their passengers better, but AFAIK all the major U.S. carriers are equally unfriendly.

Re:And nothing of value was lost

[blackraven14250]

No, it doesn't apply because there's no legal requirement that a business accepts US dollars as payment. It's a legally recognized method of debt resolution, not a legally required method.

Re:And nothing of value was lost

[hawguy]

I had the exact same experience -- on a flight from SFO to HNL, the fasten seatbelt light was off for less than an hour on the entire flight.

Once someone got up to use the bathroom while the flight attendants had just started serving beverages. She firmly told him "There's a reason the fasten seat belt light is on sir, return to your seat!". However, an hour later the fasten seatbelt light was still on and, someone in front of me hit the flight attendant call button to ask for a beverage. The same flight attendant said "Come on back to the galley to pick it up".

They need to have 2 fasten seatbelt lights, one that means "We think you should sit down and buckle in because there might be turbulence" and one that means "Turbulence is highly likely all passengers and flight attendants must remain seated".

I've never understood why passengers have to sit down when the fasten seat belt light is on, but often flight attendants are pushing a 200 pound cart with a couple pots of scalding hot coffee on top of it down the aisles.

Re:And nothing of value was lost

[SpecBear]

Yeah, I hate American Airlines. The final straw for me was when I was checking baggage, and it took longer than getting a new car registration.

Then it struck me: I was waiting in line wishing that American Airlines could be as quick, competent, and customer friendly as my local DMV office.

I haven't flown with them since.

Re:And nothing of value was lost

[mjwx]

we REQUIRE you to keep your seat belt fastened while seated

No shit. You're in an oversized cigar tube travelling at 900 KM/h and you don't think that's prudent? Your safety be damned.

All airlines require you to keep your seatbelt fastened whilst seated. They'd rather you didn't move about the cabin unnecessarily so that you:
1. Dont hurt yourself when the plane hits a bit of turbulence.
2. Do not interfere with the operation of the flight staff.
3. Do not be a nuisance to other passengers.

You've never flown over the equator have you? I live in Australia so that means I do it quite a bit to get to other countries and every time we cross that line separating the hemisphere there is turbulence, often quiet violent turbulence and every 4 out of 5 flights someone who is stupid enough to be sitting without their seatbelt gets hurt (normally there is an announcement on the PA asking if there is a doctor on board).

It's not some giant conspiracy to make you uncomfortable, it's for your own safety and the COMFORT OF OTHER PASSENGERS. I cant stress this enough, I absolutely hate it when some idiot lets their crotchspawn run up and down the aisle or when some smelly retard has his hairy armpit slung over my chair so he can chin wag with his equally smelly mate.

Planes are not luxury cruse liners, they do not have roomy cabins, they are designed to get me to where I want to go within a matter of hours, for that time I can compress myself (not a small person) into a seat and be fucking courteous to other passengers. So please for the sake of everyone, sit down, shut up and put your belt on.

Re:And nothing of value was lost

[Man On Pink Corner]

I just flew on American Friday night from Honolulu to Chicago; 45 minutes out of Hawaii, the captain turned the "Fasten Seats Belts" light back on - at the first excuse for a mild bump - and then left it on uninterrupted for the next 7.5+ HOURS - in smooth. clear air - all the way until we landed - 36 hours later

Are you sure your plane didn't crash on an uncharted island with a temporal anomaly?

Re:And nothing of value was lost

[T-Bucket]

I hate to tell ya, but liability has a lot to do with this. (I am, in fact, an airline pilot). We're instructed to keep the sign on unless we're 150% sure that the air will be smooth ahead. The reason for this is if the sign is on and we hit a nice big chunk of turbulence, it's YOUR fault if you bounce off the ceiling (because you were disobeying the sign). Whereas, if the sign is off you end up with a broken leg and a concussion from that bag that fell on your head, the airline gets sued for not telling you to sit down first.

Sounds like you ran into an overly cautious captain.

They're all bad

[sjbe]

US Air and Southwest are the only two airlines that have not regularly fucked up my travel.

Give them time and I promise that will change. I've flown quite a bit on pretty much any US carrier you care to mention and they're all pretty much equally crappy. If you haven't had bad luck with one of them I applaud your good fortune.

Re:They're all bad

[gonz]

Really? Did you try Virgin America? Their planes are new, with stylish white plastic and black leather interior, with disco color lighting. They have a Linux-based entertainment system with free games and movies, seat-to-seat chat, and a shopping-cart style electronic ordering system for food/drinks. To celebrate the holiday, the internet was free for all of December. And the price is comparable to shitty airlines like Delta and US Air. Virgin America kicks ass.

Re:They're all bad

[apoc.famine]

Virgin America services all of a dozen airports in the Americas. To compare them to airlines that reach several airports in every single state in the US is stupid.

Sure, VA may be awesome. But you know what? They aren't flying the routes that most people need. They're flying a handful of really profitable ones. I know that Air France treated me well when I flew them, but I'm not about to compare them to US Air either. You're talking about very different markets than everyone else here as well as the article.

Inevitable Battle

[Jah-Wren Ryel]

For as long as I can remember (practically since deregulation) the airlines' approach has been to maximize profits through increased pricing complexity - or "efficient yield management" as they are more likely to label it. The core reason for the existence of airline fare search engines is to reduce pricing complexity. Therefore it seems obvious that the airlines would do everything they can to kill the search engines - but they can only go so far because they more they squeeze, the more consumer demand they create for the search engines. Where is equilibrium? I dunno. I would like for it to be at the point where the airlines quit the pricing games and try to compete on service instead, but that would be too easy.

Welcome to the Airline Industry Expedia / Orbitz

[citylife]

Airlines long ago eliminated commissions for in-person travel agents because they had the market power and how were 1000's of mom and pop agents going to fight the airlines? Fearing dis-intermediation, the airlines continued to pay Expedia / Orbitz and the reservations systems such as Worldspan commission for deal flow but now the airlines have the market power with their own sites.

Its a hard dose of reality for the online sites, who don't offer much functionality above what you can get on Southwest.com. My mom is a travel agent- and while she is computer challenged she can run command line commands into Worldspan faster than I can login to Orbitz. I've never understood why someone would spend hours online finding a site when a travel agent can do it all for you for almost nothing. My mother selected 3 of the 4 hotels for my honeymoon, the other coming from the NY times travel section. Guess which one was the dump with paper thin walls and crappy beds?

I wonder why MS says NO!

[rrossman2]

Just happened to look at ITA Software's website.. and look at their customer list:
www.itasoftware.com/about/customers.html
I do believe I see Bing as one of the customers :)

Re:Welcome to the Airline Industry Expedia / Orbit

[Moraelin]

My mother selected 3 of the 4 hotels for my honeymoon, the other coming from the NY times travel section. Guess which one was the dump with paper thin walls and crappy beds?

Yeah, my mom can be a practical joker like that too ;)

Low-cost airlines vs. traditional

[schnell]

When I have to fly I try Southwest first, then Jet Blue. If I can get their on either of those I drive or I don't go.

If you are a "casual" traveler - i.e. you typically travel for personal reasons or at your own discretion - you're dead on. Southwest, JetBlue and Virgin America are inexpensive, comfortable and usually will get you where you need to go on time. These airplanes don't offer much in the way of perks or status programs (other than getting you a free flight now and then), but as a casual flyer that's not a big deal.

But if you fly fairly often (say, 50,000 miles a year or more) for work etc., then the traditional carriers start making a lot more sense - mainly because they do have multiple classes, perks programs etc. For example, United is a pretty terrible airline - more expensive, bad customer service in many cases, less nice cabins ... if I were a non-frequently flyer, I wouldn't touch them with a 10-foot pole. However, because I fly a lot on United and its code share partners, I get a lot of perks. Specifically, I know that if my schedule changes and I need to fly standby, I will be able to get on ahead of pretty much anybody else. Ditto for if my flight is cancelled and I need to be rebooked. It's also worth the extra money to me (especially since I'm not usually the one paying it) to know in advance I won't get a middle seat, will get to board first and not have them run out of overhead luggage space, occasionally get upgraded to first class, and so forth. American Airlines to me falls into that group of airlines I'd never look at as a casual flyer but would think strongly about as a business/frequent traveller.

So I think which airlines you look at should be based on your travel profile. I can almost analogize it to business class vs. consumer class Internet services - consumer class is cheaper and is good enough most of the time. If you have special needs or are a heavy user, paying more for the business service is the way to go.

Re:Low-cost airlines vs. traditional

[CohibaVancouver]

But if you fly fairly often (say, 50,000 miles a year or more) for work etc., then the traditional carriers start making a lot more sense

They also make a lot of sense if you want to fly from Des Moines to Paris or from New Orleans to Rio. You can check in with a "tradional" legacy carrier at those airports and be checked all the way through to your international destination, baggage and all (via a hub). Try doing *that* on Southwest. I realize Americans who have passports and travel overseas regularly are very much in the minority, but for those who do this is a valuable service.

Re:Low-cost airlines vs. traditional

[SanityInAnarchy]

You mean they put a dozen clones of you on Southwest flights and wait till one of you reports back that you made it alive?

Are you sure your name isn't BadAnalogyGuy?

Re:Welcome to the Airline Industry Expedia / Orbit

[OzPeter]

I've never understood why someone would spend hours online finding a site when a travel agent can do it all for you for almost nothing.

Probably because travel agents don't like to work from my home office at 3am.

Expedia is good for consumers

[Monkeyman334]

If airlines were so hurt by websites like Expedia, then you'd think they'd inform users that they could get better prices if they just went to the AA website. But every time I've tried finding a flight on Expedia, and then going and finding the same flight on AA, the price is outrageously high with AA. Really, I think it's like TV networks fighting netflix and Hulu (on TV boxes), the networks want to divide up the market and overcharge you for crap you don't want, and Netflix just makes it too convenient for people to get what they want at the lowest price. Same thing with Expedia, services like that need to stick around.