Now it gets interesting. Priceline is expected to announce this afternoon that it will “permanently eliminate” airline ticket booking fees on all published domestic and international fares. The online agency temporarily stopped charging the fees this summer.
“This means that, in most cases, priceline.com customers will pay less for their tickets than they would at other major full-service online travel reservation services, including Expedia, Travelocity and Orbitz,” said Jeffery Boyd, Priceline’s chief executive, in a prepared statement.
The cut doesn’t apply to Priceline.com’s “Name Your Own Price” airline ticketing service.
No word yet on whether the three online agencies will follow Priceline’s move. I’ve asked them to comment, and will update this blog post when they do.
If just one of the agencies follows Priceline, it could send dramatically alter the online travel landscape. The repercussions could be felt offline, too, since traditional travel agents would be under pressure to cut or eliminate their booking fees.
The clear winners are customers, who will pay less for their airline tickets.
Update: Brian Hoyt, Orbitz spokesman: “We have no intention of dropping our airline service fees.”
Katie Deines, Expedia: “We believe that current pricing appropriately reflects the value that Expedia brings to our customers and suppliers.” (In other words, no.) Travelocity didn’t respond to requests for a comment, but has told other news organizations it’s sticking to its fees.
Update (12/6): Hotwire has “permanently eliminated its airline ticket booking fees,” the company announced today. That applies to both opaque and retail listings on all flights. “Today’s announcement will help customers save even more money during this period of increased air travel costs,” Eric Grosse, senior vice president and general manager at Hotwire, said in a press release.
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{ 4 comments… read them below or add one }
Our business model continues to make common sense and remains one of the only currently in the market-place able to compete and grow where declining profits
become the norm throughout the conventional travel industry.
Priceline and other big 5 online click and order companies, forced to spend millions a week
on advertising for unique visitors to it’s branded site, cannot fend off a travel model with 131,000 unique sites, paying zero for advertising for it’s visitors and bookings. No one can.
Earl Allen Boek
RobertResorts.Net
530-378-1363
This model while great is not revolutionary; in an analogous to a situation in the search industry where one company made an analogous move which turned them into one of the most powerful companies in the world. In case you haven’t guessed that company is Google, while everyone else was charging money for placement Google just said “users want the most relevant search results possible.” They gave this to consumers and decided to make their money through advertising…and to say the least things are going quite well for them.
In the airfare search industry things are no different; what companies have to realize is that if the airfare search industry doesn’t change on it’s own then airfare suppliers will make them change. I work for http://www.travature.com which does meta-searching for airfare from a large number of suppliers and one thing I continually run across in negotiations is that suppliers are fed up with paying fees to get their fares out there.
Many large suppliers are so fed up with the idea of charging for a booking or charging the consumer more that they say they will not tolerate this concept any longer (The biggest suppliers have told me that they refuse to take on new partners that charge for their flight information). In effect they are saying that their content in itself provides value and without it airfare search sites would not exist.
This makes complete sense even the largest airfare search sites in the world would cease to exist if companies like AA, Delta, and United would no longer let them search their fares or pull their GDS fares.
It is high time that a leading company stopped charging consumer’s booking fees, and I applaud Priceline for doing such. Our company policy at Travature.com has always been no booking or service fees of any kind, this serves 2 functions
1) Consumer Trust in that we will not omit fares as to make a higher conversion rate (profit) on certain airfares
2) Consumer Happiness: Even if you only charged the suppliers and not the consumer booking fees (like many meta-search engines), we all know that the consumer ends up paying in the long run…this is simply because the supplier will consider this booking fee a cost of doing business and redistribute this cost to the consumer. So in effect taking out this fee will lower prices in the long run and lower prices man happy consumers…
All in all I am glad to see the beginning of the end for booking fees and all other search associated fees. In the future I predict that all fees of this sort will cease to exist and the marketplace will be better for it.
I’m sure priceline is making their money on the backend…remember, they deal in oaque fares from airlines and probably just negoiated a commission in lieu of consumer fees…
I’m really tired of the whole arguement from both sides…on the vendor, they say they don’t like the idea of charging for a booking or charging the consumer..what makes this industry so special that those who support it can’t charge reasonable service fees for services rendered? You do it for so many other industries and yet you don’t hear the same arguements…I think what this is really about is the vendors wanted to go direct to the consumer which of course they have every right to do, but study after study has shown that the travel intermediaries do a much better job of selling their product then the direct method
This is just a publicity stunt and nothing more. Priceline has been lagging far behind 3 major horses (Orbitz, Expedia and Travelocity) and by eliminating service fees they have decided to attract more new customers. People are extremely dissatisfied with Priceline and I doubt that this move will make much of a difference for them. I am sure that some sort of deal was struck with vendors so they will not be at loss. Plus don’t forget private fares where you can include markup with base fare so people won’t even know that they are being charged additional fees. We ran surveys and 85% of our customers don’t mind service fees. When you visit a doctor or a lawyer and pay $400-$500 to hear just an advise it’s ok but when you pay $5-$10 service fee for airline tickets it’s not. What an idiocy.
As for vendors not listing their fares in GDS is just never going to happen. If Delta for example would be able to offer lowest airfare prices all the time then they would not need travel agents but when you have hundreds of airlines it would be virtually impossible for people to visit them all when searching fares. Plus don’t forget about selling segments when 2 (or more) airlines combined in one booking (issued separately). In my humble opinion travel agents have nothing to worry about, at least for the next 10 years.
As a travel agent I am more concerned with ARC raising yearly and transaction fees. First no commissions, now raising fees almost 5 fold, plus debit memo issues. Airlines surely don’t like us making them money. This is what truly disgusting.