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Battle for Bookings
The Travel Critic · February 1, 1999

Online travel agencies are going the way of the dodo - driven to extinction by their own incompetence and airlines' avarice.

The sites collect a scant 5 percent commission for selling tickets on most of the major carriers, about half what a brick-and-mortar travel agency pockets.

Survival became even more difficult a few weeks ago, when Delta Air Lines imposed a $2 booking fee for domestic round-trip tickets not bought directly through its Internet site. Although the airline rescinded the charge this afternoon, citing "competitive reasons" for the change of heart, it's only a matter of time before the penalty reappears.

It doesn't take a travel expert to see what's happening. With a record 6.7 million Americans booking flights on the Web last year, according to a recent poll by the Travel Industry Association of America, airlines are angling for more online customers. If you buy your ticket through an airline, there's no middleman taking a cut. Result: fatter profits for the carrier.

A survey by Jupiter Communications suggests the effort to squeeze online agents into oblivion will work. Within four years, it projects 62 percent of all online airline ticket bookings will be handled by airline sites. It was less than 10 percent in 1998.

But don't blame the demise of travel sites on the airlines alone. The Web agencies should also thank themselves for their troubles. Most of them collected venture capital from eager investors who were lured by rosy predictions that the Internet travel market would experience explosive growth. It did, but now the airlines are claiming their share of the action - all before these sites can realize any significant returns.

Although the top five travel sites grossed a tidy $1.06 billion in bookings last year, according to industry researchers at PhoCusWright, their collective net earning were negligible.

On a deeper level, the Web agencies are bungling their big chance by mismanaging their resources. They still don't understand what users like us want - an easy-to-use Web interface to shop for a cheap fare.

The evidence that that they just don't get it is everywhere. I have to wade through a dozen screens before I can get a price for an airline ticket on Expedia. My computer crashes from all those Java applets when I'm on Biztravel.com. I have to memorize those silly airport codes (like BWI for Baltimore) when I use any of the Internet Travel Network's booking engines. Never mind the annoying ads on Travelocity and Preview Travel.

The end won't come overnight. It may take a year or more. If the other airlines are inspired by Delta and slap a fee on tickets purchased on sites other than their own, that could hasten the online agencies' exit. And if carriers follow Southwest Airlines' lead and eliminate commissions to cyberagents, that would be another serious blow.

When online agencies start merging with one another or shutting down altogether, I'll miss the sense that there's a place to shop around and compare, an alternative to buying my tickets from an airline or a human travel agent. Then, instead of choosing between the lesser of three evils, I'll have to choose between the lesser of the two.

Christopher Elliott is a travel commentator and author of A Bridge to Nowhere: A Year in the Florida Keys. All e-mailed questions may be edited, condensed or republished at the site's discretion.