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Off The Radar: Why Airlines On Travel Search Engines Are Going Missing
Looking for the best airfares on Expedia or Orbitz? You won’t find them from American Airlines. Meanwhile, Delta fares are gone from other online travel search engines like CheapOAir.com and Vegas.com. A brewing battle between airlines and fare comparison services is to blame.
Last week, the ongoing saga between the airlines and popular OTA sites and GDS platforms (Orbitz, Sabre) reached a tipping point, when American Airlines pulled its fares from Orbitz.com, refusing to pay the fees demanded by the travel search giant for listing its fares.
Where Airfares Have Gone & Why
Travel search engines – also called online travel agencies or OTAs, which allow you to book flights through them – have long not had fares from some airlines such as Southwest or JetBlue which have preferred to sell direct to consumers. Travel meta-search engines search against published airfares and send you to book directly with the airline.
Over the past few weeks, both Delta and American have made moves to pull out of larger OTAs, to go direct to consumers. These sudden moves underscore the efforts major carriers are putting into direct website sales and encouraging loyalty, following the lead of smaller discount carriers like JetBlue, Southwest, Virgin America, and others.
American Airlines has prominently displayed an FAQ area for consumers visiting AA.com explaining why Expedia and others no longer show American fares in search results. The airline, however, notes it will continue to negotiate with OTAs and GDS providers:
“American is a strong believer in pricing transparency and the choice afforded customers by our inclusion in online shopping comparisons”.
Sabre, one of the largest GDS platforms used by travel agents, which also powers Travelocity, struck back by announcing it would end their contract with American Airlines a month early (in August 2011) and immediately began reducing visibility for AA fares within searches.
In reaction, Expedia also pulled American Airlines from its results.
Meanwhile, Delta Airlines has also pulled fares from smaller OTA sites such as Airfare.com, CheapAir.com, Vegas.com, AirGorilla.com and Globester.com, according to the NY Times article. Hardly a major move, since those sites probably account for a smaller percentage of bookings.
In December, Delta made a bigger statement by pulling out of larger, but still second-tier sites like Bookit, OneTravel and CheapOAir, looking to provide a more “Apple-like” experience for consumers, and has been steadily upgrading booking features on its website.
A sample search result on Delta.com:
Indeed, Delta appears to be focusing on brand loyalty and streamlining the booking experience for both new and repeat users, their flight search results now feel more like an OTA booking engine, with (some) transparency of ancillary fees.
What Does This Mean For The State Of Travel Search?
Travel industry analyst, Douglas Quinby of Phocuswright, posted Airlines vs. the World, one of the most in-depth looks at what this all means to the travel industry in short and long term scenarios. Key points made by Quinby:
Expedia has preemptively called American’s hand on this. Giving unusual support to a direct competitor on the issue, Expedia first pushed the airline’s flights to the back of its flight display, and then on New Year’s day removed American’s fares altogether…
…It is quite likely other carriers, emboldened by American’s actions, will enter the fray as their GDS agreements come up for renewal across 2011 and 2013..
In the short term, airlines are posturing to see if they hold any negotiation power over the OTAs in an effort to reduce distribution costs, while speaking direct to consumers – potentially upselling ‘lowest fares’, and thereby boosting their profits in a number of ways.
Also at issue is how this will affect the airlines’ leverage in terms of forcing OTAs to use “direct connect” options, which would give airlines the ability to deliver a limited number of fares and availability to any/all intermediaries – including OTA’s, meta search engines and GDS systems, in effect, controlling airfare search results more tightly.
Immediately, though, it appears it’s the consumer losing if the number of search results (and fare options) start to diminish on OTA sites, even if they do offer best price guarantees. What’s more, it seems like this isn’t going to go away any time soon.
In the long term, Quinby points out a larger issue:
Airlines’ long-term strategy to advance distribution from fare- and schedule-led selling to merchandising. Today, airfare shopping treats the seat as a commodity. The results display is fare- and schedule-led. In other words, it is price and schedule that largely drive the results display when travelers (or travel agents) enter their search criteria.
Are Flyers Stranded With Poor Travel Search Results?
The bottom line is consumers are searching for value when comparison shopping on OTAs, and most travelers just want to see how to get to their destination as quickly and cheaply as possible, but it’s no longer a straightfoward comparison.
What many travel search engines fail to do is calculate and display the total cost of flying, which can include ancillary fees for baggage, premium seating and upgrades, in-flight services (or lack there-of), which is currently the airlines’ bread and butter as far as maximizing revenue per passenger.
That brings up some key issues surrounding consumer and traveler rights. What may seem like a very good deal on an OTA, quickly could turn into a traveler nightmare, as passengers who thought they were snagging a bargain begin to feel nickel and dimed without that transparency in search results.
Several organizations, such as the Interactive Travel Services Association have taken a stance on transparency of add-on fees, while the Consumer Travel Alliance called upon American Airlines to “to launch a renewed effort to listen to its customers and partners about the services they actually want and need, instead of trying to force feed us a ‘direct connect’ to higher prices, less choice, and limited competition.”
Meanwhile, on the search side of things, there’s other cries of foul play- FairSearch.org, the coalition formed in “support of a healthy Internet future, where greater consumer choice and economic growth are driven by competition, transparency and innovation in online search” came under scrutiny by Internet legal expert Eric Goldman.
In a blog post from December 30th, Goldman pointed out Expedia’s (a named member of the coalition) apparent ‘hypocrisy’ in manipulating search results to reduce visibility for / completely exclude AA runs contrary to FairSearch’s mission.
What About Google & Travel Search?
You might have heard that Google has plans to expand its travel offerings by acquiring ITA Software, a move that is being scrutinized by travel experts and government regulators.
Travel technology, historically speaking, moves at the speed of a glacier – as Quinby so rightly pointed out, it’s no small technical task to aggregate billions of flight options and fare data from multiple sources and present the results in a meaningful manner in a matter of seconds (or less) in a Google Instant world.
The legacy technology (read: dinosaur capabilities) of the major GDS platforms (Sabre, Travelport, Amadeus et al) are now under intense pressure to revamp their products by way of innovation or acquisition, which is very much needed in the travel search world. That brings us to the related issue in travel search technology: the ITA acquisition.
Some proponents believe that Google’s acquisition of ITA Software will lead to more innovation, because they appear to be in the best position to ramp up the technology quickly with the resources that could be put behind it.
Opponents, however, believe that Google already has too much power over initial travel searches, and the acquisition would only give Google more control over travel search and search advertising dollars, and would therefore hinder innovation because of their overwhelming market share.
Most importantly, anti-trust issues arise as Google could control which services license ITA technology – particularly important because Bing Travel currently uses ITA, but there’s no immediate impact on Bing’s travel search results at the moment.
In what would be a worst case scenario for some, Google could simply cut out other OTA/ intermediary sites and opt to display data prominently within the SERP and send traffic direct to airlines, which Google would then profit from via any direct connect deals with the airlines. The question of transparency, again, is a big one.
Because of Google’s stronghold in the search marketplace, if Google’s goal is to drive searchers directly to the best option, could it mean those airlines (like JetBlue, Southwest) who have rejected OTA presence, would be compelled to partner with ITA, in order to remain visible and competitive? (That may actually be a benefit to consumers, however.)
Among these issues, a Huffington Post commentary posted last Friday evening by former antitrust regulator Pamela Jones Harbour, points out other concerns that need to be considered by government regulators (to summarize Harbour’s points):
- Would Google manipulate the SERPs to provide favorable visibility ITA results?
- Could Google impact the pricing strategy for airlines by providing ‘personalized’ results based on demographic information they collect?
- How would the cost of travel search advertising be affected post acquisition and would airlines pass on increase to consumers? (Note: Harbour uses the example of Google/Yahoo Japan deal resulting in advertising costs rising by 5x, she phrases it as “what would prevent Google’s search advertising prices from increasing” – but that is quite misleading, given that the ad marketplace is market-driven, based on supply and demand – it regulates itself. However, the second point may be valid, but perhaps no more so than the rising cost of oil resulting in fuel surcharges; it’s a cost of doing business in the airline industry.)
- Would Google have too much control over the supply and demand side of travel search with the ability to show real-time pricing and availability, giving them power to extract higher advertising fees and what is shown to consumers?
- Would consumer choice (and competition) be affected, as well as limit opportunities for innovation by travel search competitors?
In A Holding Pattern
Given the standoff between the OTAs and airlines at the moment, it’s really a question of who will back down first in negotiations (assuming discussions are still happening as all sides suggest) – it seems one side or the other will need to see a significant decline in revenue before going back to the table with a new deal. It could be months (say, after first quarter earnings are determined) or years before anyone gives in, and much could change in the meantime.
Add to that the indefinite timeline for the ITA acquisition, and what that may mean to the travel search landscape, we’ll just continue to watch what happens in this ongoing drama, like helpless passengers stranded on the tarmac.
What should consumers do in the meantime to ensure they get a good deal on airfare?
If you’re booking a vacation package with Hotels, Cars, Activities, then OTA’s (as well as other niche travel sites) are still the way to go to get the best overall deal, although many airlines also offer vacation bundling, known as dynamic packaging in the industry. But if you only care about the cheapest airfare from point A to B, there’s really only a few options:
- Comparison shop the best you can using meta-search engines like Kayak.com or Fly.com, which allow you to compare the most fares, then go direct to the airline sites to buy.
- Research the best times to buy using Bing Travel’s price predictor or FareCompare.com to get alerts on upcoming fare sales from your airport(s) to favorite destinations.
- Learn which airlines have the most flights from your local airport(s), shop directly with them, but do review their fees/perks programs carefully. If airline has a fare sale within a week or so of your purchase, you may be able to call them and ask for the difference back if the same itinerary is lower.