Expedia and Travelocity Drop Booking Fees (Temporarily)

There’s good news out there for those of you who like to book your travel using online travel agents. Expedia and Travelocity have both followed in Priceline’s footsteps and dropped all booking fees for flights. There don’t appear to be any catches, but this is a temporary move. Flights must be booked by May 31.

After Priceline did this ages ago, Expedia was the first to follow and drop fees. I think it’s safe to assume that this is a competitive move to try to shift more share from its competitors. Travelocity soon followed, apparently afraid it would lose too much share.

But Orbitz has yet to match. Will they hold out? Orbitz has done a lot to try to differentiate itself from other sites with its TLC and Price Assurance programs, but now the latter is being copied as well. Travelocity said it will also refund your money if someone books the same trip as you for less, but they will only do it for vacation packages. Not to be outdone, Priceline said it will do the same for both individual flight itineraries and vacation packages. Confused yet?

I just have to wonder if this move makes sense at all. You would think that the fee-sensitive travelers had stopped booking with online travel agent sites long ago and now go to the airline sites. Are they going to come back now? I doubt it. Of course, as I mentioned, it’s probably just an effort to bring people over from other online travel agents, like Priceline. Since Priceline stopped charging fees, they have attracted a greater share of the audience. Expedia must now think it’s significant to do something about it. And maybe Orbitz disagrees. Time will tell, though I think it’s more likely that they’re just preparing their response as I write this.

Mark over at Upgrade: Travel Better thinks this “temporary” fee cut may become permanent, and he very well may be right. Once you get into these competitive spirals, it’s hard to get out, even if it ends up not working out well for the bottom line.


16 Responses to Expedia and Travelocity Drop Booking Fees (Temporarily)

  1. The Traveling Optimist says:

    Typically I’ll look at one or two of the online agencies to shop the market (air only) then I’ll go directly to my airline of choice for the purchase. It saves me some money and peace of mind about whom to go to for redress in the event of ticketing issues.

    In this electronic age maybe that’s too much work for some but still a lot less intensive than sitting at an agency desk, hanging on the phone making one call after another or being told to go back to the agency for re-issues because “they have the money.”

  2. David says:

    Perhaps a naive question, but if those booking fees disappear, what’s the incentive for the likes of Expedia to be selling flights at all ? Are they going to have to survive purely as a packager, putting together flight, hotel and car hire for you all-in-one ?

  3. The Traveling Optimist says:

    David – I used to analyze booking trends as part of product distribution for a legacy carrier way back in the day. Then it was fairly straight forward: airlines paid booking fees for each segment of travel, agencies collected a commission from the carriers as their representative.

    Logic suggests that structure is still in place. A per segment fee to the database service (SABRE, Apollo, Worldspan, Amadeus, etc) and a fee or volume incentive to the agency, brick and mortar or online. Fees from the agency to the customer were either pure profit or to supplement reduced fees from the airlines.

    Airlines discovered long ago that corporate volume contracts drove buyer choice on the corporate side and (largely) pure price on the private sector end of the equation, reducing the influence agencies once held in large measure. Same with online agencies today…there’s no one to cajole you one way or the other for their financial benefit so they collect a fee from you regardless of your choice.

    Cranky is right – with the initial spiral in to “free bookings” that’s not likely to be reversed. The online agencies will have to tighten their belts or foist more advertising on you to recoup the moneys via click-thru.

  4. CF says:

    David – To add to what Optimist says, many people think that travel agency commissions are gone, but that’s only the case for smaller agencies. Big guys, including online agencies, still get commissions because of their ability to truly move the market. So, they’ll still make some money on each flight but just not much.

  5. Andrew says:

    In response to some of the information in the OP, I have used an online travel agency (expedia) recently to book a ticket — because I could not get it to price correctly on the airlines website (fly-ana). Apart from that, I book exclusively with airline’s own websites.

  6. David M says:

    I’ll comparison shop and book an online agency if they’re better priced, but that’s pretty rare. Especially with the bigger places, about the only time I see a better deal is if they combine two different airlines, though the last time I booked something like this was when Expedia put together ATA OAK-LIH and Aloha LIH-HNL for a last minute one way ticket. Sometimes, the agencies that specialize in certain markets will have contract fares, but I haven’t been seeing that as much recently, either.

    For a trip I booked earlier this week, I used Kayak and the new TripAdvisor flight search to keep an eye on things. The one thing I didn’t like about TripAdvisor wasn’t really their fault; Hotwire’s database seemed to be polluted with low fares that were no longer available (mostly CO operated by NW) so those bad results kept coming to the top of the list. Finally, when I got the airline I wanted at the price I wanted at the times I wanted, I clicked the Kayak link to the airline site.

  7. David says:

    Until a few years ago, Travelocity used to have a facility whereby one could enter an airport pair, and the website would list all filed fares between the 2 airports. Furthermore, one could then choose any particular fare, and see on which dates that fare was available.

    Travelocity pulled this feature a while ago (and I wasn’t happy when they did so !). Opodo have a very weak imitation of this on their website.

    Anyone ever seen anything similiar ?

  8. CF says:

    David – I haven’t seen anything like that personally, but you can get a ton of fare info over at FareCompare.com. It’s still not as good when you need to marry availability with the fare amount, but it’s better than nothing.

  9. JK says:

    CF–Interesting, as usual. One question I’ve wondered about: statisically, what percentage of travelers fly essentially with a single airline for nearly all their annual travel vs. the pecentage who fly with multiple airlines over the course of the year?

    I’ve sort of felt that with company contracts, one’s location, i.e., one’s home airport, and loyalty programs, choosing an airline isn’t quite as big of a deal as we might think it is. Also, that price is seen as being so important, might apply more to the prices of the individual airline we favor, as opposed to the whole field of carriers we might be able to see on the online travel agent.

    Of course, there is always the impact of Southwest. How do travelers factor in this airline, or do they, when they make their booking decisions?

    Thank you! Will be moving on to solve the world’s economic problems next week!

  10. CF says:

    JK – That’s a good question, but I don’t know the answer. Company contracts often allow people to fly multiple “preferred” carriers, so there can be some variance there. And of course, when someone who has a choice reaches their “threshold” for elite status, they may then start experimenting with other carriers for the rest of the year so they can see what else is out there. So I would imagine that most frequent fliers are on multiple carriers during the year. Add in the alliances that are out there and it really does open up options a great deal.

    As for Southwest, well, they’ve done a great job of getting people to go to their website, but as they’ve turned to focus more on managed travel, they’ve started striking more deals to show up in the Global Distribution Systems. They are a significant player, especially in markets where they have such a strong schedule. If you want a short haul from LA, for example, Southwest will give you the best schedule on most routes within the state or to neighboring states. That’s invaluable for the business traveler.

  11. Axelsarki says:

    CF, how can you volunteer @ LB? I live in the LA area, and would love to do something related to LB.

  12. CF says:

    Axel – I’m not sure if you have to be 18 or not, but you should certainly give them a call. Contact Maricela de Rivera at (562) 570-2674 or email at maderiv@longbeach.gov. Depending upon where you are in LA, you might want to try Travelers Aid at LAX. I actually volunteered with them when I was about 16 or 17, but I believe they weren’t big on going much younger. Still, call them and see. Hopefully they can get you involved.
    http://www.tasla.org/

  13. John says:

    FYI
    Travelocity has brought the feature back where you can search all fares between any two cities for the next several months
    Go to Flights home page and click the Flexible dates button after you enter the city pairs
    It works for most destinations including international
    Just saved about $700 roundtrip for two from ORD SXM using this feature
    Highly recommend it
    Cheers

  14. Barbara Coleman says:

    i booked a trip in July 2011 with Travelocity and was charged a booking fee of $63.90. I thought these booking fees had been dropped by Travelocity. Is this a legal fee ????

    • CF says:

      You can check with Travelocity but that’s a fairly strange number, so I’d bet it’s some sort of tax they’re passing on from one of the governments. I don’t recall if Travelocity was charging booking fees or not, but there’s certainly nothing illegal about them doing it as long as it’s disclosed.

  15. rita jones says:

    I just paid $7.00 booking fee on Expedia. I didn’t think they charged booking fees.
    I tried to book the ticket on Air France and they told me the flight was sold out.

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