American Makes Expedia Less Useful

American, Distribution
Late last week, American put out a terse press release that simply said that the airline “will no longer sell international tickets or domestic first or business class tickets through Expedia.com or any other website powered by Expedia.com to customers purchasing travel from the United States.”

Talk about a bad day for Expedia and for online travel agents in general.

Word on the street is that the airline couldn’t make an economic case for continuing to sell those tickets through Expedia, a rather expensive distribution channel (though Expedia says they pulled them off themselves). For years the airlines have been hammering at distribution costs, tirelessly working to squeeze money out of every profitable distribution partner while the airlines themselves bled red ink. Part of that process involved trying to push customers to use each airline’s own internet site, the place where distribution costs were at their lowest. This move is just another step in that evolution.

That being said, calling it just another step is far from fair. This is a very big deal. Expedia is the largest online travel agent with almost 30 million unique visits per month at last check. Increasingly, those visits are solely for shopping purposes. When customers find flights they want, many head to the airline website to avoid the booking fees charged by Expedia and others.

For those people traveling internationally or in premium cabins, Expedia will no longer provide a very good comparison. That means people will likely flee the site for other more comprehensive ones. For that reason, I would be surprised if this move was permanent, though I’m hearing that it very well may be. This is likely to be just the beginning and other online travel agents may be affected next.

People will always need to compare though, so how can they do it going forward? Let me suggest metasearch. (Full Disclosure: I run PriceGrabber.com Travel, a metasearch site)

The idea of metasearch is simple. Customers come to one site (besides PriceGrabber, there are many sites including market leaders Kayak and Sidestep) and search just like you would on any other travel site. At that point, the single site goes out and gets results from a bunch of different sites. Some of these are direct airline sites like continental.com while others are online travel agents like Orbitz (not Expedia – they won’t play nice). When you find the flights you like, instead of booking on that site, you get sent to the other sites for booking. So if you find a US Airways flight you like, you can click straight through to usairways.com where you buy the ticket without a booking fee.

In theory, this makes a great deal of sense. It lets people compare but it lets the airlines do the booking themselves. Don’t think that this means the end of the online travel agent though. Customers still need them for multi-airline itineraries, and they’re working hard to provide extra customer care that will make it worthwhile for some people to pay the booking fees. But for basic transactions, the airlines want you to book directly and you want to compare all your options. Metasearch will let you do both.

Unfortunately, there are technical issues that prevent this from being completely ready for prime time. Not all airlines participate (Southwest won’t, for example), and those that do have to overcome technical and economic issues that come with an increased number of searches. Those are already being addressed and eventually they will be resolved.

Even now, though, Expedia not having a great deal of American Airlines’ itineraries makes the site a lot less useful than a metasearch site without Southwest (Expedia doesn’t have them either). This should make metasearch sites much more compelling.

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