I first saw the news on TechCrunch a couple days ago. Once I noticed Kayak’s Keith Melnick and Steve Hafner confirm it in the comments section, I figured it was true. American has decided to stop participation in Kayak. After reading the blog post and many of the misinformed comments that followed, I figured I’d give a little primer on how Kayak works and why this move shouldn’t change your opinion of whether to use it or not.
Kayak, Sidestep, Mobissimo, and PriceGrabber Travel, the site I ran until we shut it down last year, are (were) all metasearch sites, or aggregators. (Yes, there are more out there as well.) The basic idea is like that of any shopping comparison site. Kayak (and the others, but I’ll stick with Kayak from now on) doesn’t sell anything itself. It aggregates fares from a variety of sources. Here’s an example of a result I just pulled up on Kayak (the AA relationship doesn’t end until August 1).
When the user finds the flights that he wants, he picks the “seller” he wants to buy from and Kayak sends him over to that seller. In this case, it’s either AA.com or Orbitz, but Kayak works with a bunch of them. (I believe Orbitz/CheapTickets are the only big air providers other than airlines, but that’s a story for another day.)
Anyway, in this case AA.com looks cheaper because the fee includes all booking fees, and the airline site almost always has none (excluding US Airways). Of course, the online travel agent (OTA) usually has one (except for Priceline).
How does Kayak make money? They get paid a little bit when they send you over to the seller or they get paid more when the purchase is actually completed (like a traditional commission). They also make money off advertising, but that’s not relevant to this discussion. (I’ve really got to stop using so many parentheses.)
Now, according to American (via BudgetTravel):
Kayak/Sidestep has advised American Airlines that they will no longer display our content.
We are disappointed and hopeful that this issue can be resolved in the near future so that American Airlines will again display on the Kayak/Sidestep sites.
Hmm, this doesn’t sound right. But then I noticed Kayak chief Steve Hafner’s comment on TechCrunch and it makes sense of what’s going on. He said:
American asked us to suppress search results from competing websites as a condition to displaying their fares. This is simply not something that Kayak will do. Imagine Sony telling Best Buy that they couldn’t sell Panasonic?
Now this quote is hardly using an apples-to-apples comparison. It would be like Sony telling Best Buy that they couldn’t sell Sony products provided by third party resellers. But the point I take from this is that American says it will participate in Kayak only if no results from OTAs are displayed for their flights. Kayak told them to take a hike.
Why does Kayak want results from Orbitz or other online travel agents in the first place? Backfill. It’s hard to develop a relationship with every airline, and some don’t ever want to participate, so Kayak would have an incomplete offering if it couldn’t fill in the blanks with an online travel agent. In some cases, this means that results from multiple sellers will be displayed. American doesn’t like that so they’re walking away.
TechCrunch inaccurately states that “American Airlines has a particular beef with Kayak because it tends to show AA flights through its partnership with Orbitz instead of directly from American. That means American has to pay a double tax, once to Kayak and once to Orbitz.”
It is possible that some flights are being shown through Orbitz and not AA.com, but my last search showed the opposite was true. The reality is that American and Orbitz have different connections with different data transfer speeds to Kayak, so different numbers of flights results get returned. So you will have some occasions when one seller shows up and not the other, but ideally they would both show up on each flight. This is good for you, because sometimes you can find one site happens to be cheaper than the rest.
If Kayak is, in fact, suppressing results from AA.com and only showing Orbitz because they can make more off Orbitz, then that is absolutely inexcusable. I would be surprised to see that happening.
One thing that seems certain is that American would never pay a double fee, unless Kayak has instituted some sort of listing fee and that would surprise me. Payment historically hasn’t been upon display but rather when the click occurs or when the purchase occurs. AA will either pay Kayak directly or Orbitz will pay Kayak and American will pay Orbitz its usual commission. Those are the only options. Maybe the Kayak guys will read this and can offer some clarification if that’s not true.
Whichever “CEO of a competing travel site” leaked this information to TechCrunch appears to have an axe to grind with Kayak. Just remember this. If you go to Kayak, you may not see AA.com, but you’ll still see those flights from Orbitz. Save $6 and go directly to AA.com to book, but don’t think that the Kayak results will now be incomplete. If you liked shopping there before (and I know there are mixed feelings on that one), this shouldn’t change your mind.