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Desperate times call for desperate measures benefit consumers. As online travel agencies slug it out in the hunt for market share, many are starting to cut booking fees -- ironically, in stark contrast to what the airlines themselves are doing. While the airlines are looking to squeeze every last ounce of revenue from each passenger mile, the websites that put people in seats are hungry for any competitive advantage they can find.
Orbitz Worldwide (NYSE: OWW) has permanently kicked its airline booking fees on both domestic and international flights. Travelocity is following suit, to a limited extent, at least, by continuing to wave booking fees ... a measure that Expedia Inc (NASDAQ: EXPE) is taking, as well. What started as promotions are fast becoming the norm.
Are the travel sites trading long-term opportunities for a short-term bump?
It could go either way. If they can gain a serious piece of the market and retain it for the long run, the winners may be able to make up the difference by using the larger customer base as a way to cross-sell back into the (relative) black. But, it's easy to screw this one up. By either failing to secure a bigger piece of the pie or not getting consumers to spend more later, the play could end in disaster.
Of course, now is the time for bold moves. Only Priceline (NASDAQ: PCLN) -- which hasn't charged booking fees since 2007 -- showed first quarter bookings growth (among publicly traded online travel agencies).
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