By SCOTT MAYEROWITZ
AP Airlines Writer
NEW YORK (AP) - Some airlines are making travelers work harder to find a deal.
Carriers are offering more deals
to passengers who book flights directly on their websites. It's an
effort to steer people away from online travel agencies such as Expedia,
Orbitz and Travelocity, which charge the carriers commissions of
roughly $10 to $25 a ticket.
While travelers save money, they also must do without the convenience of one-stop shopping.
Frontier Airlines is the latest
carrier to jump into the fight, announcing Wednesday that it will
penalize passengers who don't book directly with the airline. Those
fliers won't be able to get seat assignments until check-in. And they'll
pay more in fees while earning half as many frequent flier miles.
"Particularly for families, it
provides an incentive to book directly," said Daniel Shurz, Frontier's
senior vice president, commercial. "There is no logical reason for our
customers to want to book anywhere else."
Contracts with the online travel
agencies prohibit airlines from offering lower fares on their sites.
Instead, airlines such as JetBlue Airways Corp., Spirit Airlines Inc.
and Virgin America often provide discount codes in emails to their
frequent fliers or through Facebook and Twitter.
The savings for booking directly can be significant.
Toronto-based Porter Airlines
frequently offers codes that save travelers up to 50 percent. A recent
search of flights from Chicago to Toronto for November produced an
airfare of $249.61 using a code at flyporter.com. The same flights would
have cost $404.38 through Travelocity.
The airlines face a delicate
balance. The online travel agencies account for the lion's share of
ticket sales. But the airlines want to trim the fees that eat into their
profit margins.
Besides the discounts, the
airlines say their sites offer passengers a better experience, providing
up-to-date seat maps, details about in-flight entertainment and more
seamless booking.
Henry Harteveldt, co-founder
Atmosphere Research Group, said the airlines and travel sites have "a
very, very dysfunctional business relationship." The travel sites treat
all flights equally. Price is the only differentiator.
"The online travel agencies
either won't or can't talk about how an airline might have Wi-Fi on a
plane or extra legroom seats available," he said.
The online agencies say they
provide travelers with several advantages, including comparison shopping
and the ability to mix and match airlines for a single trip.
"That's something you can't do on an airline's site," said Dara Khosrowshahi, president and CEO of Expedia, Inc.
Simon Bramely, vice president of
transportation and lodging for Travelocity, part of Sabre Holdings,
noted that "the flight is one element of the trip." He said online
travel agencies can save travelers hassle and money by creating packages
that include hotel rooms and car rentals.
The battle is not new. Southwest
Airlines Co. was a pioneer in cutting out the middleman. The airline
does not list its fares on third party sites. That means travelers have
to search both southwest.com and then elsewhere to compare fares.
Southwest hopes fliers will never make it to another site.
"We think we can have better
control over the customer experience by dealing directly with them,"
said Southwest spokesman Chris Mainz.
Most of the big carriers have
remained quiet. American Airlines, part of AMR Corp., was the exception.
In December 2010, American cut off Orbitz Worldwide, Inc. from
displaying its fares and selling its tickets to protest the commissions
and the failure to displays extras like seat upgrades. The site had been
selling about 3 percent of the airline's overall tickets. Expedia
joined the fight by making American's fares harder to find. All sides
eventually settled their disputes.
Frontier, part of Republic Airways Holdings Inc., is making its changes specifically to cut the commissions.
A four-segment itinerary - say a
roundtrip flight from Sioux Falls, S.D., to Phoenix connecting in
Denver each way - booked directly through Frontier costs the airline
$1.60 to process. That same itinerary booked through an online travel
agent costs Frontier $20 to $26, depending on which website the ticket
is booked on, according to Shurz.
Those commissions add up: Shurz
said Frontier spends about $55 million to 60 million annually on
distribution fees. In the first half of 2012, 42 percent of Frontier's
$713 million in revenue came through tickets sold directly with the
airline. Shurz hopes to increase that figure to 65 percent in a few
years, cutting expenses in the process.
Frontier's customers have a big incentive to book directly.
Only those going through the
airline's website will get to pick their seats in advance. Travelers
booking through third-party websites will only get half the frequent
flier miles. Fees for changing itineraries, going standby, traveling as
an unaccompanied minor or bringing a pet onboard will be $50 higher for
those booking elsewhere.
Frontier is a low-cost carrier
based in Denver. It flies to 80 destinations in the United States, many
smaller cities, as well as leisure destinations such as Mexico, Costa
Rica, Jamaica and the Dominican Republic. Through August, it carried 9.1
million passengers. In that same period, United Continental Holdings
Inc. carried 96.1 million passengers.
In a related move to increase
loyalty, Frontier is lowering the amount of frequent flier miles needed
for a free flight by 5,000. The airline also changed its website URL to
flyfrontier.com.
About the only thing not
changing are baggage fees: They will remain $20 for each of the first
two checked bags regardless of where you buy a ticket.
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AP Airlines Writer Samantha Bomkamp contributed to this report.
