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enilria
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The Airlines' Love-Hate Relationship with OTAs (Expedia, etc)

Wed Dec 14, 2016 3:00 pm

Once again the airlines are talking about cutting or limiting bookings from Online Travel Agents (OTA), Expedia/Travelocity/Orbitz/CTI/etc., and pushing customers back to their own websites. It all sounds like good logic, but it comes with a problem. It hurts airlines' ability to expand into new markets. Why?

In a market where an airline is dominant, like JetBlue at Boston or Delta at Minneapolis, it is common for passengers to just go directly to the airline site to book. In these situations it costs the airlines commission (and lost opportunity to sell up add on fees) to offer their flights on the OTAs which really only serve to show passengers that they could fly on other lesser known airlines, and probably cheaper. It costs the airlines money to sell via OTAs in cities where they have dominant positions.

Conversely, if you are JetBlue in Minneapolis or Jet Blue adds St. Louis, it is very valuable to be in the OTAs since customer visibility for JetBlue in those markets is extremely low. It would be unlikely that customers would go to the JetBlue site to buy. The OTAs are a lifeline to building in new markets.

Any airline that switches away from OTAs becomes dependent upon its own existing hubs or focus cities to sell the vast majority of its tickets and makes expansion into new markets very difficult, but with the benefit of lower and cost and more revenue from existing customers. This is probably part of why WN has struggled in DCA, LGA, PHL, and BOS without being in OTAs.

Cost savings also include about $20 million per year from reviewing agreements with online travel agencies, JetBlue said.

"There's just no way to get across the real value of a JetBlue experience versus flying any of our competitors," Marty St. George, JetBlue's executive vice president of commercial and planning, said in the interview. "Getting back towards a direct model is probably a better solution for us."

For months, airlines have tried to draw passengers to their homepages to upsell add-ons like extra legroom. This effort has put airlines at odds with some websites, which only display the base airfare and has drawn the ire of consumer advocates who say it hampers comparison shopping.


http://www.reuters.com/article/us-jetbl ... SKBN14220H
 
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exFWAOONW
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Re: The Airlines' Love-Hate Relationship with OTAs (Expedia, etc)

Wed Dec 14, 2016 5:27 pm

I might agree with most of what you said, but don't airlines rely on pax from on-line cities more than locals to fill up flights to a new location? That keeps the costs of selling seat lower with more in-house sales. I would argue that slightly more than half on any departing flight are people returning home rather than originating.

I agree, it takes a long, long time for the locals to realize/remember the newcomer when it comes time for a trip. People are creatures of habit.
Is just me, or is flying not as much fun anymore?
 
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readytotaxi
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Re: The Airlines' Love-Hate Relationship with OTAs (Expedia, etc)

Wed Dec 14, 2016 5:51 pm

"For months, airlines have tried to draw passengers to their homepages to upsell add-ons like extra legroom. This effort has put airlines at odds with some websites, which only display the base airfare and has drawn the ire of consumer advocates who say it hampers comparison shopping."

I think airlines should be more pro active at the airport at check-in or at the gate selling upgraded service, perhaps incentivise the staff.
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737max8
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Re: The Airlines' Love-Hate Relationship with OTAs (Expedia, etc)

Wed Dec 14, 2016 6:06 pm

Who said WN has struggled in DCA, LGA, PHL, and BOS? Is that something you are making up or do you have a source?
The thoughts and opinions expressed in my comments do not represent that of any airline or affiliate.
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drdisque
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Re: The Airlines' Love-Hate Relationship with OTAs (Expedia, etc)

Wed Dec 14, 2016 6:51 pm

One thing that mitigates it is that many more people who do not start their search at the airline website are now starting their search at Kayak or Google Flights and not at the OTA. From there they can go directly to the airline website.

Affiliate (Kayak, Sidestep, Google Flights) commissions are MUCH lower than OTA commissions (they're in the $0.50-$1 range compared to the ($3-$10 range for OTA's).
 
MIflyer12
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Re: The Airlines' Love-Hate Relationship with OTAs (Expedia, etc)

Wed Dec 14, 2016 6:55 pm

Intermediaries that don't provide value commensurate with cost get disintermediated if they're not protected by oligopoly or law. (Think of insurance brokers vs. Esurance, or old-style brick and mortar travel agencies that did little but book airlines/hotels/rental cars.)
 
frmrCapCadet
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Re: The Airlines' Love-Hate Relationship with OTAs (Expedia, etc)

Wed Dec 14, 2016 8:20 pm

I wonder if the OTAs would ever consider having customers rate their flights. Preferably moderated, polite, and no rants.
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32andBelow
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Re: The Airlines' Love-Hate Relationship with OTAs (Expedia, etc)

Wed Dec 14, 2016 8:43 pm

One of the biggest problems is that OTAs don't transfer all the information from the OTA to the airline. So the customer to the airline is priceline, and if they need to contact the passenger they are unable.
 
airliner371
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Re: The Airlines' Love-Hate Relationship with OTAs (Expedia, etc)

Wed Dec 14, 2016 10:13 pm

enilria wrote:
Any airline that switches away from OTAs becomes dependent upon its own existing hubs or focus cities to sell the vast majority of its tickets and makes expansion into new markets very difficult, but with the benefit of lower and cost and more revenue from existing customers. This is probably part of why WN has struggled in DCA, LGA, PHL, and BOS without being in OTAs.

No, no, no, no, no. You don't get to make up your own facts. First off DCA... REALLY? Southwest is the largest carrier in the Baltimore/DC Metro Area. Larger than AA, larger than UA. A few of there smaller routes don't have the best load factor, that is it. You're the first one to always mention that load factor does not equal profitability but let's debunk it before you respond with load factor. Their average load factor so far this year has been 77%, a huge improvement year-over-year and the station has continued to improving since the ambush of new flights they added just two years ago. They advertise all over D.C., you can't go 4 blocks without seeing a WN ad somewhere. They have ads all of Reagan Airport itself. Okay so DCA proven wrong, :checkmark:

Next LGA. I don't know where you're getting this b.s. from but this is also false. Let's start with load factor. Through August of this year, it's at 87%. And as a frequent LGA traveler, I can tell you their fares are not through the floor low so don't respond with that either. They're doing well at LGA and Gary Kelly himself has said, given the opportunity to expand, they would love to at LGA and DCA.

BOS: WN's load factor is a whole two percentage points lower than B6's at 83%, which is absolutely solid for a station the size of BOS. They've done plenty of ad campaigning in BOS and frankly people know to check Southwest when they fly out of BOS.

PHL: PHL is seeing huge load factor gains this year over last year. Yeah, their build up of flights YEARS AGO failed against US Airways, they're doing just fine in PHL now though.

Stick with what you know enilria, and clearly you don't know WN. And please stop making up statements like they're facts. For your ego though, you don't even have to respond to this, just consider yourself right and call it a day.

http://www.transtats.bts.gov/Data_Elements.aspx?Data=5

737max8 wrote:
Who said WN has struggled in DCA, LGA, PHL, and BOS? Is that something you are making up or do you have a source?

Nope, he's just making it up as he goes.
 
C010T3
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Re: The Airlines' Love-Hate Relationship with OTAs (Expedia, etc)

Thu Dec 15, 2016 12:04 am

Well, airlines could do what some hotel chains do, which is not offer miles/points on flights not purchased on their websites.
 
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antoniemey
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Re: The Airlines' Love-Hate Relationship with OTAs (Expedia, etc)

Thu Dec 15, 2016 12:05 am

I can tell you that experienced airline agents HATE dealing with passengers from certain online sellers. They're less likely to be properly informed about the baggage allowances and costs and more likely to have errors with their ticket... often ones that the agent cannot fix.
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jwvw89
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Re: The Airlines' Love-Hate Relationship with OTAs (Expedia, etc)

Thu Dec 15, 2016 1:57 am

C010T3 wrote:
Well, airlines could do what some hotel chains do, which is not offer miles/points on flights not purchased on their websites.


Another page I wish the airlines would take from the hotel book is creating your own search aggregator.

The hotels have partnered to create "Roomkey" which is a website like an OTA that aggregates a search of hotel rooms and prices but when its time to book it directs you to each hotel's .com to book directly. I wish airlines would do the same, come together create a common search tool that allows consumers to shop and compare, but for booking consumers then get redirected to each airlines website to book directly. For me it seems win-win, it allows airlines with limited presence in a city have their flights shown to consumers that may not have otherwise known to book with them (e.g. B6 in DFW, WN in CLT) and the airline doesn't have to pay a commission to an OTA.
 
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Web500sjc
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Re: The Airlines' Love-Hate Relationship with OTAs (Expedia, etc)

Thu Dec 15, 2016 2:07 am

jwvw89 wrote:

Another page I wish the airlines would take from the hotel book is creating your own search aggregator.




They did according to Wikipedia; Delta, Northwest, United, Continental, and American created Orbitz.com in 1999 to combat Travelocity.
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BobPatterson
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Re: The Airlines' Love-Hate Relationship with OTAs (Expedia, etc)

Thu Dec 15, 2016 2:08 am

enilria wrote:
This is probably part of why WN has struggled in DCA, LGA, PHL, and BOS without being in OTAs.


I see no evidence, relative to JetBlue for instance, that Southwest is "struggling" for load factor at those airports.

From DOT T-100 data. 2016 data is for 8 months.

Boston.......................Load.....................Load
2004......................................JetBlue.....77.47
2005......................................JetBlue.....82.63
2006......................................JetBlue.....79.13
2007......................................JetBlue.....80.87
2008......................................JetBlue.....78.98
2009.....Southwest.....83.26.....JetBlue.....78.05
2010.....Southwest.....76.45.....JetBlue.....79.69
2011.....Southwest.....78.62.....JetBlue.....82.92
2012.....Southwest.....83.53.....JetBlue.....83.72
2013.....Southwest.....78.49.....JetBlue.....83.19
2014.....Southwest.....82.75.....JetBlue.....85.55
2015.....Southwest.....82.99.....JetBlue.....85.66
2016.....Southwest.....83.67.....JetBlue.....85.63

New York - LaGuardia
2004......................................JetBlue.....84.23
2005......................................JetBlue.....84.88
2006......................................JetBlue.....84.34
2007......................................JetBlue.....82.20
2008......................................JetBlue.....82.41
2009.....Southwest.....79.80.....JetBlue.....82.28
2010.....Southwest.....84.43.....JetBlue.....85.95
2011.....Southwest.....84.30.....JetBlue.....84.09
2012.....Southwest.....80.24.....JetBlue.....82.61
2013.....Southwest.....78.62.....JetBlue.....81.22
2014.....Southwest.....81.77.....JetBlue.....81.63
2015.....Southwest.....84.69.....JetBlue.....81.62
2016.....Southwest.....87.92.....JetBlue.....83.52

Philadelphia
2004.....Southwest.....66.46
2005.....Southwest.....69.31
2006.....Southwest.....65.42
2007.....Southwest.....70.38
2008.....Southwest.....71.48
2009.....Southwest.....75.24
2010.....Southwest.....80.23
2011.....Southwest.....80.12.....JetBlue.....86.57
2012.....Southwest.....78.91
2013.....Southwest.....82.01.....JetBlue.....70.14
2014.....Southwest.....83.22.....JetBlue.....72.22
2015.....Southwest.....86.57.....JetBlue.....77.90
2016.....Southwest.....89.50.....JetBlue.....83.11

Washington - DCA
2011......................................JetBlue.....77.38
2012.....Southwest.....79.89.....JetBlue.....80.52
2013.....Southwest.....76.96.....JetBlue.....79.56
2014.....Southwest.....69.01.....JetBlue.....81.93
2015.....Southwest.....72.19.....JetBlue.....81.87
2016.....Southwest.....77.94.....JetBlue.....82.19
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flymia
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Re: The Airlines' Love-Hate Relationship with OTAs (Expedia, etc)

Thu Dec 15, 2016 4:13 am

I really don't see the point of buying through orbitz or Priceline. I use google flights and kayak to price trips, but I don't use them to buy. After my search I go to the airline sites directly.

And maybe not as normal at the typical traveller but knowing my destinations and airlines that have good options I might just go straight to the site directly, along with always checking the bigger airlines in Miami like JetBlue or AA.

Why someone wouldn't just go to the airline site, after finding the price I don't know. I guess it's just easier.
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alm1
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Re: The Airlines' Love-Hate Relationship with OTAs (Expedia, etc)

Thu Dec 15, 2016 7:16 am

flymia wrote:
Why someone wouldn't just go to the airline site, after finding the price I don't know. I guess it's just easier.


In Europe there is a new trend - OTAs selling at a loss, with negative comission when you go to them using price comparison sites. They try then to make money by charging for some payment methods, selling addons and most importantly selling "service" separately. So you can buy flight a little cheaper than with airline but if you will need anything later (like when airline cancels flight or changes schedule or whatever) they won't do anything without you paying them quite outrageous additional sum.

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