As predicted here, Expedia has decided to make its temporary elimination of the airfare booking fee permanent. This follows in the steps of Priceline and Hotwire, which stopped adding a surcharge over a year ago.

The Expedia fee was scheduled to go back into effect on June 1. The company had two choices: Quietly reinstate the fees, and face the marketing wrath of the no-fee competition, or “permanently” kill the fee with a big fanfare. How’s the fanfare sound on your end?

The big agencies still get a cut of the sale, unlike most mom-and-pop travel agencies, so the extra booking fee monies were additional revenue. Many customers (31%, according to here) were doing their searches on the major agencies’ sites, and then going to the airline to book directly and save the fee. Now, the agencies’ fares should be on the same level as the airlines’ own websites.

Interestingly, Expedia also cut change fees in the same breath:

Other fee changes also were announced Wednesday. Expedia.com said it will eliminate the change-and-cancel fees on hotel, car rental and cruise reservations and on most flight reservations. Flights that are part of certain package deals will still be subject to a fee when reservations are changed or canceled. Expedia.com said it will resume charging $20 [on June 1, 2009] to make a flight booking over the phone, a fee that was halted during the promotion.

Eliminating change-and-cancel fees is nice, but it’s just the surcharge, not the totality of relevant fees. Airlines are charging $100, $150, or more to change itineraries for non-refundable booking classes, and Expedia can’t waive those fees. The elimination only applies to the surcharges which Expedia tacked on.

In any case, this puts pressure on Travelocity and Orbitz to make fee cuts permanent as well. Both of those sites’ fee-elimination policies have a sunset clause, and fees are scheduled to re-emerge on June 1. Neither site is commenting on whether they’ll follow Expedia’s lead or not. We’ll see if there are more announcements of newly-permanent fee reductions in the coming days…

Three weeks ago, to the day, I asked when Orbitz would drop its airfare booking fee in response to fee-cutting by Priceline, Hotwire, Travelocity, and Expedia. The answer: Today.

Orbitz has followed suit and has temporarily ended the airfare booking fee, for tickets purchased through May 31, 2009. The fine print: “Valid for round-trip or one-way flights through May 31, 2009. Excludes multi-carrier itineraries and flights originating outside the U.S., Canada, Mexico and the Caribbean.” Too bad about the multi-carrier itineraries. That’s something Orbitz excels at, so perhaps it makes sense that they still charge a premium for it. But still, too bad.

In their press release, they pitch that the combination of the newly-deleted fees and the Price Assurance program (analyzed here and here) makes them the online agency of choice. Assuming that the fares are the same at, say, Orbitz and Expedia, but the only difference was Orbitz’ Price Assurance program, then yes, I’d choose the no-fee Orbitz (even if I’m still a skeptic as to the real worth of Price Assurance).

But regardless: the clock is ticking. May 31 is the same expiration date as Travelocity and Expedia, which is not a huge window of opportunity.

But will they really bring fees back on June 1? I still maintain that, once you and your competitors let the genie out of the bottle, it’s hard to be the first to squeeze it back in. Priceline and Hotwire are unlikely to add the fee back in. Will Orbitz blink? Will Expedia? Travelocity?

I’m still betting that the no-fee environment will be extended. If one agency brings the fee back, expect a marketing blitz by competitors, touting the difference.

In the meantime, consumers benefit.

Nearly three years ago, this site reviewed the then-burgeoning field of airfare aggregators, also known as metasearch sites. These sites let you compare the fares available across multiple airlines and across multiple booking sites, to help you find the lowest fare. Last time, Kayak came out on top. How much has changed in the last three years?

For starters, there are sites which have folded, some new competitors, and sites that changed their model significantly. At the same time, there has been pushback from airlines and suppliers, some of which have resisted the aggregator model. (The lawsuits between American Airlines and Kayak, which initially resulted in American Airlines no longer being listed in Kayak results, was perhaps the most prominent case of pushback. Since October 2008, aa.com results are back in the results. More on that below.)

The result: The golden ring of a truly complete search, covering all the options and all the providers, is still a ways away. No single site actually finds every flight option, every fare, or every seller.

But that doesn’t mean that there aren’t differences between the aggregators. It’s time to disaggregate the aggregators again.

This year, each site was put through multiple tests. Four kinds of itinerary were tested: A large-city to medium-city domestic US flight with multiple carriers offering direct service; a medium-city to small-city domestic US flight with at least one change of plane required; an international flight with a US origin; and international flights (from Paris to Dubai, and Manchester to Madrid) to test how sites do for non-US flights. For each of these flights, I tested a short-term booking (7 days advance purchase) and a longer-term booking (30 days advance purchase).

This time, I compared Kayak, Sidestep, Mobissimo, TripAdvisor Flights, Momondo, Skyscanner, WeGo (formerly Bezurk), Trax, Farecast, Fly.com, and Dohop. Sites which were on the list last time but either folded or stopped doing metasearch include FareChase (bought by Yahoo, then abandoned in March 2009), PriceGrabber, and Qixo.

So which aggregator came out on top in 2009? Here’s the summary, with site-by-site reviews thereafter… (more…)

Back in June, Orbitz launched “Price Assurance,” by which customers would get refunds if other customers bought the same itinerary for a lower price. I reviewed it, with skepticism, when it was rolled out.

Here’s what I wrote when it was rolled out:

Unlike Yapta, which tracks fare drops and alerts you when the published price goes down, Orbitz will automatically send you a check IF AND ONLY IF another Orbitz customer purchases the same ticket you booked, and they do it for less money. If the price just goes down, but no one buys that ticket on Orbitz, you’re out of luck. No refund.

So when would you be more likely to win in the refund lottery? It would need to be a frequently purchased itinerary, so I’d be expecting it on major business routes like Washington-Chicago, San Francisco-New York, etc. Trying to get a price drop refund on that Bozeman, Montana to Fayetteville, North Carolina itinerary? Good luck with that.

So were my hunches right, or wrong? I asked Orbitz what the numbers really look like. Here’s an update from their reps:

Orbitz has mailed refund checks to travelers on over 2,400 routes since June 2008. This information is based on flights purchased on Orbitz.com in instances where a customer has purchased an airline ticket, and a subsequent Orbitz customer purchases a ticket on the same flight at a lower price, automatically generating a refund.

Subsequently, Orbitz provided a spreadsheet with the top ten refunded routes from ten cities. (The document was labeled “top 20,” but there are 70 routes mentioned.)

As I predicted, the majority of routes are indeed major business routes between American cities. There are some quirky outliers, though. Atlanta to Liberia, Costa Rica; Chicago to Guadalajara, Mexico; Miami to Barranquilla, Colombia; New York to Paris. The major business routes remain king, though.

Have any of you bought a ticket on Orbitz and gotten a refund afterward? If so, hit the comments.

[UPDATE: In a followup, Orbitz has provided the top 20 routes that have generated refunds. The list of 70 routes originally posted represents the top ten refund routes for those particular departure cities. I'm appending the top 20 list as well. Thanks to Orbitz for sharing the data!]

See the complete list, as provided by Orbitz, below the jump…

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Elizabeth of Go Green Travel Green (not pictured) writes in to remind me of the new “price assurance” policy that Orbitz rolled out last week.

After you book your flight, Price Assurance guarantees that if someone else books the same flight (same date, same time) through Orbitz at a better rate than yours, Orbitz will send you a check for the difference (between $5 and $250 per person).

According to the Wall Street Journal, the move is an attempt to ward off competition from Priceline and Hotwire, both of which eliminated the ticket booking fees so often associated with online travel agencies. (Orbitz charges a $6 booking fee edit:$4.99 to $11.99 booking fee, variable depending on the itinerary, per ticket.)

So instead of offering a guaranteed discount (i.e., no booking fee), Orbitz is offering you the possibility of greater rewards, but for greater risk. It’s a gamble. And, in my estimation, it’s a losing bet, with the odds favor the house on this one.

Unlike Yapta, which tracks fare drops and alerts you when the published price goes down, Orbitz will automatically send you a check IF AND ONLY IF another Orbitz customer purchases the same ticket you booked, and they do it for less money. If the price just goes down, but no one buys that ticket on Orbitz, you’re out of luck. No refund.

So when would you be more likely to win in the refund lottery? It would need to be a frequently purchased itinerary, so I’d be expecting it on major business routes like Washington-Chicago, San Francisco-New York, etc. Trying to get a price drop refund on that Bozeman, Montana to Fayetteville, North Carolina itinerary? Good luck with that.

And besides, do you really expect fares to go DOWN much anytime soon? If Orbitz starts offering the other side of that wager, I’ll be in.

For the most part, I’d stick with either the airline’s own website, Priceline, or Hotwire, to save on the booking fee.

Related:
- The black art of repricing tickets
- Track airfare before and AFTER you buy?
- Putting low-fare guarantees to the test
- Orbitz (aff)

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Reader Joe writes in:

I live in Ventura, California, and I was looking at a flight to Philadelphia. But the fares don’t make sense. It’s cheaper for me to fly from Santa Barbara to LAX to Philadelphia than it is to fly nonstop LAX-PHL. I don’t get it. It’s cheaper to connect at LAX??! I’m flying further, so why is it less? About $80 less, too. Why??

Ahh, airline economics. Use more of a resource, pay less! But believe it or not there’s sometimes a logic to it.

In fact, this is quite common. I recently faced a similar thing when buying a ticket. It was cheaper to fly from Greensboro to Charlotte, and onward to San Diego, that to fly nonstop from Charlotte to San Diego. Adding the Greensboro to Charlotte leg actually caused the price to drop about $70.

Two important things to remember:
1) Pairs matter. Distance doesn’t.
Fares won’t necessarily depend on the route you fly. Fares are based on city pairs — the departure and destination city.
2) Supply and Demand.
Supply and competition for a particular route will generally trump other economic factors like distance flown.

Airlines price flights based not only on the costs they incur, but also on the demand for the route and the amount of competition for the particular city pair. In your case, Joe, the LAX-Philadelphia route may have seen hefty sales already, selling out the cheaper seats on that route. But the Santa Barbara-Philadelphia city pair may have seen only light sales, so the cheap seats could still have been available.

And don’t forget fare sales: If a competitor is driving prices lower on the Santa Barbara-Philadelphia route, then prices are likely to drop. This is especially noticeable when a new, cheaper competitor starts service from a city. (The “Southwest Effect” is a common phrase to describe the effect of fares on a city when Southwest starts service in a market.)

[As a sidebar: Given the fact that you'll have to change planes, thereby risking a misconnection and spending more time in airports, is it really worth saving a few bucks to increase your inconvenience? You might also be paying a nonstop premium, which could easily be worth it. I realize your question was about why the price difference exists, but the lower price may still be a bad value.]

Bottom line: If you’re trying to make sense of an airfare, ignore distance. Ignore where you’re changing planes. And ignore superficial logic. Focus on price for the explanation.

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