Five major US agencies have (temporarily) eliminated booking fees on air tickets. Now, Orbitz is escalating the fight against its competitors by changing its display of rates and reducing the booking fee on hotel rooms.

Orbitz will show the total of base rate, taxes, and fees on the search results page. (No word on mandatory charges like resort fees that hotels hide from searches.)

How much of a change is this? On the surface, this is a positive step toward greater price transparency. But is it really a big shift? Since hotel searches are geographically limited, taxes rise proportionally with base rates. Lower rates would, by definition, mean lower total prices. (This is unlike airfares, where base fares on two airlines may be the same, but the total prices may vary based on the number of stopovers or the airports involved.)

In terms of fees, the simultaneous reduction and integration of fees in results muddies things. Orbitz says they’re reducing hotel booking fees charged by the site, with a sunset clause that expires the reduction after July 15, 2009.

But who would notice? Since the fees aren’t itemized, it’s hard to see what the actual fee to Orbitz is. Customers may not care about whom they’re paying their fees to, but it’s not really transparent.

At first, I thought this would put pressure on Priceline, which claims to be “working hard to keep priceline’s hotel booking fees lower than Expedia, Travelocity, Orbitz, and even Hotels.com.” But if Orbitz fees aren’t broken out, then the real pressure is to show total cost up front.

As far as transparency is concerned, this is still a good move. Let’s hope these changes gain sway with others, and that they last beyond July 15.

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.

Today, Travelocity dropped its booking fee for airline tickets. A week ago, Expedia did the same.

Both agencies are promising that the fees will be on hiatus until May 31, 2009. But bringing the charge back may be tough: Back in 2007, Priceline and Hotwire dropped their booking fees “temporarily,” and they still haven’t brought the fees back.

That leaves Orbitz as the lone holdout among the biggest U.S. travel agencies. So when will Orbitz, the biggest holdout, throw in the towel on fees?

Consumers should welcome the rollback of these add-on booking charges. But this episode shows how brutal the online travel marketplace is right now. If online travel agencies want to collect a surcharge, they’re going to have to get creative, and earn it. Simply offering price comparisons and a few online alerts — which are free elsewhere — won’t cut it. And Travelocity, Expedia, Priceline, and Hotwire have admitted that.

Sure, Orbitz may counterargue that they provide value-added with their price guarantee, but since that service is of relatively limited value, I wouldn’t pay a premium for it (though maybe it’s worth the $6.99+ gamble for someone else…)

Travelocity is even poking a stick in Orbitz’ eye by copying their “Price Assurance” model and bringing it to vacation packages under the name “PriceGuardian.” If someone else books the same package as you, and the price has dropped, you get a check for the difference. Yeah, good luck with that.

What we may see is a shift to voluntary fees for add-on services, much like the airlines are going a-la-carte themselves. Want a price-drop guarantee? Pay a few bucks up front. Want text message alerts? A few more bucks. That I could see happening. But the standard one-size-fits-all fee is history at the mainstream agencies.

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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TechCrunch reported and Budget Travel confirms that American Airlines is pulling its fares out of the granddaddy of all airfare aggregators, Kayak.com. Effective August 1, you won’t see AA fares on Kayak.

TechCrunch also reports, citing “the CEO of a competing travel site” as a source, that American is “considering doing the same with Orbitz. If it does so, other airlines such as Continental and Northwest may follow suit.”

For starters, this stinks for consumers, because it’s making comparison shopping harder. Already we’re stuck comparing apples to oranges, thanks to the variation between the airlines’ myriad fees. But in the long run, I’m betting that pulling out of comparison sites will stink for the airline, too, and we’ll see this decision reversed.

The comparison with Southwest will inevitably arise. Sure, Southwest doesn’t show up in comparison sites, but Southwest customers have been “trained” for years now to skip the search engines and go straight to the airline. American doesn’t have that kind of culture built up, and it’s unlikely to go all-in toward creating such a culture at this point. Just pulling out of Kayak won’t do the trick. And worse, it’s a real pain in the butt to waste time looking all over the internet for the lowest fare. I have always disliked that about Southwest, but hey, it’s working for them. Still, Southwest is the exception — not everyone can pull off selling tickets solely on their their own. Even JetBlue caved in and started publishing fares on other sites.

American Airlines has played these games before. They once yanked first-class fares from Expedia, but came back three weeks later.

This sort of thing goes both ways, too. Notably, online travel agencies don’t claim to cover ALL the options. Orbitz, for example, limits customers’ choices in its rental car search to those companies that pay to be included.

I’m betting that American’s pullout is a bargaining strategy. They hate to pay any referral fees to sites that drive them customers, but they don’t want to lose those customers entirely. Their real goal: to negotiate a smaller revenue split with Kayak and/or Orbitz.

If I’m right, then American’s fares will be back online for comparison shopping within a month or so. If I’m wrong, then we will likely see other airlines do the same, and the business model of Kayak and its competitors is at risk. It’s not just venture capitalists who lose out if those sites fail: The consumer loses. So I really hope my prediction is right.

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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