The War Between Airlines and Internet Travel Agencies

According to an article in the Atlanta Journal-Constitution, customers are no longer able to purchase flights on Delta Air Lines through on-line travel agencies, and as of December 17, 2010.

It is the latest in an attempt by airlines to refrain from paying commissions to Internet travel agencies by attempting to direct traffic to their own Internet web sites. Talks and negotiations are still in progress pertaining to American Airlines and their ongoing contract disputes between Internet travel agencies Orbitz and Expedia.

If airlines are successful at cutting out Internet travel agencies and meta-search travel engines who act as “middlemen,” then not only will customers no longer be able to purchase flights on those airlines at those third-party Internet web sites, but they will also no longer be able to access such information as flight schedules, seat availability — and ancillary fees.

Years ago, a similar situation occurred between airlines and “brick-and-mortar” travel agencies where the airlines reduced the commissions paid out at first and then stopped them altogether. As a result, travel agencies either started charging their customers for services that were formerly complimentary, or they went out of business altogether.

Could the airlines successfully collude and deliver a similar fate to on-line travel agencies, which have dropped a nominal fee for their booking services a few years ago, or could the potential strategy backfire and result in a significant drop in revenue for the airlines by not providing its customers with multiple ways to book a flight? Is there a possibility that this war will be done before it gains additional momentum?


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