AA Grounds Kayak in Fare Display Tiff
American Airlines is locked in an extremely ugly standoff with travel search site Kayak.com, and the tiff over who should display what fares from whom is getting bigger, and likely has wider ramifications for both the future of travel search websites and online booking, not to mention that it will have a big effect on how much consumers end up paying for flight tickets when they book online.
Here’s the story so far. In late June, AA asked Kayak and at least four other travel search websites to direct all consumers looking for AA fares directly and solely to the AA website, instead of giving consumers the choice of booking either through AA or through travel agents like Orbitz or Cheaptickets.com. This would be because if tickets are booked through companies like Orbitz, then AA has to pay them a referral fee for each customer.
While the other travel search sites have complied, Kayak refused. The situation has now come to a standoff, and AA has pulled its direct listings off Kayak. as of August 1, 2008, Kayak and Sidestep.com (which was recently acquired by Kayak), instead of complying with AA’s demands, are displaying schedules only (not prices) for American Airlines flights. If somebody still wants to book an AA flight from Kayak, even without knowing the price, Kayak sends them off to the Orbitz website.
Note that while it may sound, on the surface, that Kayak is standing upto AA’s bullying, the fact is that Kayak and Orbitz have a partnership deal which ensures that AA has to pay two (See update and comments below for correction) referral fees - Once to Kayak and then again to either Orbitz or Cheaptickets.com (both owned by Orbitz Worldwide Inc.). AA has already cancelled its listings on Kayak, and if this fight continues, they’ll likely pull out of Orbitz too.
Whatever the end result of this little kerfuffle is, its likely to influence how other airlines do business with travel search engines and booking agents in general, and Kayak and Orbitz in particular. Continental and Northwest are likely to follow in AA’s footsteps. Southwest is already ahead of the pack considering that they offer booking only on their own website.
Another aspect is how this will affect the market share of Kayak/Sidestep, since other sites like Yapta are in compliance with AA’s demands, and are able to show AA fares and send prospective passengers directly to the AA site, without offering links to travel agents.
From a consumers point of view, more choice invariably leads to lower prices, so if AA wins this fight, and other airlines follow suit, you can expect air prices while booking online to start climbing.
Update: It has been pointed out (see comments below) that AA does not have to pay a double referral for bookings from Orbitz routed via Kayak. I’ve said what I wanted to say in my response in the comments.
Reference:
http://online.wsj.com/article/SB121755825030403467.html
http://blog.kayak.com/2008/08/01/kayak-statement-on-american-airlines/
Posted on August 3rd, 2008 by PLing
Filed under: Travel News
I’d like to clear the air on some inaccuracies with this story. AA does NOT pay a double referral fee to Orbitz and Kayak.com for AA itineraries purchased through Orbitz. Why, that’s just silly. If a Kayak.com user purchases a ticket directly through the supplier (airline or hotel company directly), then that supplier pays Kayak.com a small referral fee. If, however, a user books an itinerary through an online travel agency site, then the OTA pays Kayak.com that referral fee and the supplier does not give us any money at all. Why would they? And don’t forget, a supplier’s most affordable distribution channel is a meta-search site.
Here’s our official statement released on Aug 1: This morning, Kayak.com became a bit less comprehensive as fares from American Airlines are no longer available on our website. American asked us to suppress search results from online travel agency partners as a condition to displaying their fares on Kayak.com and SideStep.com. We remain committed to providing a comprehensive and objective display to our users.
Therefore, Kayak.com and SideStep.com are displaying schedules only (not prices) for American Airlines flights. Consumers are still able to compare AA itineraries along with those from hundreds of leading airlines, and if they wish to find the price or purchase an AA ticket, they can still do so by clicking on the “Info” link and we’ll send them into the Orbitz booking path. We think this is a step backwards for consumers and we hope American changes its mind.
True. It is kinda silly. Not that its any excuse, but I was quoting from techcrunch (linked above under references). “American Airlines has a particular beef with Kayak because it tends to show AA flights through its partnership with Orbitz instead of directly from American. That means American has to pay a double tax, once to Kayak and once to Orbitz”
Maybe I misinterpreted their meaning. But at the end of the day, anything I publish is my responsibility, so I apologize. I’ll add an update and a correction.
Kellie from Kayak is dead wrong on at least one particular point: A supplier’s most affordable distribution channel is NOT a meta-search site. It’s the supplier’s own site. Do the simple math: A supplier pays a fee for ticket purchases driven through a meta-search site - while it pays nothing for ticket purchases driven through its own site.
That’s right Jessica, but its not all black and white. The grey comes because there’s no one site or channel which can claim to reach every visitor on the net. AA needs all the search sites just as much as sites like Kayak need travel suppliers like AA.
So AA is welcome to get any visitors it can get directly to its site. But as far as paying Kayak/Orbitz, etc. is concerned, isn’t it better that AA gets a customer, even if it has to pay a bit, rather than getting no customer at all out of the pool of visitors who prefer to book through the search and travel agent sites?
I don’t have the stats, but it would be interesting to know how many bookings AA gets directly, as opposed to through referrals.
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