Saturday, March 21, 2009

Airlines, OTAs in in Metasearch Gridlock

Now, the real work begins.
There is so much sameness to metasearch these days, now that Expedia and Travelocity removed, at least temporarily, their consumer booking fees on flights.
For example, when I compared Delta fares on JFK-Dallas flights for the end of March, I found the following uniformity in a side-by-side grid display of fare offerings using the TripAdvisor flight-search tool: Delta, Expedia and Travelocity all were selling the Delta flight for $369.
Why click on one over the other?
Until recently, Delta, or most other carriers, probably would have offered the cheaper fare because Travelocity and Expedia tacked on their booking fees.
So, with the booking fees on hold, how are airlines -- and the OTAs, for that matter -- going to distinguish themselves in this, ahem, metasearch gridlock?
It is an important question for the airlines because in the past few years metasearch has evolved in the carriers' planning from an experiment into a mandatory part of their distribution strategies. They need to be where the customers are -- and about 18 percent of U.S. online-travel bookers use metasearch to plan and shop, according to Forrester Research.
In a well-publicized battle with Kayak last year, American Airlines figured out one way to stand out. Kayak and others agreed to display American Airline's fares alone, without any side-by-side comparisons to Orbitz or anyone else.
I believe it is likely that other airlines will put renewed pressure on the metasearch companies to do likewise now that the playing field has been leveled.
Will that be enough?
Billy Sanez, an American spokesman, tells me there already is differentiation beyond the solitary displays. Once consumers click on an AA fare in a metasearch engine, they usually get deep-linked into, which offers a potpouri of ways to search -- by price, schedules, flights with available seats, and flights regardless of availabilties etc. You even can download a complete American or Oneworld timetable. "The job's being done," Sanez says, meaning AA is converting an attractive number of these metasearch-delivered shoppers.
But, is AA and are other airlines getting this message out to consumers in a strong enough way? If cost-conscious consumers scour a metasearch grid and see the same American or Delta fares at the same price on the airline sites, Expedia and Travelocity, will the travelers be aware enough to know that they should book on the airline link because there is all kinds of beneficial razmataz going on over there?
How can the airlines further differentiate themselves in the metasearch gridlock beyond the solitaray displays and get their message out in more clearly defined ways?
Did someone just say "Twitter?"


Darren Cronian said...

Hi Dennis,

Is they really a benefit of consumers clicking on the airline booking link over an OTA? I don't know about in the US, but consumers here are being brainwashed to book with an ATOL agency, so I suspect that many would opt for Expedia/Travelocity over say AA or Delta.


About Dennis Schaal said...

Darren: I am really not that familiar with ATOL in the U.K. However, you get at the essence of the issue. American Airlines and others argue that there really is a benefit of booking airline-direct. Better ways to search, special promotions for frequent flyers etc. I'm sure the OTAs would argue it should not be all about price and they have their benefits, too. Let's see who wins the argument.

About Dennis Schaal said...

Darren: I took a drive, went out for some dinner, am watching the World Baseball Classic (7th inning, South Korea is walloping Venezuela), and I started to think more about your question. Is there really a benefit to booking on an airline site over an OTA? In the U.S. and Canada at the moment, the answer is "yes." Definitely. There are a whole bunch of fare families, premium seats (not to mention checked-bag fees) and a la carte services that the GDSs, traditional travel agencies and OTAs don't have access to yet. And the carriers, pushing airline-direct, are in no hurry to broaden the reach of these products and services. When the GDSs announce full-content agreements with airlines, the "full content" is a glass half-full. With some of this content exclusively on airline sites, consumers can't find these products on the OTA sites and local travel agencies can't book them, either. So, if the airlines aren't serious about widening the distribution of these services, perhaps this is a differentiator that they should emphasize in their marketing, although it really isn't a pro-consumer message.

Valyn Perini said...


You say "it really isn't a pro-consumer message" but I'd say it's just not a pro-intermediary message. The average consumer out there isn't loyal to an OTA or a travel agent (unless he's a big spender or directed by a corporate travel policy), and doesn't really care if he has to open up one more tab in his browser window. The look-to-book ratio is still in the stratosphere, so consumers are used to shopping for fares.

The reduction in booking fees makes me think the airlines are going to have to step up incentives for consumers, and linking deep into isn't going to be enough. What better incentive to a consumer than offering products on that can't be found on the GDS and OTAs? That's just smart product distribution, and true channel differentiation.


Dennis Schaal said...

Valyn: I agree it is channel differentiation if is offering products unavailable in travel agencies and OTAs etc. If they start offering real incentives and attractive products, then, yes, that would be a big differentiation. When I said "it really isn't a pro-consumer message," I meant it wouldn't be if they were telling consumers, "Hey, come to our website so we can charge you to check your bags etc."