On Orbitz: Is Flight Metasearch Even Dead-er?

OK, even with Orbitz's decision earlier today to remove consumer booking fees on most flights, I don't think that flight metasearch is dead.

And, neither does Yen Lee, the president of Up Take, who triggered a lot of great discussion and travel news on the topic through his post on the Up Take Travel Industry Blog, outlining how flight metasearch is in for some tough sledding because of a lack of price differentiation among online travel agencies (OTAs) and suppliers.

So, somewhat ironically, with Orbitz joining Priceline, Expedia and Travelocity in dropping consumer booking fees on flights, at least through the end of May, the OTAs, as a group, gain something of an advantage.

That's because airlines, with their all-out push to get consumers to book directly on the carriers' own websites, lose the price advantage they had over the OTAs because the airlines weren't charging booking fees and most of the OTAs, up until a month or so ago, were tacking on the extra $7 or $11 fees.

So, now, the playing field between the OTAs and airlines in metasearch tools like Kayak, Fly.com, Farecast and TripAdvisor, and elsewhere, is relatively even.

The airlines will still milk their advantages, prodding consumers to book on airline websites if travelers want access to various perks and ancillary services -- bag fees, premium seats -- and hopefully some more attractive products in the future.

But, when consumers shop for airline tickets, they will see that the $235 Delta.com fare is now also available on Orbitz.com or Cheaptickets.com for $235, as well.

As I wrote a few days ago, the Orbitz decision had been expected and will hurt Orbitz because the company is so reliant on air-booking fees for its profits. Unlike the three other OTAs, which are much further along in their hotel and vacation-package businesses, Orbitz, the child of major U.S. airlines, still is too heavily skewed toward selling airline tickets.

Kayak and other metasearch companies will be under pressure, too, because the OTAs will have about $300 million less available to spend on their advertising in the metasearch arena. The $300 million was one analyst's estimate of how much the OTAs took in annually in booking fees.

So, in sum, with booking fees gone, the OTAs gain some ground on airline sites, the metasearch companies will continue building their own hotel and related media businesses as revenue from flight metasearch becomes more challenged, and Orbitz itself, with its stock hanging by a thread at around $1.35 per share, is in a fight for its survival.

Last week, Brad Gerstner, a former NLG exec who founded Altimeter Capital Management, predicted that Expedia might swallow up Orbitz, or perhaps Orbitz would combine with Travelocity.

Indeed, metasearch is not dead. It will continue to evolve as it finds ways to enable OTAs and suppliers to differentiate themselves and to create some order out of the currently, very-disorderly consumer booking experience.