Thursday's Travel InsideOut

Orbitz -- she of pressurized travel transactions -- hopped onto the media/advertising bandwagon in a super-charged way with the relaunch of Trip.com. For those of you who remember the ill-fated and nebulous Trip.com brand under former owner Cendant, we can say that at last Trip.com has a raison d’etre.

Dennis Schaal Blog: Mega, Not Meta, Move: Orbitz Enters Search Business: I wrote several weeks ago that Orbitz would attempt to maximize all of those lookers perusing its shop, take its media business a leap forward and get into the search business, possibly through a merger of some sort with Kayak.

Well, Orbitz, has entered the search business on its own, for now, by relaunching Trip.com as a search business. This fairly huge development was brought to my attention by Tom Botts of the Hudson Crossing Travel Industry Insight blog. Read more

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There are more warnings that this could be the Winter of our discontent, with airline bankruptcy filings looming.

Wall Street Journal: Loss at AMR Narrows: American Airlines parent AMR Corp. on Wednesday reported a $390 million second-quarter loss as collapsing travel demand continued to erase gains from lower fuel costs.

The results are the latest evidence that the airline industry is flying through one of its toughest summers ever. The other four large U.S. hub-and-spoke carriers -- Delta Air Lines Inc., UAL Corp.'s United Airlines, Continental Airlines Inc. and US Airways Group Inc. -- also are expected to announce second-quarter losses when they report next week. Read more

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United is not alone, of course, in feeling the pinch from and lack of control over credit card fees. Even federal agencies haven’t been able to negotiate lower fees from the banking kingmakers of plastic. (Note: the story below inaccurately says that United “last month” began passing along its fees to some travel agencies. Actually, the initiative is slated to begin July 20.)

New York Times: Card Fees Pit Retailers Against Banks: The most profitable item at Patricia Orzano’s 7-Eleven store on Long Island is coffee. Slurpees are a distant second.

But as more customers use plastic to pay for even small purchases like these, she has watched a growing share of her revenue vanish in a stream of credit and debit card fees that retailers say raise the price of goods and sharply lift the cost of doing business. Read more

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AirTran claims it’s the first carrier to install Wi-Fi throughout its fleet, and it offers tips about onboard-surfing protocol. I can’t wait until airlines allow passengers to use their cellphones during flights, and I’m looking forward to those yakety-yak-yak do’s and don’ts, too.

Yapta: AirTran the First to Establish "Internetiquette": AirTran Airways announced on Tuesday that it’s the first airline to equip its entire fleet (136 aircraft) with Wi-Fi. The cost for access is $9.95 for flights under three hours, $12.95 for flights longer than that and $7.95 for Blackberry/iPhone access. Read more

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Kayak, Airfarewatchdog.com, Hotwire and Yapta good, says Consumer Reports. Expedia and Orbitz price guarantees, not so much.

Consumer Reports: Travel Price Guarantees Come Up Short: Whether it's for a hotel, a cruise, or the fare to get you there, many travel sites offer a "best price guarantee," and will "refund you the difference" to match any lower price you can find. Some sites, such as Delta, will also throw in a travel voucher for up to $100. Read more

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Arthur Frommer looks askance at cruising. After all, it’s not “travel,” he sniffs.

TravelMole: Cruising? That's not traveling:
Don’t get him wrong. Arthur Frommer likes cruises but “travel, it’s not.” Read more

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Travel InsideOut is a Dennis Schaal Blog daily feature. Get a thorough-going look at the day's travel industry top and tangentially interesting stories. Feel free to comment on them below.

Travel InsideOut is Copyright (c) 2009 by Dennis Schaal. All rights reserved.

United's Fee Passalong Could Tilt Playing Field Back Toward Airline-Direct Channel

United Airlines' decision to test the waters and have some travel agencies foot the fees for credit-card transactions when selling United flights could conceivably tilt the airline-online travel agency marketshare-skirmish back toward the airlines.

As Tom Botts noted in the Hudson Crossing Travel Industry Insight Blog: "If adopted even more broadly and applied to the Online Travel Agencies, they would be forced to reinstate some sort of booking fee in order to cover the costs of paying credit card merchant fees. This would return a pricing advantage to the airline.com websites that has recently been removed by all of the major players in an attempt (which we have heard has been successful) to drive growth."

In fact, PhoCusWright financial analyst Jake Fuller, in his recent report, Does the Model Work Without Fees?, cited "indications of a mid-teens increase in air-transaction volume since waiving fees [in March and April] suggests a rise in [OTA] share to 37% and that OTAs would be able to offset at least some of the lost fees through volume."

Fuller pegged the OTAs' share of online-flight bookings at 32 percent in 2008, down from a peak share of 44 percent in 2002.

So if a bunch of major carriers follow United's lead on credit-card fee avoidance and the OTAs are forced to reinstate some form of consumer-booking fee to shoulder the new burden, then the increased volumes that the OTAs have seen in the last few months may evaporate as some consumers return to airline websites for flight-booking.

And, as Nadine Godwin notes in her Travel Weekly piece, United's initiative could drive more travel agent bookings to United.com, as well.

Godwin writes: "Alternatively [instead of agents absorbing the fees and booking United flights using their own merchant acounts], it could push agencies to book at the carrier's website rather than the GDSs, leaving United to pay credit card merchant fees but bypass GDS fees."

Travel organizations quickly are taking sides on the issue.

ASTA (American Society of Travel) has taken a dim view of the United plan and reportedly stated that it would be asking the Justice Dept. to monitor possible airline collusion on the issue since carriers have openly aired their feelings on the question of reducing credit-card fees for some time.

And Robert Joselyn, a prominent travel industry consultant, reportedly is urging travel agents to book carriers other than United as a form of protest to convince the airline to rescind its new credit-card policy.

After greatly reducing their GDS fees several years ago, many airlines identified credit-card fees as the next battleground in the drive to reduce distribution costs -- but United's is the first potentially game-changing attempt.

In a July 2007 Travel Weekly article, Al Lenza, then Northwest's vice president of distribution and e-commerce, said credit card fees were soaring and it was critical for Northwest to trim its "dependence on credit cards."

Lenza was the point man in Northwest's ill-fated drive in 2004 to have agents pay a "shared GDS fee" in an attempt to reduce Northwest's distribution costs. After vehement protest by travel agencies and the GDSs, Northwest withdrew the plan.

Lenza left Northwest in 2008 when it merged with Delta, and The Beat reported in February that he began working at United on distribution strategy.