The Farecast travel search engine, acquired by Microsoft in April, edged out Orbitz to become the sole air-search option on MSN.com in the U.S.
The move marks the first time that a major portal has decided to use a metasearch engine as its exclusive air-search option.
MSN Travel is giving prime real estate to Farecast, which compares fares on multiple Web sites and also predicts fare trends.
Visitors to AOL Travel, for example, use Travelocity for air searches. Consumers planning trips on Yahoo Travel use Travelocity as the default option but can select Yahoo-owned FareChase instead if they want to try a metasearch engine to compare travel choices on multiple sites.
The story of MSN's elevation of Farecast is a tangled one. Until early summer, MSN's travel area used Expedia, a former Microsoft subsidiary, as its travel provider. However, in July, Orbitz Worldwide, which owns Orbitz.com and eBookers, among other services, announced that Orbitz and eBookers would power the air, car, hotel and vacation package offerings on MSN's U.S. and U.K. sites, respectively. Farecast would be integrated into "the site," the announcement said.
But although eBookers still powers air, hotel and cars on MSN's U.K. site, the introduction of Farecast as the dominant air-search option on MSN.com in the U.S. means that Orbitz's turf on the Microsoft site has been relegated to hotels, cars, packages and cruises.
As a result, Orbitz loses sizeable transaction revenue from air searches, with the bulk of that revenue instead going directly to Microsoft through its Farecast unit.
A more prominent platform
The move also gives Farecast a more prominent platform to offer "facilitated search" and other ad vehicles to companies such as Priceline, Expedia and Hotwire.
For example, there is a facilitated search option at the bottom of Live Search Farecast, as its air-search engine is called. Consumers can choose to search through Price-line, Expedia and/or Hotwire, with each of their individual search engines opening in a separate window.
Ads from other prominent travel brands, including Travelzoo and AA.com, are displayed at various points in search results, too. Priceline, Expedia, Hotwire and others compensate Farecast every time a consumer clicks on their search engine or on a sponsored ad. The MSN move, however, isn't a total loss for Orbitz, because Orbitz has a preferred relationship with Farecast. When consumers search for flights using Farecast and see results for US Airways flights, for example, they can choose to book the trip on USAirways.com or Orbitz.com.
But Orbitz is disadvantaged in these comparisons with airline sites because Orbitz charges a booking fee of about $6 and the airlines do not.
Orbitz Worldwide spokesman Brian Hoyt said the company knew in July that Farecast would be integrated into MSN.com. He pointed out the online agency's preferred relationship with Farecast and mentioned that Orbitz powers much of the other travel offerings on MSN.com.
Hoyt said MSN chose to partner with Orbitz because of Orbitz Price Assurance, which sends airfare refunds to consumers if another Orbitz.com customer books the same itinerary for a lower price, and because of its TLC Alerts, which provide notice to travelers when there is a gate change or a flight cancellation.
So far, Farecast has not been integrated into MSN's U.K. site.