Orbitz eliminates booking fees

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Orbitz Worldwide eliminated air booking fees at Orbitz.com and CheapTickets.com for reservations made through May 31.

The fee elimination matches recent moves by Expedia and Travelcoity, except Orbitz booking fees will remain for multi-carrier itineraries and flights originating outside the U.S., Canada, Mexico and the Caribbean.

Orbitz Worldwide CEO Barney Harford said Orbitz has the flexibility to absorb the revenue impact because its operations include "variable and semi-variable costs," including electronic marketing.

Harford said e-marketers will have to "continue to deliver meaningful traffic" and be a good "source of business."

"We’ve already made some changes and we will continue to focus on that," Harford said. He added that Orbitz’s paid relationship with the Kayak metasearch engine "remains strong."

Kayak CEO Steve Hafner said, "We congratulate them on their reduction in fees. Orbitz provides a great service to consumers and this levels the playing field between supplier sites and Orbitz on price."

There had been speculation that Orbitz would be hard-pressed to drop its $7 booking fee because the company garners about 60% of EBITDA (earnings before interest, taxes, depreciation and amortization) from the fees.

But Harford said Orbitz anticipated that competitors would remove booking fees, and that the company had the "flexibility" to react. He noted that Orbitz had removed $40-$45 million from its cost structure in the last four to five months.

Harford said Orbitz’s removal of booking fees, coupled with Orbitz Price Assurance (a program providing consumers with rebate checks if a another Orbitz customer books the same flight at a cheaper fare), makes Orbitz a prime venue for consumers.

"With the booking fee coming off, there really is nowhere else better to buy your ticket," Harford said.

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