CHICAGO -- Orbitz, the multi-airline owned online agency, began
charging consumers a service fee of $5 per ticket on all airlines,
according to an announcement on its home page at www.orbitz.com.
The fee is capped at $10 for two to four tickets.
Charging a service fee was always in the company's business
plan, according to chief marketing officer Roland Jacobs, adding
that the focus of the initial six months was to build a customer
base.
He acknowledged that the trend of airlines, including Northwest
and Continental, to eliminate Web commissions played a role,
although it was not the driving factor.
Travelocity introduced a service fee about six months
ago on Northwest flights while Expedia has not introduced service fees.
Other sites, including Trip.com, Priceline.com, TravelByUs.com and Lowestfare.com also
charge fees, Roland noted.
The introduction of service fees on the Orbitz site means that
consumers will pay nominally less for some fares, including Web
fares, on the airlines' sites.
Sounding a lot like owners of offline agencies, Roland said the
fee is justified because Orbitz adds value in providing a wide
selection of low fares and customer care. With Orbitz, he added,
consumers don't have to search multiple sites to find deals.
Forrester Research senior analyst Henry Harteveldt said the
Orbitz service fee reflects that its business model has thinner
margins than Travelocity's and Expedia's.
Expedia, for instance, uses a merchant model and is less
commission-dependent and both Travelocity and Expedia appear to
have more advertising revenue sources, Harteveldt said.
Orbitz's fee may also reflect the possibility of reduced
financial support from its backers," Harteveldt said. "Orbitz's
airline founders are facing tough times and some may not be in a
position to make their expected financial commitments to Orbitz at
this time."
As an incentive to new customers, Orbitz will waive the fee
once, the company said. And, it will not charge service fees for
other site transactions, including the purchase of hotel stays, car
rentals, cruises and vacations.
Orbitz already has a competitive edge if other airlines
eliminate Internet commissions because it is guaranteed transaction
fees from its charter associate airlines, including Northwest and
Continental, if they eliminate Internet commissions.
An Orbitz spokeswoman said that provision remains in place.