Expedia Against 'Search Discrimination'… Unless It Gets To Do The Discriminating
from the hello-hypocrites dept
You may have heard about the “controversy” over the last few weeks, concerning American Airlines’ decision to pull out of Orbitz, the online travel booking site (we covered how American Airlines has wanted to do this for years, and was finally allowed to go through with it). Almost immediately after that happened, Orbitz competitor Expedia apparently decided to “punish” American Airlines by first hiding AA results in Expedia’s own search and then dropping AA altogether. While this kind of “solidarity” with a competitor might raise some collusion questions, an even bigger issue is that it lays out Expedia’s blatant hypocrisy on the question of “search discrimination.”
That’s because Expedia is a leading member of a lobbying group called FairSearch, which was set up mainly to protest Google’s planned acquisition of ITA. Both sides on that fight have been bombarding me with press releases/articles on a near daily basis, all of which I’ve ignored, because it’s a silly fight. However, considering that Expedia is one of the main members of the group, and one of the key points that the group is supposedly fighting for is protesting “search discrimination,” the whole thing rings a little hypocritical. From the FairSearch website:
TRANSPARENCY: Consumers — not search engines — should choose winners in the marketplace. Consumers benefit from more choices in the search marketplace competing to win users, innovating to improve products and displaying results transparently. When search providers engage in search discrimination — manipulating search results to promote a favored product and punish competitors — consumers pay the price.
This comes just one paragraph above a nice Expedia logo:
All that said, I’m a bit confused about this entire dispute. What’s to stop Orbitz from simply getting American Airlines fares from wherever it wants to get them and including them? The data is factual data, not subject to American Airlines’ control, so I don’t even see how AA can legally stop Orbitz from including it. The real issue, it seems, is that AA wants Orbitz and others to get their data directly, rather than via middlemen, but the way to do that is to make it easy for the travel search engines to do that in a way that’s more convenient and cheaper than getting it through any middlemen. Not sure why that requires a legal dispute…
Filed Under: search discrimination, travel
Companies: american airlines, expedia, fairsearch
Comments on “Expedia Against 'Search Discrimination'… Unless It Gets To Do The Discriminating”
AA can very easily force it’s middlemen to not allow Orbitz to get rates, as part of their contract. As AA is the one selling the product, and the other sites are only commissioned agents or commissioned resellers, they don’t have much get back on the issue.
I suspect AA’s motivation is to try to take out one layer of middleman in the deal, which is a good thing, no? While there is no indication of the why in this story, I suspect that Orbtiz doesn’t want to move because they may lose some volume bonuses or other that they were getting from their middleman providers, and that AA is probably going to pay them a significantly lower net commission on each ticket.
As for Expedia’s actions, it is pretty clear that their decision to remove AA from their listings isn’t about influencing competition, rather in protest for actions taken by AA. They very likely fear they will be put in the same position as Orbitz at some point, which can hurt their bottom line. Their choices are pretty clear.
middlemen exist because of a shoddy job
because AA does a relatively horrible job (and I’m being generous), the middlemen exist. Mostly because they make more sense of things than AA does, and allow you to search more than just AA for flights.
this is not a magic thing here.
All AA just did is make their service less useful.
I don't understand
If AA quotes a price for there service is that the price the customers pays whether they go through expidia or orbitiz or goes straight to AA?
middlemen exist because of a shoddy job
To play devil’s advocate…
American Airlines is entirely within their rights if they wish to make their service(s) more difficult to use/access.
I don't understand
If AA quotes a price is that the price the customer pays wether they go to Orbitiz, Expedia or go to AA directly.
Why Orbitz Can't Show AA Fares
Orbitz, Expedia, and Travelocity are travel agents which means they are the entities which actually issue the tickets and communicate with the airline reservation systems (in the case of AA, it’s SABRE) in the course of doing so.
The ability to issue tickets is a privilege permitted by commercial agreements between the airlines and travel agencies.
It’s not about getting access to the flight data per se. The dispute must be about the commercial terms of Orbitz’ agency agreement with AA, although I have no idea about the specifics.
Note that Orbitz, Travelocity, and Expedia are totally different than other sites like Kayak and Sidestep, which offer a similar shopping experience but make money from referral fees by sending shoppers to the airline sites where the actual booking is made.
(I used to work at Expedia.)
This happens every 3 years....
I work in the Business Travel IT arena and AA, UA and the other carriers do this about every three years on average. They say, “We’re pulling out of online booking engines”….then they realize the market share they lose by doing this.
AA pays Expedia, Orbitz and all the others a fee per booking to be on the web site. They load their content up, and pay Orbitz, for example. Orbitz then can “sell” the booking and charge what they want to as a service over/above the posted rate of the trip/segment.
The last 10 years, this has always been a threat by the airlines. This time, it looks to be real. AA looks at SouthWest for example and sees that they are VERY successful in hosting their own booking engine online. Notice SouthWest fares do NOT show up on Orbitz, Travelocity or any other online ticket warehouse.
So, it looks like AA is going to take a stab at this on their own. The problem I see is that, UA and the other airlines tend to follow suit. When one airline does something, the others follow…..
AA would prefer you make your race-based travel decisions through their ignorant sites. In case you have a desire to travel to the Dakotas or Montana or Vermont or Connecticut or Maine, naturally.
http://www.blackatlas.com/faremap
Why Orbitz Can't Show AA Fares
That’s really the thing to understand in this situation: booking agent VS. search engine.
I am glad two people specifically familiar with industry chimed in here. My basic take away was that AA (nor the others) doesn’t care where you search, but they do care where you book because they have to pay a whole lot more to agents than referrals (from engines). Some airlines are also terminating agent relationships (I think it was Delta).
middlemen exist because of a shoddy job
“American Airlines is entirely within their rights ….”
“Expedia should be able to set up its search engine however it wants….”
Absolutely correct on both counts. Which means the real question is not whether or not they shoulda/coulda; rather, why did they?
In the days before Expedia/Orbitz/Travelocity/etc, if you wanted to purchase airline tickets you had two choices: 1)direct from airline, or 2)travel agency.
While there are still travel agencies around, these websites have made them largely (though not completely) obsolete, therefore there are distinct parallels between them. Which brings us back around to the question of “why?”
Why make it more difficult for potential customoers to buy tickets?
Why, in a capitalist economy, decrease your own ability to compete, and therefore gain capital?
Why point a gun at your own perfectly functional foot and squeeze the trigger?
Why Orbitz Can't Show AA Fares
aha! I think that does answer my question (above), but only partially.
If they are paying less in overhead, but showing less net gain due to decreased sales, where’s the business sense?
On the other hand was the decrease in sales volume slight enough that the decrease overhead gives them an increased net gain?
Re:
Wait. Are you seriously trying to turn this into a racism discussion? Or do you mean something else by “race-based”?
If the former, you need to wake up and take your everyone-is-a-racist-but-me glasses off.
If the latter, please explain.
Re:
reported.
Another "Nail" for Net Neutrality
Companies shrilly proclaim with loud bullhorns how they need “freedom” to provide customers with things the customers wants. Yet, we seem to have an unending parade of stories, such as this one (search discrimination), exposing the true meaning of corporate “freedom”, which really translates into market manipulation.
Another "Nail" for Net Neutrality
I agree as Americans we were born and raised to be consumers the Internet only make the job of the corporate thieves easier to manipulate us out of our money they tell us what we want and how much to pay for it
Conflicting Accounts
I recently heard this story from a local radio station and it was claimed that AA initiated the pullout because of the fees that Expedia was charging. They also stated that Expedia was charging every time an AA flight was viewed outside of the initial search window. Hard to say which side is correct until all the facts become less muddled.
The Big Question
Both companies are within their rights. Expedia may be weighing in with a premptive strike to dissuade other airlines fom trying the same thing.
Maybe AA was banking on “most customers try multiple sites; if we don’t show up on Orbitz we’ll be competitve on Expedia” – this would be a divide and conquer strategy, which Expedia would obviously see as the first step to AA forcing the same undesirable deal on them. Solidarity with a competitor is in their interest.
So… may the best site win. For example, I do most of my booking with sites like Expedia and Travelocity, this is the first I realized I’m missing out on Southwest fares. How much room is there for un-aggregated travel company sites. especially when it gets to the point where every bag an extra $25 each way and (maybe soon) they’ll charge for carry-on too?
Maybe in a few months Expedia searches will also ask “how many bags” and those penny-pinching airlines will lose another cost advantage.
I suspect AA will come to regret its decision. I hope it doesn’t cost another round of pilots their pensions too.
The data is factual data, not subject to American Airlines’ control, so I don’t even see how AA can legally stop Orbitz from including it.
Correct, this is factual data, so it is probably not copyrightable. However, it can be contractually regulated through contracts with data partners or website terms of use.
I agree
I agree with MD2000. Both companies have their rights
This happens every 3 years....
Travel Tech –
I work in health insurance and am extremely interested in learning more about travel IT, particularly as we get ready for the advent of so called “health insurance exchanges” in 2014 that are supposed to be a lot like Orbitz, etc. Not sure how to do this, but I’d love 15 minutes of your time to pick your brain on the possible parallels.
Shot in the dark, but it’s worth a try.
Thanks
KK