Travel sites, airlines face off

Providing comparisons to customers becomes issue for both sides.

As airlines charge extra for baggage while adding more fee-based amenities like premium seating and in-flight wi-fi, it’s getting more difficult for travelers to compare the cost of a flight on different carriers.

A push for federal regulations aimed at making comparison shopping easier for travelers could require airlines to share data on fares and fees with online travel agencies like Expedia, Orbitz and Travelocity.

But airlines are resisting, saying they have the right to decide what companies they partner with for sales. While online travel agencies can help airlines push more tickets, the carriers also see them as middlemen that profit from the product sold by airlines — and drive fares down by intensifying direct price competition.

“What’s happening is, they’re blocking competition by blocking comparison,” said Kurt Ebenhoch, executive director of Air Travel Fairness, an advocacy group representing travel search companies.

While many travelers want to find the lowest fare, carriers like Delta Air Lines don’t want to be compared to other carriers based solely on price. That, they fear, would result in a race to the bottom in fares.

Instead, Delta and other major carriers want to attract customers willing to pay more for more creature comforts, like extra leg room on Delta, free checked baggage on Southwest, Sky Clubs, inflight wi-fi, power outlets and food or beverage options.

The U.S. Department of Transportation in 2016 under the Obama Administration started a process to collect public comments on the issue and whether consumers are harmed when airlines restrict where their flights and prices are listed. The request for information attracted more than 58,400 comments, but the process was suspended by the Trump Administration in March 2017.

Ebenhoch hopes for movement with legislation introduced by the Republican senator from Maine Susan Collins to lift the suspension of the DOT process. But he acknowledged that airlines “are

exerting a great deal of pressure” to kill the measure.

What’s more, the Trump Administration is looking to reduce regulations, not add more.

For example, the DOT in December 2017 declined to impose regulations on airlines to increase transparency of baggage fees. To explain the decision to withdraw the proposed regulations, the DOT cited its priorities and the priorities of the administration, along with Trump’s executive order signed early in his administration to reduce regulation.

It’s a position that has benefited the airlines.

Airline lobbying group Airlines for America released a statement saying it believes that “dictating distribution and commercial practices to the airline industry would only benefit those third parties who receive a commission on sales through ticket distribution, and not the flying public.”

“All businesses, including airlines, need the freedom to determine which third parties they do business with” and how to market and sell their products, the statement said.

Before the DOT’s public comment process on the issue was suspended, among the comments submitted was a letter signed by members of Congress, including Rep. Hank Johnson, D-Lithonia, and David Scott, D-Atlanta, in support of the airlines’ position. It asked the DOT to “refrain from compelling airlines (or any private company) to engage in a business relationship with other forprofit corporations.”

The letter called it “highly unusual, if not unprecedented, that an agency use its regulatory authority to micromanage the business relationships of private companies in this way,” adding that, with the Internet, “consumers have more information about airline fares, schedules and availability than ever before.”

Another group of House members signed a letter backing the online travel agencies’ position, saying, “It is more important than ever that consumers maintain the ability to comparison shop.”

But what airlines want to do is sell more tickets through their own websites, rather than through third parties — allowing them to have more control over the sale, gather more information about travelers’ preferences and sell bundles or a la carte options they develop.

Delta’s vice president of global distribution and digital strategy Rhonda Crawford said in a written statement that “most external channels that display Delta and other airline content skew toward sorting by the cheapest fare — even if that fare doesn’t deliver the best experience by way of schedule or amenities that are available and important to the customer.”

Delta in recent years has pulled its fares off a number of small online travel sites.

“Unfortunately, some online travel sites sell itineraries that are harmful to the consumer, add fees that Delta does not charge, or use false and deceptive advertising,” Delta spokeswoman Elizabeth Wolf said in a written statement. “Delta will continue to work to ensure our products are distributed broadly but also accurately through online outlets that adequately represent the Delta brand to consumers.”

The No. 2 airline in Atlanta, Southwest Airlines, has for years refrained from selling tickets through online travel sites including Orbitz, Expedia and Travelocity. Dallas-based Southwest said a core part of its business is a direct-to-consumer model, and its no baggage fee and no change fee policies are “only made possible” by selling directly and exclusively through Southwest.com.

In a written statement, Southwest spokeswoman Thais Hanson said “many online travel sites reward airlines that ‘nickel and dime’ passengers because they only compare ‘base fares’ and do not properly disclose fees.” She added that Southwest thinks it would be detrimental to consumers if the federal government regulated how a business distributes its products.

Ebenhoch has a different take. With Southwest, “there’s a perception that they’re the lowest fare option,” he said. “That isn’t always the case, and they don’t want everybody to know. So the best way to do that is to be invisible when you’re comparing.”

But the Atlanta Business League, in a 2016 letter from its president Leona Barr-Davenport to the Transportation Secretary, agreed with Southwest’s reasoning, saying that the Dallas-based carrier’s decision to “sell its offerings directly to consumers is a decision that helps consumers.” She added that online travel corporations “often charge fees that increase the average cost to consumers” and can give preferential placement to airlines that pay higher fees.

Crawford at Delta said the airline is collaborating with distributors and online travel agencies, but said those third parties need to invest in more display capabilities to show more options for different tiers of fares. Ebenhoch said they already have.

“At the end of the day, we believe airlines want to eliminate third party intermediaries and sell everything themselves,” Ebenhoch said. “And that will result in higher fares and less competition.”