Amid the dot-com wreckage, travel bookings are turning out to be one thing the Web is very, very good at. With all the efficiencies of instant price comparison and the one-stop plane, hotel and rental-car shopping that Expedia and its main competitor, Travelocity, offer, tech tracker Forrester Research estimates that U.S. sales will reach $16.7 billion this year and $29 billion by 2003.
So it's maybe too bad that the airlines have decided to get into the act. Orbitz, an online travel web site funded by the five major U.S. airlines United, Delta, Continental, Northwest and American (or, where applicable, their corporate parents) is now set for a launch in June after the Department of Transportation said Friday it would not stand in the service's way.
Expedia and Travelocity fought Orbitz with all the might of their own corporate parents Microsoft and bookings giant Sabre, respectively and not just because it's a bit troubling, competition-wise, for a cabal of the Big Five airlines to be cooperatively selling their own version of "competitive fares." It's because Expedia and Travelocity are members of capitalism's longest-standing endangered species: the middleman. They currently charge the airlines a $15 fee for every round-trip ticket, a cost the airlines say and you can probably believe them is ultimately passed on to the consumer.
Now those fees look to be on the way out. Northwest opened the bidding in March by discontinuing fees to online bookers; if the other airlines follow suit and you can believe they will Expedia and Travelocity stand to lose 25 percent of their revenues.
Of course, Orbitz won't be charging those fees to the airlines that run it, and the presence of the airlines' own individual bookings sites have already pushed the web middlemen to more profitable but less popular services like hotel reservations and car rentals. How long till the airlines start getting in on that act too is anybody's guess. But with fees disappearing and inside player Orbitz set to move in with pricing that's almost sure to be predatory, a likelier question could be whether Expedia's first quarterly profit is the beginning of a very short run.