TEXT OF INTERVIEW
JEREMY HOBSON: If you use Orbitz or Expedia to search for airline tickets you’ve probably noticed there are no American Airlines fares on those sites anymore. That’s because of a dispute that started last month. And it’s raised questions about whether airlines are better off flying solo when it comes to online ticket sales.
LA Times Consumer Columnist David Lazarus has been looking into what that means for us consumers, and he joins us now. Good morning.
David Lazarus: Good morning.
Hobson: So American Airlines leaves Orbitz, then Delta ditches some other travel sites, then Expedia drops American Airlines — what’s going on here?
Lazarus: It depends who you ask. If you ask the airlines, they say look, we’re trying to differentiate our products and build our brands. They use the example of the Apple store versus Best Buy; you go to Best Buy, you see oodles of products from oodles of makers, whereas you go to the Apple store, you see oodles of products from one maker. The airlines like that, they want that for their own, whereas the travel agents like Orbitz and Expedia say this is anti-competitive move, and what the airlines are trying to do is limit the amount of information that customers have, so it’s harder for them to comparison shop.
Hobson: So that’s what the airlines say, that’s what the travel agents say. What do you say, David Lazarus?
Lazarus: I say it’s all about the do-re-mi, not surprising — you’ve got to follow the money and in this case, there’s a critter called a global distribution system. It’s sort of a pre-Internet network that was devised so that travel agents would have all the fare information that they require. Well things are different now in the Internet age, and the airlines are trying to cut out these global distribution systems by feeding their own info directly to the travel agents. They have an incentive to do this because they have to kick back some of the fare to the travel agent, they also have to kick back some of the fare to the global distribution system. The global distribution system in turn kicks back some of the fare to the travel agent. A lot of money is changing hands, so the airlines are saying, why don’t we go around them? While the travel agents are saying, let’s hang on to our current system because we get a lot of cash from it.
Hobson: But if they go around them, then passengers like you and me end up having to look up everywhere to find the lowest fare.
Lazarus: And that’s indeed the case. Right now, for instance, if you want to fly on Southwest, you’ve got to go only to their site; they don’t want to participate in anyone else’s play yard. Well that’s going to be the case going forward. What that means for travelers is you’ll do a whole lot more mousework if you want to find that lowest fare, but it will still be out there.
Hobson: Well we’ll be looking for them very hard. David Lazarus, consumer columnist for the L.A. Times. Thanks so much.
Lazarus: Come fly with me.
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