Below is an excerpt from an article appearing in the USA Today of January 3.
From the point of view of consumers who purchase air line tickets, hotel rooms and rent cars through third parties, they are benefiting by being able to readily compare prices for services. What the public does not understand is that the “Third Parties” are able to command huge commissions from airlines, hotels and rental car companies in order to be listed on the sites. Suddenly huge profits are being earned by parasites who are performing services that could be provided at a tiny fraction of the cost.
Why should the public care? When airlines, hotels and rental car companies have to share significant portions of their revenues just to have a listing, they do not earn the resources to properly maintain and expand their businesses. Ultimately this must lead to a decline in product and innovation.
Who would want to pay a 20% commission to a real estate salesman rather than the usual 6% or 7%? Wouldn’t the added cost diminish the value of the house and discourage home ownership?
American Airlines now joined by Delta is bravely taking on these rapacious giants. Hopefully other airlines will find the gumption to take independent but parallel actions. If that takes place, hotel chains may follow. If not, there may be a need for legislation to reign in these predatory practices.
Full disclosures: The Watchdog has interests in hotels. That is how he knows about this!
Delta, American airlines pull fares off some travel sites
From USA TODAY:
Travelers wanting to book a flight online will find fewer options now that two of the nation’s biggest airlines have stripped their fares from some travel sites.
Those looking to fly on American can no longer book trips on Orbitz as of Dec. 21, while Delta stopped allowing three websites — CheapOAir.com, OneTravel.com, and BookIt.com — to list its flights after Dec.
It’s a move that more airlines may follow in an effort to cut costs, promote their brand and increase their ability to sell aspects of the travel experience that bolster the bottom line, some travel experts say. But some industry observers worry that the winnowing of booking outlets could ultimately make it harder for consumers to find the best deal…
Click here to read the full article.
Well of course a socialist would not want to allow consumers to be able to make their own decisions. They are too stupid. We need government regulators to step in and “protect” us.
The only thing this will change, if the government gets involved as the hotel owners and airline companies will be beggin them to do, is to raise prices for consumers. But then, that’s what these groups really want. They aren’t bright enough to run their businesses and compete in a truly free market econony.
EDITOR: I wholeheartedly agree that the airline, hotel and rental car executives weren’t “bright enough to run their businesses and compete in a truly free market economy.” If other airlines join American and Delta by taking similar actions, the situation will be redressed through negotiations or the market system. But the challenge is daunting, becuase it means having to put yourself at risk lest your competitors not follow. You don’t want to be the only guy (or gal) rushing the enemy’s line!
“You don’t want to be the only guy (or gal) rushing the enemy’s line!”
You mean like SouthWest, the country only profitable airline ? The internet has provided a forum for real free market commerce. If someone could provide this booking service better and cheaper they would have ( will ?).
There’s no reason for intervention and these booking companies have not conducted themselves improperly. They’re maximizing their profits and providing a fully voluntary and useful service to the public. Their success is evidence of their effectiveness and value.
This editorial is off the mark.