Tuesday, April 28, 2009

Delta and Northwest Bring Back 500 Bonus Miles for Booking Online - Are the OTAs Finally Stealing Share Back from Supplier Sites?

Well, its been nearly six weeks since the OTA fee-removal frenzy began. As you will no doubt recall, The pre-fight (or should we say pre-flight) warm-up match was nearly two years ago when Priceline and Hotwire dropped air booking fees. In the Main Event, Round One, Expedia dropped air booking fees, then Travelocity quickly followed suit and Orbitz finally joined the party a week or so later. Round Two was kicked off when Orbitz dropped booking fees on hotels which was quickly matched by Expedia.

But now, the question is, is it working - are the OTAs actually grabbing growth back from the supplier sites?

Maybe so - Today, Delta (and Northwest) both returned to offering 500 mile booking bonuses on their websites - something we have not seen in nearly two years. The airlines (in their usual lock-step fashion) first lowered the bonus from 1000 miles to 500 and then eliminated them all together. It is billed as a temporary promotion so we'll see what happens. If the airlines operate as they usually do, we'll have bonus miles back at all the supplier sites by the end of the week. It could be just a broad attempt to stimulate bookings but we doubt it - the airlines have gotten much smarter in recent years in how they target demand stimulation offers - this is a broad swipe.

And why not? Given the new pricing parity, airlines have little else to offer other than websites that are generally sub-par when compared to the content, functionality and service offerings that the major OTAs have built out. Millions of consumers have paid $7 for these services for years - it goes to figure that even more would opt to buy from an OTA given price parity.

Comically, Delta's PR team seems to have missed out on a few of the changes in the OTA world given the first point they trumpet regarding booking at Delta.com is no booking fees. And the 2nd point is a best fare guarantee which still falls FAR short of the Orbitz offering.

OTAs offer many different airline choices, combinations of different carriers for the same trip which often results in a lower fare, money-saving air+hotel package products, often superior en-route service and, in the case of Orbitz, even assurance that if the price goes down, you'll get your money back - something no airline offers. Maybe the airlines have woken up - it looks like at least Delta and Northwest have...

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