Twenty-three domestic and international airlines joined United, Delta, Continental and Northwest yesterday in a new Web venture that will directly challenge established Internet travel sites Travelocity.com and Expedia.com.
The site, which will be managed by Boston Consulting Group until an executive team can be recruited, will list all 27 airlines' "Internet fares," allowing consumers to comparison-shop for last-minute, weekend fares without surfing from site to site.
"Consumers were frustrated by this," says Boston Consulting spokesperson Carol Jouzaitis. "There is no one site where all the Web fares are posted."
The new site, first announced in November, is joined today by domestic giants American and USAir as well as smaller regional airlines ATA, AirTran Airways, Hawaiian, Midwest Express, Midway and Vanguard. Foreign-based airlines joining the site are Air Canada (AC) , Air Jamaica, Air New Zealand, Alitalia, All Nippon Air, Australian, British Midland, COPA, CSA Czech, Iberia, KLM, Korean, Mexicana, Singapore and Varig. All have agreed to make seat inventories available to the site that are "as low or lower than those available from any other source."
The site's name has not been chosen yet. No decision has been made on what flight database, or GDS, will be used. The site will include most features of other Internet travel sites, including the option to book rental cars and hotel rooms. Boston Consulting expects the site to launch within 90 days.
One feature the site almost certainly won't have is the name-your-price function that Priceline.com has ridden to stock-market success.
"We made a conscious decision not to pursue that business model," Jouzaitis says.
The major airlines were among the first to use the Web to offer discounted weekend fares. But when the name-your-price services came online, first with Priceline and then with Expedia, many customers found the service preferable and more convenient than subscribing to numerous e-mail notification services or visiting multiple Web sites.
Under that model, while the airlines are free to turn down any bid, the service takes some pricing control away from the airline. By putting their Web fares in one place at the new site, the airlines are naming prices and taking some of that control back.
"This is another way to get rid of distressed inventory," says David Kirby, editor of Interactive Travel Report.
While the airlines aren't yet offering Web fares to other travel sites, Kirby believes that could change. "If they can do it as cheaply at Travelocity as this site, I think they would."
The announcement comes at a time of frenzied consolidation in the Internet travel industry. Travelocity and Preview Travel are merging to better compete with Microsoft-incubated Expedia. They recently partnered with Priceline in order to be able to compete with Expedia's Flight Price Matcher service.
The four founding airlines plan to invest more than US$100 million in the site, which immediately becomes another e-travel heavyweight. That industry racked up $7 billion in sales last year and is expected to grow to $20 billion by 2001, according to research firm PhoCusWright.
The founding airlines will own equity stakes in the new venture, but it will be operated independently. Boston Consulting says that all strategic decisions about the site and its services will be made as soon as its executive team is hired.
Kirby believes that the success of the new site could boil down to how the fares are organized.
"I've long questioned why people would go site to site just to save 20 bucks," Kirby says. But if the site is only searchable by airline, rather than by destination, Kirby believes it will be of little use to people who want to comparison-shop. "Will there be sections by airlines? Or will you put in a destination? That will be a key to ease of use," he says.