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Many online travel agencies such as Expedia, Orbitz and Travelocity over the years scurried to wean themselves away from their previous dependence on selling airline tickets in favor of a higher-margin hotel business but now Expedia wants to lean back a bit to reemphasize the sale of flights.
Following Expedia’s agreement last week with American Airlines Group to begin selling American’s Main Cabin Extra and Preferred Seats later this year, Greg Schulze, Expedia Inc.’s senior vice president of global tour and transport, tells Skift that Expedia plans to be selling additional airlines’ branded fares by the end of 2015, giving customers new options to compare them so they can better understand what they’re getting.
Many airlines around the world, including JetBlue recently, have chosen to brand, or name, their fares and offer different services for each, including a free checked bag, same-day changes or early boarding, depending on the purchased fare.
Schulze says Expedia Inc. plans to make $700 million in technology investments in 2015 and a chunk of that will go toward improving the user experience in purchasing airline tickets given all of the new complexity in doing so.
Expedia Inc., which migrated its airline ticket selling to a single technology platform two years ago, earns less than 10 percent of its revenue from airline tickets, but that percentage is expected to tip upward over the next few years. That platform migration is the foundation for improving Expedia’s air-ticket business, officials say.
Schulze says online travel agencies stopped focusing on innovation in selling airline tickets several years ago and will likely reverse course as Expedia gives flights new emphasis.
“We want to set a new standard in air technology,” Schulze says, adding that Expedia already uses Routehappy’s information to provide further detail about flight amenities and will increasingly give customers the ability to compare branded fares from airline to airline.
In an apparent reference to the Priceline Group’s Booking.com unit and others, Schulze says many online travel agencies only offer one product type and Expedia sees being a truly full-service online travel agency as a differentiator. He expects competitors to follow Expedia’s lead.
To implement a wider array of airlines’ branded fares, Expedia is working with its three global distribution system providers, Amadeus, Sabre and Travelport, to access the fare data from airlines, but they will need to improve their technology, Schulze says.
If they can’t do it, Schulze says, Expedia will look to work with providers other than the global distribution systems. In the distribution system pecking order, Expedia will first be working with Amadeus to bring additional airlines’ branded fares to Expedia later this year.
Asked whether Expedia will start offering JetBlue’s Blue, Blue Plus, Blue Flex and Mint fares later this year, Schulze declined to say but noted that JetBlue is an important Expedia partner.
Purchasing an airline ticket is “a long, hard slog,” Schulze says, noting that customers conduct an average of 48 searches across the Web before they purchase a ticket.
Expedia intends to improve that process for customers but it will face a huge challenge in doing so. When it comes to fare comparisons, airlines have refused to allow travel metasearch sites such as Kayak, for example, to compare their fares side by side against other airlines.
How effective Expedia can be in providing more transparency into the value customers would be getting in purchasing one airline’s flight versus another’s remains to be seen.
Expedia grew its airline ticket revenue 14 percent in the second quarter of 2015, but don’t expect its flight revenue to overtake its core hotel revenue. That won’t be happening but plans call for a little more balance over the next few years.