03 September 2009

Booking Fee Mania Spreads to AsiaPac

Bowing to another inevitability - Zuji (aka Travelocity AP) will cut booking fees effective today.

Inevitable? Why?

Well the experience elsewhere has shown that it didn't hurt Priceline to start with who killed them in 2007. Earlier this year the big 3 US also cut them - Expedia, Travelocity and Orbitz. All with negligible effect on their bottom line. More importantly the impact in the US market showed that the transaction loss for the OTAs was less than the airlines and of course the traditional offline outlets. Thus proving that there was some growth left in the OTA model.

So Zuji cutting fees is just normalizing something that has shown to work elsewhere.

So now - no more fees... Anyone still charging fees for transactions face a diversion of business away.

So LCCs and others - pay attention - there may just be a lesson here.


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