Spreading Uniformed Junk Courtesy of BTC

BTC Spreads False Information about How Web Users Search For Fares.

Time Out for A Moment Of Clarification.

This really bugs me. There is a complete and utter well dog poo of stuff coming from some of those players who support the legacy GDS - In this case Travelport - in its battle against American Airlines. I am particularly irritated by BTC.

Firstly a disclaimer - I have several clients who can benefit from the move to more direct connect activity by the airlines and yes personally I support that idea that airlines should be free to chose how and where they distribute, similarly how customers search and buy airline product. After all the USA is supposed to be the land of the Free. Thus yes I am clearly biased. However in this case I think I just want to set the record straight so that a reasoned analysis of the situation and the impact can be had by all.

In the latest missive from BTC - it would seem that the message is designed to show how stupid AA is for shutting off $800 million dollars of revenue that AA receives from Orbitz annually. But worse - the impact is accelerated by the importance of Orbitz which is far greater because of its relevance to the consumer in the marketplace.

Here is a statement from the latest BTC PR missive against American Airlines.

QUOTE:
According to a May 2010 PhoCusWright report, 87% of travelers start their shopping process on the Internet. What’s more, some 28% of shoppers at online travel agencies (e.g., Orbitz) end up purchasing on suppliers’ websites.

The point: Consumers who start the shopping process on Orbitz before going to airline.com will now completely miss AA offerings and end up on AA competitors’ websites. This could represent a much bigger number than AA is willing to acknowledge.

END QUOTE

Clearly the writer has little clue how people search for fares on the internet. BTW the total revenue - I Believe - is not just from Orbitz.com but also from the other OWW (Orbitz Worldwide) sites such as eBookers, and Cheaptickets all of whom (at time of writing) are still able to access AA. If I am wrong please can someone correct me and I will publish a correction asap. Indeed as I noted yesterday AA is even advertising on Cheaptickets. Anyone who is still naive enough to assume that shopping on the web for travel is a simple and fair process has not been paying attention for the past 15 years.

So let's start with an understanding the vast majority of searches on the web start in a specific place. Only 15% or so start in a pure search engine such is Google. Alright so far.

There are a lot of ways to search for information and Google aims to capture a much larger piece of that pie if - as we expect - the Google acquisition proceeds.

People shop in one place and buy in others. To say otherwise is rather disingenuous to the consumer. There are some folks who think that there should be a tax on people who look in one shop window and buy else where. On the web that is possible because a click-through does generate money. But in the real world does Bloomingdales charge people for looking in their shop window and buying at K-Mart? Hardly.

But let's return to the BTC statement.

If you examine the study concerned from PCW - there are other salient facts - that the customer will typically search in a large number of sites before making their decision. That search process is driven by a wide number of factors. To make the assumption that it is linear and that the search process goes in a linear path would be a false assumption. So to assume that:

A large number of searches start specifically with Orbitz.com and end at the AA website would be a bit of a stretch. A very big bit of a stretch.

As the Boomers retire and move out of mainstream - they are being replaced by new generations of consumers - Gen X, Y and Millenials who are far more comfortable in using social media to go straight to what they want or go via places that are nowhere near Orbitz.com.



Over time the relevance of the OTAs as a class and Orbitz as a member of the class has declined as the premier source of travel information.

This is a trend that will likely continue.

My other point is that the consumers are smart and if they feel that they want an offer from AA - they will either go direct to AA.com or to those sites where AA is present. They do this all the time anyway. Just in case you think this is a strange phenomenon - then consider how Southwest is rarely compared with other airlines. And Southwest is the number one US based carrier by passenger numbers domestically.

However let me be clear - there is an impact on AA. I cannot hope to know what is going on in the mind of the folks over at AA but I have to hope that they know what they are doing. This is a calculated risk and one they clearly feel comfortable in making. Also I think Travelport has calculated and made the decisions that they have.

To paint Travelport as the pure victim would be a falsehood in my view. Further for Travelport to have characterized their defense of Orbitz as the champion of the free is a bit of a stretch, particularly since they failed to disclose in public statements their ownership share in Orbitz.

Interestingly in issuing his decision on the subject - Cook County Circuit Court judge Martin Agras clarified things as he stated his grounds for denying the preliminary injunction, ...that Travelport, which controls 48% of Orbitz, “does not have standing to sue on behalf of Orbitz".

However I will agree with the folk at BTC. This is a just a shot in what will be a very long war. There will be casualties on all sides and the consumers will be affected. Ultimately in my view the essence of the battle is seen as purely an economic problem - there is a consumer benefit from buying direct it is cheaper to one side of the purchase. Consider that there is a tax being paid for partial neutrality in search. That tax is one of the issues here but I can assure you it is not the only one.

Cheers