7 years ago
 

Analyst report: Expedia, Orbitz feeling impact of American Airlines exodus

If Orbitz Worldwide and Expedia Inc. thought the absence of American Airlines flights on their websites would lead to travelers merely booking other carriers, then they were wrong.

And, competing online travel agencies — such as Priceline and Travelocity, although they weren’t specifically named — didn’t necessarily make up the difference.

Those conclusions were contained in a UBS Investment Research note on Online Travel Agencies, authored by analyst Kevin Crissey.

“We believe Expedia and Orbitz have seen their air transactions fall importantly since American left Orbitz (Dec. 21) and was removed from Expedia (Jan.2),” the note says. “Our channel checks and data suggest many customers have chosen to book on AA.com rather than on competing carriers or through other online agencies.”

UBS Investment Research estimates that airline transactions through OTAs fell 10% to 15% starting around Christmas.

“That falloff is consistent with our estimate for American’s share of the US market formerly listed on Orbitz Worldwide/Expedia,” the note says.

UBS Investment research says that slim margins on air bookings likely blunt the financial impact on Orbitz and Expedia.

However, hotel reservations, which have larger margins, may also be impacted, UBS says.

Of course, American Airline also is probably feeling a pinch, the note says.

American has stated that its advanced book load factor is flat, and this may have been accomplished through low fares, UBS Investment Research says.

However, the firm believes that the airline has been able to recapture about 80% to 90% of lost revenue.

American has embarked on an advertising campaign, including online and radio ads, touting AA.com in light of the absence of its flights on Expedia and Orbitz.

There may be more information about the impact on the OTAs when Orbitz Worldwide, Expedia Inc. and Priceline report their fourth quarter financial results in February. Travelocity is privately held and doesn’t publicly report earnings.

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Dennis Schaal

About the Writer :: Dennis Schaal

Dennis Schaal was North American editor for Tnooz.

 

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  1. Diller speculates about Expedia-American Airlines settlement | Tnooz

    […] Expedia chairman’s statement comes as at least one analyst says Expedia has been feeling the sting from American Airlines’ absence on Expedia […]

     
  2. NorthernFlyer

    I can’t believe a drop of 10%-15%, especially if the research shows that the bookings largely did not shift laterally to other OTA’s (notably Travelocity and Priceline). AA at most likely represents about 3% of Expedia’s air volume (that statistic was quoted in an earlier report in December)…which seems about right. And of that 3%, how many were willing to totally desert the ‘good ships Expedia and Orbitz” because they were only willing to book American. If that were the case, many of those travellers would already have been booking AA direct. Sounds like faulty research to me.

     
  3. Calvin

    I applaud Orbitz and Expedia for standing up to American, who for one, wants to keep travelers from shopping around. I will not fly American, nor will I sell any flights on American.

     
  4. Rpatel

    It’s about time that somebody woke up and took the charge where it belongs, in companies hand. I suggest other Airline, Hotels and Car Rental companies follow the suit and stop profit drain to OTAs.

     
  5. Nick S.

    Does anybody know where I can find a copy of the actual UBS report? I’ve been searching their website and can’t find it. Thanks for your help.

     
    • Charlie L.

      I’m looking for the study as well. If anyone finds it, please post it.

       
 
 

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