Orbitz fee suggests a squeeze

By Bruce Mohl, Globe Staff, 01/13/02

Banks addicted us to automated teller machines, then started charging us to use them. Now airlines, after getting us hooked on buying tickets online, appear to be headed in the same direction.

Orbitz, the online travel agency created by five big US airlines, started charging a service fee for writing tickets last month. The fee is $5 for buying one ticket, and $10 for two to four.

The fee surprised me. I've found Orbitz to be a very useful travel tool, but coughing up money for a service fee seemed like paying the airlines for the right to buy a ticket from them.

For years, the airlines have been trying to squeeze costs out of the ticket-purchasing process. First, they slashed the commissions they paid to brick-and-mortar travel agents. That forced the agents to charge their customers fees for their services, and put them at a severe competitive disadvantage on most simple transactions.

Then Continental, Delta, United, American, and Northwest launched Orbitz, an online travel agency that offered the convenience of one-stop shopping (something the individual airline Web sites couldn't offer) with discount fares that other travel agents have had a hard time matching.

The strategy seemed to be working. Online travel purchases are taking off, and Orbitz, after a brief downturn following Sept. 11, has rebounded, and its sales are gaining. So why tamper with success by implementing a service fee?

Perhaps the airlines are doing to Orbitz what they did to the brick-and-mortar travel agencies, squeezing more cost out of the system. Or perhaps the airlines are just testing the appetite of consumers for paying a service fee to use Orbitz's online reservation system.

So far, the other two big online travel agencies, Travelocity and Expedia, haven't initiated their own fees. Travelocity, however, does add a special $10 service fee to all Northwest tickets because Northwest doesn't pay the online agency any commission for writing the tickets.

Jon Douglas, news editor at Smarter Living Inc., a Cambridge travel information company, said he assumed the new Orbitz service fee means the agency's revenue model is changing, that it is now being forced to turn a profit on its own.

"My advice to consumers," said Douglas, "is to shop around."

Trying the bypass

Following Douglas's advice, I tried to see if I could outwit the Orbitz service fee.

I was looking for a ticket to Florida in April and found a good price on Orbitz for an American Airlines flight. I immediately minimized that screen on my computer and pulled up the American Web site to see if I could find the same fare there minus the service fee. I found the flight, but it cost $47 more on American's own Web site. How crazy is that?

Carol Jouzaitis, an Orbitz spokeswoman, said she couldn't explain it. She confirmed that any traveler could do what I tried to do, but said few travelers would.

"Most people aren't going to take the time to see if they can find it somewhere else to save $5 or $10," she said. "Most people don't want to go through that scavenger hunt."

I guess she's saying I'm not like most people.

Check your insurance

Eleanor and Vincent Terlino of Saugus purchased insurance coverage for a trip to Aruba for their 60th wedding anniversary, but the policy ended up not covering what they thought it covered.

The couple booked their trip through All Seasons Travel in Saugus in September. When Vincent got sick, the couple canceled the trip and asked for a refund of the $3,500 they had paid. It took 12 weeks to get a check for $1,700, and they are still impatiently waiting for the balance.

Officials at the travel agency say they offered the Terlinos two types of insurance coverage for their trip. One covered the entire trip; the other, cheaper policy covered only the land portion while allowing the air tickets to be reused at a later date.

The travel agency officials said the Terlinos chose the latter coverage, but Eleanor Terlino denies that. She said she was asked if she wanted insurance coverage, and she replied yes. She didn't think she was buying limited coverage.

"Why would I do a stupid thing like that?" she asked. "I want all my money."

The story may still have a happy ending. The travel agency has appealed to American Airlines to refund the air fare and has received verbal assurances that a refund will be forthcoming. Travel agency officials say all refunds have been delayed by the aftereffects of Sept. 11.

uftagline

Bruce Mohl can be reached by

e-mail at mohl@globe.com.