JetBlue drops 12 travel agencies to cut costs

Bloomberg

JetBlue Airways Corp. has withdrawn its flights from a dozen online travel sites in the first phase of a broader effort to trim $20 million from its ticket-selling expenses.
JetBlue is remaining with larger agencies including Priceline.com and Expedia Inc., along with
Expedia’s Travelocity.com and
Orbitz.com units. The airline favours sites like Kayak Software Corp.’s Kayak.com where consumers can comparison shop for prices and schedules, but then are redirected to the website of the selected airline to book their travel.
The changes are the latest skirmish between airlines and online travel agencies that sell tickets based on fare and flight data provided by global distribution systems, or GDS. Carriers in general pay five-times more for a typical booking made through such travel sites than on their own website, said Henry Harteveldt, founder of Atmosphere Research Group. Airlines are trying to get more control over the information and the so-called distribution costs involved.
“It tends to be the lowest-revenue customers coming through in a market where we pay the same distribution costs for a customer paying $39 as one paying $339,” Marty St. George, JetBlue’s executive vice president for commercial and planning, said. “Distributing really low fares through these channels is very, very expensive for us.”
Online travel agencies depend on global distribution systems to provide the price and schedule data used by many consumers to purchase airline tickets. The GDS companies historically have collected fees from the airlines for handling that fare and flight data, then share the fee with sites that sell the tickets. That means selling a ticket through such sites is more expensive than other options. Sabre Corp. and Travelport Worldwide Ltd. are the largest US-based GDS operators, while Amadeus IT Group SA operates primarily in Europe.
A typical reservation having 3.2 flight segments and made through a GDS-dependent site would cost a carrier $10.40, excluding agency incentives or commissions, Harteveldt said. That same trip would cost an airline less than $2 to process through its own website or mobile app, he said. The “overwhelming majority” of JetBlue’s bookings come from its own website, St. George said. The travel sites dropped by JetBlue are LBF
Travel’s SmartFares.com, MyFlightSearch.com, VacationExpress.com, Vayama.com, WhatsCheaper.com, Vegas.com, JetSetVacations.com, CheapFlightsFares.com, QuickTravels.com, Kiwi.com, FlyFar.com and FlighNe work.com.