United Airlines Threatens To Stop Selling Flights Through Expedia

Filed Under: United

Travel providers have long had a love-hate relationship with online travel agencies like Expedia. Historically both airlines and hotels have relied on these third-party booking sites to sell their seats and rooms, yet they’ve also done everything they can to discourage guests from booking through them.

Why? Because online travel agencies are a good source of customers, but at a cost. Airlines and hotels not only have to pay for bookings through third party sites, but these kinds of sites also limit the ancillary revenue opportunities airlines have.

How airlines & hotels have dealt with OTAs

Airlines and hotels have taken very different approaches to dealing with online travel agencies:

  • Hotels have created incentives for booking directly, including special rates and free wifi for those who book direct, etc.; this helps hotels avoid paying a commission of 10% or more to online travel agencies
  • Airlines have been more inconsistent when it comes to their relationships with online travel agencies, though they also pay lower fees, as airlines largely cut commissions for third party bookings years ago; airlines like Southwest have been successful not displaying their flights through online travel agencies, while other airlines haven’t been able to rip the band aid off

United to pull inventory from Expedia?

It looks like United is ready to cut ties with Expedia when their current contract expires on September 30, 2019… or at least that’s what they threatened during this week’s first quarter earnings conference call.

In February United revealed they were unable to reach a new agreement with Expedia, while now they’re saying that they plan to pull their flights from Expedia as of that date.

United’s chief commercial officer, Andrew Nocella, had the following to say:

“Expedia has historically been very good in selling our lowest fares but quite obviously, we think we can sell our lowest fares just as well. We look forward to having a direct relationship with our customers going forward, and that’s really where we are with Expedia.”

What would the implications of this be?

What would the impact on revenue be if United cut ties with Expedia? Skift notes that Expedia likely sells about 8.5 million domestic United tickets per year, for about $2.8 billion in bookings. Expedia makes $10.56 in revenue per booking, so this could cost Expedia $90 million per year. It could be less than that, since it’s not a sure bet that all of those people who were booking United through Expedia would otherwise be booking United direct.

The question of what’s on the line for United is a much bigger one, since it’s tough to estimate just how many fewer bookings United would get if they pulled inventory from Expedia. United president Scott Kirby indicates that the impact wouldn’t be significant, though that may also be optimistic on his part.

What makes this situation especially interesting is that both United president Scott Kirby and United chief commercial officer Andrew Nocella used to work at American, and during their time at the airline they tried to do exactly the same thing, ultimately unsuccessfully. They threatened to pull inventory, but quickly reinstated it.

I’ll be curious to see if United does in fact follow through with trying to pull inventory from Expedia. On one hand it’s risky, though at the same time if they can get passengers in the habit of booking directly, and if other airlines follow, this could make a huge difference.

There’s no doubt upside to airlines in getting people to book directly, not just in terms of cost savings, but also in terms of the potential to get more revenue from these customers.

Comments

  1. This may also hinge on how United sees growth of meta sites like Trivago, Kayak or Google Flights. If those are growing and bring more and more bookers to United’s site then Expedia becomes less relevant. United might invest their saving on Expdia’s fees on increased visibility on other sites then.

  2. Would this affect booking United directly with Chase points, as the Chase travel portal is operated by Expedia?

  3. So a further devaluation for Chase Ultimate reward points with regards to United. We will not be able to book United flights for 1.5c/point through the Expedia operated Ultimate rewards travel portal, when award points demanded are not reasonable vs the cash price. Chase needs to do something soon.

  4. Maybe they never should have sold Orbitz (the OTA that the airlines, including United, created to compete with Expedia and others). After changing hands a couple of times, Expedia owns it now.

  5. @Lucky, would this affect bookings made through the UR portal since it’s now powered by Expedia? I make a lot of my bookings through the portal with my CSR to get the 1.5 discount on point bookings. This is especially helpful with United blocking saver availability and charging last minute booking fees, taxes, ect. Living in a United hub doesn’t provide me many other options. Thanks!

  6. But since the chase portal uses Expedia for points bookings, does this now mean that Chase points wouldn’t be able to book United flights if this happens? That’s a pretty significant devaluation for some.

  7. Neither Andrew Nocella nor Kitby were at AA in the time period when AA tried to pull content from Expedia. They were at US in PHX. AA tried to do this in 2010/2011 Port to the merger. Kirby and Nocella has no part in that.

  8. You overlooked the tactic that most hotel groups do not award points for OTA bookings, and only some honor status. Maybe this is an option for airlines, or at least reduce the amount of points/miles earned on OTA bookings to incentivize direct bookings.

  9. I would be interested to know how this would affect Expedia’s sister company, Egencia, which is used for a great deal of corporate travel booking worldwide. I presume both systems are pulling from the same system and same inventory. If it’s gone from Expedia, is it also gone from Egencia? That would suggest the loss of many (business class) corporate travelers, which is a move I doubt United would want to take.

    I also wonder how this affects bookings through Chase UR portal, since that is “powered by” Expedia. I admittedly don’t know the precise relationship, but I wonder if the loss of United on Expedia would entail the same at the Chase portal.

  10. United, seriously, never change.

    Take away an important purchasing channel so you can save US $90 million, while losing heaven knows how much revenue when people book with other carriers at Expedia.

  11. @Allen

    Egencia bookings wouldn’t change, according to United, and I doubt Expedia would remove their flights as punishment, either. That would be just too painful for each of them.

    As for the Chase portal, that’s a TBD. If it did affect booking availability then Chase should use it’s considerable influence as United’s largest buyer of miles to prevent another devaluation.

  12. It’s a giant ploy to get more profit in United’s pocket and doesn’t really make a positive difference for customers.

    I don’t think it’ll work in United’s favor – people still depend on OTAs. I actually would say that if OTA’s go out of business, it’s way worse for consumers overall. For most casual travelers, OTAs provide a valuable service in helping consolidate information and streamline booking. While most readers of this blog may be considered: “power users”, most of the general public depend on OTA’s (hence the continued success/survival of these companies).

  13. Kirby and Nocella were definitely at USAirways in 2011, which is when American had its dispute with Expedia. They had no role in that experience. What you’ve written above is factually incorrect.

  14. This has been a long time coming. The carriers have been flirting with dumping the GDSs for a while but have been ham-stringed by technology. But as the traveltech market is getting disrupted, the writing is on the wall for the GDS operators unless they change their business models to adapt and innovate sooner rather than later. United is just testing the waters with this announcement, but I think it will happen very soon and expect the rest of the US carriers to follow. The days of OTAs and Travel Agencies getting free GDS access are numbered. Pretty soon travel agencies will be paying for access to inventory.

  15. Will this impact flights booked via Egencia (the corporate travel portal owned by Expedia)?

  16. Hi Lucky,

    Could you explain what happens in case of irrops for an OTA booking? I’m thinking of a biz or F ticket combining for example Qantas and Singapore. Are the operating carriers responsible for rebooking or dealing with irrops issues, or would I have to contact Expedia to sort things out, and how good are they at that if needed?

    thanks

  17. I don’t blame United. I stupidly bought a flight/hotel package to Kona, HI through Expedia in January. I wanted to upgrade to first class on the return trip. There were seats and United wanted to sell them to me. But because I had booked through Expedia, United couldn’t change my reservation. It was so stupid. There I was, money in hand to buy an upgrade, but both me and United were unable to do anything. I tried calling Expedia, but the language barrier between me and the two Expedia reps I spoke to made accomplishing anything impossible. The Expedia reps couldn’t understand my simple request to move me from coach to first class in exchange for me paying more money.

  18. Less concerned about United or Expedia…..more concerned about impact on consumers. Airlines are forced to be more competitive when it’s easy for consumers to compare flight times, flight quality and flight pricing all in one place. This is another example of an airline policy that does not put customers first.

  19. SW can get away with it because of reputation, better performance, and the lack of all the extra fees.

    United will lose a large share of folks without United status. They are bluffing.

  20. I think the most interesting thing from that article is that UA wants a premium credit card like DL and AA have, I look forward to signing up for that.

  21. Would this affect Google flights? WN schedules but not fares are shown on Google Flights. Would this become the case for United as well?

  22. Expedia? Con artists and thieves. They do not stand behind their service. I’ve lost my last dollar with those crooks.

  23. WN has an extremely user friendly website which I would prefer even if WN offered seats via an OTA. UA has a website that I find more complex and challenging to use. Too many “clicks” are necessary to book a flight. I just recently booked east coast to west coast UA flights with stopovers.. I wanted to scream with the time it required. I realize that UA provides seat assignments, baggage costs etc. However UA should purchase defunct WOW’s online booking systems. Simple to use

  24. Please let United do this so they can get spanked by the market. No one outside of points enthusiast would seriously go out of their way to fly United. Most flyers chase low fares and perhaps convenience. If they have any common sense, they check websites that aggregate fares for comparison. Not seeing United means they will be forgotten. No one will make the extra effort to see if United is offering a lower fare when we can assume AA and Delta and Spirit are all visible. Southwest can do this because they are so easy to work with once you buy a ticket. You know you can refund the value of the ticket with minimal hassle and they won’t screw you over.

  25. @ Mark G. It’s so interesting to see how different people have different perspectives about airlines. I would rather walk than fly Southwest or Spirit. I’ve never had a bad experience on United over the course of 400,000 miles. Southwest, on the other hand, is a miserable experience. I don’t want to jockey with other passengers for a seat. I want a first class option. And don’t even get me started with Spirit. I had to fly that airline once for a last minute trip. It was like a flying Greyhound. The passengers were in pajamas and flip flops. The flight attendants had to remind people that they couldn’t bring their own booze on board. Who even thinks of doing that? Complete trash on that flight. Therefore, I try to fly UA. And, being in Denver, that is easy. I always bring thank you cards with Starbucks gift card inside for the flight attendants and pilots. It’s a small token ($25 + the cost for a box of cards for a flight with 5 crew members) that goes a long ways to making a pleasant flight. What I enjoy seeing most is how all passengers on the plane benefit from one passenger making a small gesture to the flight crew upon boarding the aircraft.

  26. Non-issue. I do fly United often, as SFO is my nearby airport. However, I use Kayak or Google as an aggregator and no longer leverage Expedia. It just doesn’t seem as comprehensive to me. If a United option makes the most sense, I’ll take what I find on Kayak and book directly on the United website.

  27. Meh. I never book air tickets through third parties. Too risky. Don’t trust them to help if there’s a issue/problem, too much fine print with releases them. Ditto car rentals. Always direct with the company. Hotels very rarely.

  28. I almost always book my flights directly through the airline. But I often find online travel agencies like Expedia necessary for more complicated routings or multi-city bookings, especially when the starting and ending city are not major hubs. Think routes like Winnipeg-Durban.

  29. OTAs are sooo 2005… We don’t need them anymore.
    Why are they still there? Their only revenue is coming from by operating a well-working, easy-to-use website. And we have to admit, they really invest a lot on that one. Many airlines has terrible, slow, extremely stupid websites.
    Also, on legacy airlines, OTAs are giving discount (as they are willing to lower their comission, and/or they have more income from selling extras, like insurance and other bullshits). Show me any fare on UA/AA/DL, there are tons of OTAs which are going to sell that up to 10% cheaper.
    LCCs are not giving a single penny for OTAs. I never knew Southwest’s fares are not displayed on OTAs, but here in the EU, OTAs are selling LCC tickets, but always around 10EUR higher, than the carrier’s own website (Ryanair, Wizzair, Easyjet). Those who book these flights on OTAs are similar to those kind of people, who just get out of a lounge, and buy a coke for $3 from the wending machine at the terminal. (admit it, you too have seen these people way too often)

  30. I stopped using an OTA for simple plane tickets long ago. One time I had booked a ticket through Orbitz and needed to change it. Orbitz charged me a $30 fee on top of the airline change fee. Since Orbitz doesn’t add any value to me, I stopped using them and go straight to an airline site.

    I think I read something that said they dropped those fees, but there’s still no incentive for me to use a middleman.

    Never mind that when something goes wrong, everybody likes to point fingers at everyone else. That’s a needless complication.

  31. I agree with Billy. Have been flying on United every month from LAX to HNL since the merger and never had a bad experience, no lost or damaged bags. The only sad thing is that they took away our lovely , service oriented and very experienced Honolulu based crew and assigned them mostly on Guam flights and replaced them with no service oriented crews based in LA or other mainland cities. We miss our Honolulu based crew. Always service with a smile. How hard is that?

  32. The only time I ever use an OTA is when I have to do some bizarre itinerary when an obscure airline is part of the trip (i.e Air Malta) and making a package out of it creates a significant benefit.

    Otherwise, I would never do it. In 1 billion years.

  33. One reason that I used Expedia for UA flights is when it involves an advanced purchase fare ticket. The UA web-site bumps up the fares at 10 PM Pacific time (midnite Central time), whereas Expedia honors the AP fares until 1159 PM Pacific Time

  34. This is simply a negotiatating tactic being played out in the public media. $90mil in revenue is simply too big a number for either party to just scoff at and both parties will do their best to protect their margins (United by trying to lower fee and Expedia protecting it). I too believe they will work something out, because they pretty much have to. Doubt we (customers) will see any change here.

  35. I almost booked through expedia but there kinda sketchy. Luckily I read Facebook reviews and was thankful I didn’t. The most horrifying reviews ever. I book directly with airlines.

  36. Pretty stupid. People use Expedia because they don’t know who to book with and trying to find the cheapest price. Its a sure bet most of the people who booked united wont be booking united if they don’t come up.

  37. I’d like to see Expedia go down the tube! Had a very bad experience with them while traveling and my husband became very I’ll. We had to change our itinerary and they took both my arms and legs to do this. United had a small charge and that’s expected. I haven’t used them since and I don’t plan to use them ever again.

  38. Ahh United, you never cease to mess things up. Remember Polaris? It was great when it started, then they got into cost-cutting and things like pajamas and a mattress pad are so secretive they aren’t even mentioned on their printed menu “to improve the passenger experience”. Has anyone tried asking for a wine flight in Polaris lately? I’m guessing most FAs don’t even know what it is since it’s another hidden menu item now.

    The benefit of Expedia is they show fares across all carriers. I travel a lot, but the destinations vary widely so I’m not flying the same route all the time. I’m not going to waste time looking on Expedia and then United’s site — especially for an itinerary like US to Europe or Asia where United _may_ have an offering, but maybe not. United’s going to lose big-time if they move forward with this.

    As for OTA’s being outdated — look at Expedia’s revenue numbers and that’s not the case. I like the consistent booking experience, consistent documentation and receipts, and consistent change notifications. As for customer service, I’ve never had an issue though I’m an Expedia Elite member since I book more than $10k/year in travel with them, so there’s a different number to call for that.

    Southwest can get away with skipping OTAs since they are known for that, and they target a different segment (families and leisure travelers) who specifically seek out SWA due to their unique offering. United isn’t that type of airline, nor should they be.

  39. Where possible I book direct as it makes changes so much easier. However sometimes airlines just do not offer all flights themselves. Recently I needed a BKK-GUM on KE, and KE could not sell me that one. Likewise AMS-EZE on QR cannot be booked on the QR site.
    Most airline websites are still incredibly buggy and poor designed. That is the aspect where OTA’s are generally better.

  40. I too along with my wife had awful experience with Expedia in January on International flights & hotel . Much rather cut the middleman with their dishonest practices. Cancelled a return flight date a month ahead of time & was charged almost $400.00 each fee they said was the Airlines charge. Called Airline & they’re charge was only $60.00 Booked a specific room with a view for 10 days in Thailand . Arrived & room wasn’t available , moved to another hotel & was promised a refund. Refund was later denied. Bought insurance on flight & condo that was not honored. Never again !

  41. Expedia and Travelocity (owned) by Expedia are terrible companies. They do not stand by their service or guarantee that they will not charge for flight changes or cancellations. They are just liars.

    When I booked my flight before with Travelocity, I made a flight change, they insisted that they do not charge a fee, but the airline did. Yet, I kept telling them that I have a written document from the airline that states otherwise. They continued to lie through their teeth. I sent the document to AMEX to successfully dispute it. Then, Expedia collection department had the nerve to contact me to tell me that this is the fee the airline wants to collect. Yet again, I sent the document to him and they finally stopped with their lies and charades.

    Yet, again, another time was when a ticket was booked and no where on their website did they state that it was for two one-way tickets packaged and sold deceptively as a roundtrip ticket. That is why my friend could not change her return date, because it was a one way ticket and not a roundtrip ticket. Travelocity again lied saying that it was the airline that sold it that way. When I confronted him that the airline said that they would never sell two one way tickets, he would not budge.

    Then, his supervisor changed the story. It’s Travelocity, so no surprise there. She said the website did clearly state that before purchasing, which was a lie.

    Travelocity should just change their name to Liecity. Never again with Travelocity, Expedia or any of its affiliates or subsidiaries. Lying one too many times.

  42. Imagine a better world: if the airlines would copy the model of hotels, where if one books the reservations on the OTAs, then no mileage or status would be honored. It would force the OTAs to be less arrogant and more customer service friendly. Also, it would encourage more customers to book direct with the airlines. Yet, if Southwest was successful, why can’t the airlines copy that?

  43. isnt the biggest difference between hotels and airlines in this aspect related to the fact that one cant earn reward points for hotel loyalty programs when booking through OTAs whereas its not the case with airlines. i can understand hotels wanting people wanting to book directly but not recognizing the fact that someone chose their property and encouraging them to do so the next time doesnt make a lot of sense. The OTAs do help in bringing visibility to properties .

  44. I find Expedia to help me get the lowest price. Often much better than on the airline’s site.

    But some of the opinions here forget to apply logic. Sites like Expedia encourage lower prices and make it much easier for most buyers by comparing routes and prices in such a simple format. Only in arrogance and insanity is this a bad thing.

  45. Expedia definitely has the most to lose in this and it should have happened a long time ago. Expedia is : Hotwire, Orbitz, Venere, Trivago, Cheap Tickets, Travelocity, Classic Vacations, and more. All the same company. The big name hotels and airlines don’t need these 3rd party sites any longer they all have quality websites now that can give you direct service.

  46. I can’t imagine why someone would choose to fly on United. Booking thru Expedia surely provided them a market they wouldn’t otherwise have.

  47. Only place I book other than direct is AMEX, and that’s only when I want weird codeshares.

  48. No United on Expedia means no United on Chase search engine. All the book-direct people here also forget that Expedia often finds better fares in the same class than airlines. Anyway, United will keep its faithful followers but will lose the rest of us who stopped caring about chasing status and fly a lot on random airlines.

  49. Good. Booking through third party sites can be a nightmare! I’ve heard stories about people showing up to the airport and not having a reservation, or having their reservation cancelled by sites like Expedia. When that happens, there’s nothing the airlines can do, as tickets were purchased from these other companies. Also, your preferred seat may not be honored, and not all airline “rules” are published. Always book directly with the carrier!

  50. If United does this, Expedia should implement an internal search function for United fares for each itinerary search, then report: “Can United beat out lowest fare?”

    The answer would be close to 100% “No,” and that would discourage people from searching for United elsewhere. Hopefully, that would accelerate United’s failure and bankruptcy, and their gates and routes and equipment could be acquired by better-run airlines (i.e., ANYONE other than United).

  51. Honestly, if you’re still flying United after what they did to that doctor, they could decapitate you, and I’ll still think you deserve it.

  52. Anything United does only has one goal — getting bigger year end bonus for those greedy executives.

    In Houston airport, United subcontracted out almost every duty to a company called ARM, a company employed folks work for a paycheck, but not for the travellers. For sure, when something goes wrong, it will be ARM’s fault, not United. I think that was the lesson that United learn from dragging that doctor out of the plane. At the same time, those original United hard working employees got laid off.

    United is going another bankruptcy route. So sorry and miss Continental Airlines.

  53. A couple of people have mentioned the incident with the doctor. It’s very disingenuous to blame United for that incident. First, if the doctor had just stood up and gotten off the plane rather than throw a temper tantrum, it wouldn’t have happened. Second, it was the airport police that roughed him up as he resisted. Third, it was a Republic Airline flight operating as United Express. To the extent a flight attendant or pilot on board had anything to do with the incident, they were not United employees. The most blame goes to the doctor. Buying a seat on a flight doesn’t give you the absolute right to be a jerk. And anytime the police give you a lawful order, it’s best to follow it rather than make a scene like a toddler who doesn’t want to go to bed.

  54. Thank god. I hope that American Airlines and Delta follow suit. Expedia and it’s corporate arm Engencia are fucking horrible platforms. Good riddance to the trash.

  55. Good riddance Expedia. You treat your customers like crap and it’s a poor reflection on United. You give your employees no authority to deal with customers issues so nothing gets done. Bottom Line: everyone (United and the customer) looses when Expedia gets involved.

  56. I’m actually really pissed at Expedia right now. I booked a BA code share on AA metal in Y. No problems on the outbound. I needed to change our return and made flight change online, paying $2102 change fee and fare difference, and they rebooked me into Basic Economy. No warnings, no notification. Found out at the airport when I had to pay for bags.

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