Will Other Travel Sites Match Priceline's Elimination of Booking Fee?

by: Eric Savitz

Priceline (NASDAQ:PCLN) Monday afternoon announced that it will permanently eliminate airline ticket booking fees on all domestic and international fares. That does not apply to tickets bought on a “name your own price” basis. That decision leaves the other travel sites with a decision: match Priceline’s move, or risk losing business as thrifty customers switch their bookings to Priceline. George Askew, an analyst at Stifel Nicolaus, estimates that other sites are charging fees of $5 to $7 per ticket sold. Askew also notes that Priceline already had a no-fee booking policy in place on a promotional basis; this makes it permanent.

Priceline Tuesday is down 83 cents, or 0.9%, at $88.22. Askew notes that of the other online travel sites, the most challenged by this is Orbitz (NYSE:OWW), “given that its largest gross bookings and revenue category is Air.” And indeed, Orbitz Tuesday is off $1.47, or 14.3%, at $8.80.

Expedia (NASDAQ:EXPE) is down 85 cents, or 2.8%, at $29.95. And Travelzoo (NASDAQ:TZOO), which is more a publishing site than a booking engine, nonetheless is down 46 cents, or 2.6%, at $17.45.