Airline Web Sites, Poised For Takeoff?

Looking to book an airline ticket on the Internet? Chances are you'll first head to Travelocity, Orbitz or Expedia. With state-of-the-art technology and access to a wide range of flights on competing airlines, the well-funded Big Three, along with smaller rivals such as OneTravel and CheapTickets, have been able to take a considerable chunk of the action from the airlines' own sites.

But the power may be shifting as financially strapped airlines try to control a bigger share of their inventories. In recent months, the airlines have fought back with steps designed to attract more customers to their sites:

· Many carriers have started offering price guarantees. American and United are the latest, joining Continental and Northwest, to promise that no third-party site will undercut their own Web site prices. The guarantees offer to refund the price difference, plus provide a $50 voucher for future travel, to travelers who can prove that they found on the same day the same flight for at least $5 less elsewhere.

· More modern and sophisticated systems have been established to locate the best fares. For example, Continental and America West now use ITA Software, a well-regarded technology for searching fares, to power their booking systems.

· A number of carriers offer frequent-flier bonus miles to those who book on their Web site. American, United, Northwest and Delta are among those that provide 1,000 extra miles just for booking at their sites.

· Several airlines occasionally offer special fares that can be booked only on their Web sites. Spirit Airlines, for example, recently posted fares from Reagan National starting at $29 each way exclusively through its Web site. And Southwest, which does not sell through third-party booking sites, launched a downloadable feature called Ding! on its Web site that notifies users of special fares.

It's not just a matter of pride for the airlines. A study by the Government Accountability Office found that the airlines paid more than $7 billion to distribute tickets in 2002. Jupiter Research, a company that analyzes Internet use, concluded in a report published last year that online travel spending in the United States will grow from $54 billion to $91 billion by 2009. Airline executives are paying increasing attention to those numbers, realizing that they can save big bucks by persuading consumers to book on their sites.

But they're walking a fine line as they try to sell more tickets directly while continuing to work with outside companies that bring in lots of business. According to PhoCus- Wright Inc., a research firm that studies tourism trends, 39 percent of the airlines' online ticket sales are made through third-party agencies, such as Travelocity and Expedia.

"On the one hand, it's clear that many airlines are trying to compete directly with third-party sites via their own branded Web sites," said William J. McGee, a consultant on online travel for the nonprofit Consumer Reports WebWatch, who has conducted several studies of booking sites. "At the same time, an awful lot of airline bookings continue to come through third-party sites."

Keynote Systems Inc., a San Mateo, Calif., company that studies e-business performance and management, recently conducted a survey that asked 2,000 consumers to use and evaluate four third-party sites and 12 airline sites. The study concluded, "Online travel agencies are outperforming airline Web sites in terms of customer experience and that is impacting their booking success."

The study ranked Expedia, Orbitz and Travelocity as the top three sites in terms of the best overall online experience for customers. Among airlines, Southwest was tops "because of its industry-leading price satisfaction and because it possessed the industry's best online booking process."

Bonny Brown, Keynote's director of research and public services, said the study showed that airlines are not doing a good job convincing users that they're offering the cheapest prices and the best availability. Third-party vendors "have built their sites better overall," she said.