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Orbitz to charge service fee

The Web travel agency is expected to announce that it will immediately begin charging a $5 service fee on all electronic tickets.

Orbitz, the Web travel agency formed by five of the largest airlines, will immediately begin charging a $5 service fee on all electronic tickets. The company is expected to announce the change this weekend.

Orbitz said Friday that the fees are needed to keep the company independent from the airlines, hotel and rental-car companies that make up their offerings. The alternative would be to get into financial arrangements, such as commissions, with those companies, which could appear as a conflict of interest, said Roland Jacobs, chief marketing officer for Orbitz.

Some online travel agencies have what amounts to a paid-placement model: Airlines, hotels and car-rental companies pay a commission to ensure their listings appear first in a search. Customers doing the search may not be aware that the commission is why a particular company is listed first.

Other factors may have contributed to the fee hike, according to Henry Harteveldt, a travel analyst with Forrester Research.

"Orbitz doesn't make as much on airline commissions as some of their competitors," he said. "Their advertising revenue is probably soft because the whole ad market is soft. What this reflects is that agencies are evolving from representing travel suppliers to representing consumers and earning their compensation from consumers."

Orbitz said customers will be able to waive the fees one time between now and Jan. 14.

Since launching last June, Orbitz has pitched itself as the low-cost leader as it has competed against the top Web travel agencies that sell published fares, including the two largest agencies, Travelocity.com and Expedia. Orbitz says it will continue to offer low fares even with the $5 service fee.

"Consumers feel if you're offering unique value through your service, (they) have no issue with a $5 fee," Jacobs said.

Travelocity and Expedia have complained to regulators about how Orbitz gains access to those low-cost deals. They've argued that the relationship between the airlines and Orbitz is anti-competitive.

Under the terms of the agreements Chicago-based Orbitz has with 30 airlines, the airlines are obligated to make all their published fares available on Orbitz.