Tech Industry

Travelocity joins booking-fee trend

The travel site says it will start charging a $5 booking fee as of next year. The company was the final industry holdout in instituting such charges.

Travelocity plans to initiate a $5 booking fee for airline tickets purchased on its North American Web sites, company officials said Friday.

Travelocity's move comes within days of competitor Expedia's announcement that it would institute a similar fee. Travelocity was the final holdout in the online travel business in regard to charging such fees.

Travelocity, a wholly owned subsidiary of Sabre Holdings, will begin charging the fee sometime in January, company spokesman Al Comeaux said. Comeaux said he could not yet provide the exact date on which the new fees will go into effect. He also said he couldn't give details on why the company decided on a $5 fee as opposed to a smaller one.

"We have done a lot of benchmarking, and even with this $5 fee, our pricing is still better than our competitors'. We believe we'll maintain our price competitiveness," Comeaux said.

This industrywide move toward booking fees comes at a time when the airline carriers are cutting back on the commissions they pay brick-and-mortar and online travel agents.

Analysts applaud the fees, saying they bolster profitability for the companies without discouraging a significant number of people from using their services.

Orbitz initiated a $5 booking fee last year. Priceline kicked off its program a couple of years ago and now charges a $5.95 fee.

Analysts perceived Expedia and Travelocity to be slow to the game in charging such fees, but Comeaux demurred.

"Clearly the economics of our industry, and commissions being cut, made it more logical to do this at this point in time," Comeaux said.

Comeaux said the threat of bankruptcy by United Airlines' parent company was not a factor in the timing of Travelocity's decision.