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HolidayBuyer's Guide
Internet

United stakes Net travel firm

United Airlines buys a minority stake in a travel technology firm, underscoring the heated nature of this online area.

United Airlines today bought a minority stake in a travel technology company, underscoring the heated nature of Net travel sites.

United, which runs its own site where Net users can book flights, rent cars, and make hotel reservations, took a minority investment in the Internet Travel Network (ITN), an independent developer of Internet-based travel planning products and services.

ITN developed United's reservation and ticketing component on its Web site, and United is planning to use ITM to expand and streamline its product offerings, the firm said.

Travel is a hotly contested market on the Net now, with sites such as Expedia, Travelocity, and Preview Travel leading the pack. Those sites serve as online travel agents, providing everything from booking to travel information and editorial content with travel suggestions.

But airlines are also in on the act; just as one can book a plane trip offline either by calling a travel agent or by directly calling an airline, one can go straight to a travel Web site or an airline site. The major difference, however, is that online, even airlines will book each other's flights and also offer add-ons as incentive to book directly through them.

United, for instance, offers Netizens double mileage in their Mileage Plus program for booking on the Web. Airlines potentially save money in personnel time every time a Netizen successfully books on the Net, said Larrain Sileo, an analyst with travel industry research firm PhoCusWright.

The fewer humans and paper work involved in the ticketing process, the less expensive the process is, she said.

"One of the main goals is to lower distribution costs," Sileo said. "They can save lots of money selling direct to the customer. I'm sure you'll see more and more incentives for the customers to go directly to their site."

American Airlines also is working on beefing up its site with a redesign in the works, according to the company.

On the other hand, airlines do not necessarily want to compete with aggregators such as Preview Travel, which bring in customers by the thousands.

"They do see a great value in working with online travel sites," Sileo said.