Orbitz tacks on $5 fee to e-tickets

The Web travel agency says the fee is necessary to keep the company independent from the airlines, hotels and rental car companies it works with.

Greg Sandoval Former Staff writer
Greg Sandoval covers media and digital entertainment for CNET News. Based in New York, Sandoval is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at @sandoCNET.
Greg Sandoval
2 min read
Orbitz, the Web travel agency formed by five major airlines, has started charging a $5 service fee on all electronic airline tickets.

The new fee, previously reported by CNET News.com, was implemented Saturday.

Orbitz had said Friday that the fee is necessary 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.

On Saturday, the company said the fee would not extend to hotels or rental cars.

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 fee 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.