In the past few years, U.S. travelers have increasingly begun to treat airline tickets as a commodity. Shoppers scour the Internet with the ultimate goal of finding the lowest price, often checking a myriad of Web sites including supplier sites, online travel agencies (OTAs), metasearch sites and deal sites. Airline Web sites had long benefited from the consistent flow of OTA shoppers who were put off by OTA booking fees. Facing the grueling market conditions of 2009, the big three online travel agencies decided to cut that flow off in March, when they eliminated most air booking fees. Beyond the initial financial impact of the OTA fee cuts, a new PhoCusWright study, conducted in partnership with Compete Inc., finds that the move has had a measurable impact on Web site conversion rates.

Airline supplier Web sites have long dominated online travel suppliers in terms of unique visitors, with the category attracting more than twice the number of visitors of the OTA air category. In 2009, OTA air visitor traffic has declined somewhat sharply. According to PhoCusWright’s Online Traffic and Conversion Report, this category was the only one to show a decline in traffic from last June (-13%). However, air conversion (monthly unique shoppers who completed a booking within the month) has increased significantly since the fee removal.

OTA air conversion rates increased from 6.5% in 1Q09 to 8.5% in 2Q09, while airline site conversion decreased from 12.6% in 1Q09 to 11.6% 2Q09. In essence, OTAs have attracted fewer, better-qualified air shoppers, while airline sites have experienced the reverse—more visitors, but converting at lower and lower rates.

The fee cuts have not eliminated the defection of OTA air shoppers to airline Web sites. Despite the removal of most service fees on airline tickets, OTAs still lose over half of their air shoppers to supplier Web site for booking. This signals that there is more to the switching behavior than just the fee element. OTAs lose more bookings to air suppliers than they do car or hotel shoppers.

Air shoppers now have more tools to choose from than ever enabling them to evaluate the relative benefits of one flight versus another. With the removal of booking fees becoming permanent and standard, both OTAs and supplier sites will have to invest more to differentiate their offerings—a tall order with the razor thin margins that characterize air distribution.

Benchmark your site’s performance against the wealth of traffic and conversion data compiled by PhoCusWright and Compete Inc. Analyze the latest online travel trends and statistics with these offerings:

PhoCusWright’s Online Traffic and Conversion Report
A comprehensive review of the latest traffic and conversion trends, this report presents an analysis of all categories within the travel vertical. Individual sectors—such as air, hotel and car rental—are analyzed to explore the dynamic between supplier sites and OTAs, as well as how nontransactional sites—such as deal publishers and review sites—affect conversion. US$1,395

PhoCusWright’s Online Traffic and Conversion Report: Metasearch, Reviews and Other Nontransactional Categories
Companies no longer need to sell travel to be a major online travel player. A subset of PhoCusWright’s Online Traffic and Conversion Report, this review of nontransactional Web sites includes key data findings and analysis revealing how metasearch and planning and reviews sites have an impact on the conversion rates of shoppers who visit them. Two major nontransactional Web sites—Kayak.com and TripAdvisor.com—are analyzed in depth. $495

Purchase the recording (video/audio) of PhoCusWright’s October 20 Webinar: Key 2009 Online Traffic and Conversion Trends. $149

PhoCusWright Global Edition seatholders have immediate access to these reports—and the Webinar—via the “My Subscription” page of www.phocuswright.com. (NOTE: you must first log in—upper right corner).