Cheap flights help online travel`s road to recovery

Online travel companies may be pulling out of the consumer spending slump faster than their airline counterparts, as consumers rush to find the latest bargains available on the Web.

Orbitz LLC. enjoyed one of the busiest days in the company`s short history on Monday, providing one indication that online travel may provide a bright spot in a panic-stricken travel market, said Jeff Katz, chairman, president and chief executive officer at Orbitz, in an interview Tuesday.

“We are seeing volumes on many days that are at or better than the volumes before September 11th,” Katz said. “Travel is clearly softening as whole, but the Internet has become a much more important part of travel.”

In the days immediately following the Sept. 11 terrorist attacks on the U.S., online travel companies such as Orbitz, Expedia Inc. and Inc. saw sharp drops in consumer demand. Expedia, for example, saw new bookings drop as much as 65 percent in the week following the attack, and its competitors posted similar losses. [See “Travel Web sites regroup as bookings fade,” Sept. 18.]

The lack of travellers has taken its toll on the carriers, with a number of U.S. airlines announcing layoffs, reduced schedules and grim near-term financial outlooks. In an effort to curb their losses, the carriers began slashing fares, and it is these cuts that have consumers scanning the Web for the latest bargains.


“There is a lot of budget consciousness out there right now,” Katz said. “Safety concerns have quickly shifted to budget concerns.”

Airlines continue to show about a 30 percent drop in reservations when compared to pre-Sept. 11 levels, but online sites are seeing a drop of between 10 percent and 20 percent, Katz said.

“If you look at the statistics coming out of Orbitz, Travelocity, Expedia and the airlines` own sites, it does strongly indicate that the Internet has rebounded much faster than the average travel marketplace,” Katz said.

“It does not mean travel is in good shape, but it does mean that people have migrated to the Internet and that the Internet has grabbed a bigger share of the pie,” he said.

Katz continued to maintain a positive outlook on Orbitz`s near future, saying the company plans to continue rolling out new services while in the midst of a tough climate. The company will begin offering services directed at business customers in the early part of next year. In addition, the company plans to keep updating its automatic alert system with more information for users. Orbitz will automatically notify users via e-mail, pager, cell phone or even a computerized phone call when changes in flight conditions occur.