Online travel retailer Expedia has stopped selling American Airlines tickets following a disagreement over terms.

With contracts between the two partners up for renewal, AA has been pushing for more favourable terms.

Airlines have to pay a commission every time people search a particular flight, look up a fare or book a trip.

The Texas-based airline has said that it would rather sell more tickets through its own website, saying Expedia is too costly.

It also claims that it can offer better packages, such as hotel and flight deals, to passengers who purchase tickets directly.

The withdrawal follows the airline severing its partnership with travel comparison site Orbitz Worldwide in December.

The industry will be closely monitoring agreements between other airlines and online retailers in 2011, with several key contracts set to expire, including Travelport and Sabre Holdings with several airlines.

Expedia said: “American Airlines’ direct connect model is of questionable, if any, benefit to travellers, would be costly to build and maintain and would compromise travel agents’ ability to provide travellers with the best selection,”.

American claims that a direct connection to its website is important to build a closer relationship with its customers that lets the carrier sell products that factor in things such as frequent flyer status.

The online retailers argue that while their business models have shifted away from airline tickets into hotel bookings and package holidays, airlines remain dependent on them for a significant proportion of sales.

Orbitz says that it booked $800m of tickets for American over the past year. Meanwhile it says that American represents only about 5 per cent, or $30m, of its annual revenues.

American has said it had continued to experience a year-on-year increase in its ticket sales since it removed its data from Orbitz, although analysts have said the carrier has offered substantial discounts to encourage Orbitz users to book on aa.com.

Expedia shares have fallen 6 percent since the row with American became public, while Orbitz shares have slid more than 10 percent. Shares in AMR Corp, American’s parent corporation, are down about 2 per cent over the same period.