Only time will tell if United will follow through on its recent, bold pronouncement that it will stop doing business with the Expedia Group of OTAs as of Oct. 1.

But should United bring the promised move to fruition, it could signal a new resolve by the Chicago-based carrier to drive distribution away from the price-sensitive OTA model and on to its own website and mobile app. 

“The airlines that we speak to are very big on investing in the digital transformation process,” said Aditi Mehta, a marketing manager for Pros, which develops pricing engines and revenue management solutions for airlines. “Over the past couple of years, we’ve seen United invest heavily in their website and mobile app.”

On the carrier’s April 17 earnings call, chief commercial officer Andrew Nocella said United plans to move forward with distribution partners better suited to its future. 

“Expedia has historically been very good in selling our lowest fares,” Nocella said. “But, quite honestly, we think we can sell our lowest fares just as well, and that’s where we are. So we look forward to having a direct relationship with our customers going forward.”

The comments came as United’s contract with Expedia is set to expire on Sept. 30 and barely a week after a federal judge had ruled that United can withhold inventory from Expedia Group for flights departing after the expiration date. 

Among the Expedia Group websites that would stop selling United if the contract is not renewed are Expedia, Orbitz, Travelocity, Hotwire and CheapTickets. Its travel management company, Egencia, would not be impacted. 

Appearances aside, however, there’s always the chance that United is posturing for a better agreement. In 2016, the companies extended their contract just two days before it was set to expire.

Maggie Rauch, senior director of research at Phocuswright, cautioned, “There’s a history of airlines and OTAs getting to the brink and resolving it at the last minute.”

She said United could be negotiating over the commission rate it pays to Expedia or about the manner in which Expedia displays its product. 

But Rauch also said that as airlines first unbundled fares, then began rebundling them in the form of tiered-fare products, it made the price comparison model of OTAs trickier to pull off. 

“As those changes have become a more permanent part of the way travel is bought and sold, it gives travelers a reason to look on an airline site,” she said. 

Indeed, Phocuswright research shows that airline direct channels have gained traction versus OTAs in recent years. In 2010, 68% of online leisure and unmanaged business bookings were captured by airline websites compared with 32% by OTAs. That split had increased to 79% versus 21% by last year. 

A 2016 study prepared for IATA by Atmosphere Research Group’s Henry Harteveldt found that airlines expect a similar trend line going forward.

Overall, the survey found, airlines expected direct channels to account for 45% of reservations by 2021, up from 33% in 2016, while they expected OTAs’ share of bookings to drop from 20% to 16%. 

Airlines versus OTAs

If United removes its inventory from Expedia, it will be following a path that is becoming increasingly common among airlines. JetBlue and Delta have removed inventory from selected OTAs in recent years, though not from any as large as the Expedia network. More substantially, Southwest doesn’t work with OTAs at all. 

Kurt Ebenhoch, executive director of the Travel Fairness Now, said that the trend is harming consumers, who end up with fewer options for comparing ticket prices.

“What this is really about is the millions of people who go to Expedia’s website to book travel,” he said. “There are all kinds of studies that show consumers want a one-stop shop.”

Mehta, though, said airlines like United want more opportunity to control the offer they make to customers, especially as improving technology enables them to increasingly personalize those offers. 

“I’m sure United has done the calculus, and they are looking at where they are seeing the return from,” she said. “They are probably seeing a lot of return from their own channels.”

See article: https://www.travelweekly.com/Travel-News/Airline-News/Delta-returning-to-India-this-December