booking fees

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No Booking Fees Gain Traction In Mainstream Media

Let the fun begin. The booking fees charged by the Online Travel Agents are now mainstream news. A story on news.com.au attracted plenty of comment yesterday while the Today Show followed up this morning. The issue has been brought into focus by Zuji and Expedia dropping their surcharge on airline bookings. Market leader Webjet, which charges up to $49.90 to process airfare bookings, has gone on the front foot with Managing Director David Clarke saying they are justified and that clients are happy to pay.

But clearly the dynamic has changed. Meanwhile travel.com.au, which has a focus on international flights and charges a $14.95 booking fee, has produced a comparison chart claiming it offers the best prices across a range of specific fares. Flight Centre has said it will examine its fee regime. Nothing like a little diversity, lacking in the OTA space until this point, to shake things up.

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Pressure On Webjet As Zuji and Expedia Drop Fees

The pressure is now on market leader Webjet following announcements today by Zuji and Expedia that they are scrapping all airline booking fees, effective immediately. The move will be heavily supported by advertising campaigns.

Webjet now charges up to $49.90 in fees per airline booking ($29.95 international booking fee plus a $19.95 “price guarantee”). 

Domestic airfares booked through Webjet attract a $29.90 additional charge ($19.95 processing, $9.95 price guarantee), almost the total cost of a Tiger Airways one-way fare between Sydney and Adelaide.

The majority of Webjet’s revenue comes from fees. Clearly that is under threat. No way can Webjet, with virtually no hotel income or any kind of diversity, afford to match. It would go broke very quickly.

CEO David Clarke said Webjet will not cut or reduce its fees and believes the company's technology is worth paying extra. Interesting times ahead for Webjet with its one-dimensional business model – not to mention consumer tolerance – set to be tested like never before.

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