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.