How Powerful Are Online Aggregators?

It’s widely understood that aggregators and travel companies share a mutually beneficial relationship. Aggregators need airlines in order to provide consumers with a useful service. Meanwhile, airlines use aggregators to gain access to a wider audience of customers—some of whom may reserve tickets through an aggregator while others may end up buying on an airline’s site. However, aggregators also provide competition to the companies’ own sites, and make price shopping easy, which can hurt profits. So in the airline-aggregator relationship, which party has the upper hand?

To find out, Akca and Rao examined browsing data from the analytics company comScore, which provided access to about 30,000 users per year who visit travel websites. They also analyzed airline data, from the Bureau of Transportation Statistics, a 10 percent sample of airline tickets from reporting carriers. The data included origin, destination, and other itinerary details of travelers, who traveled on 37 airlines and through 500 airports.

Most people not only use aggregators; they start their search with them, and only then visit the airline domain to make a purchase. (This isn’t true for Southwest, which bypasses aggregators and whose fliers book directly with the airline.) This suggested to Akca and Rao that customers, while researching, visit aggregator sites they presume offer a comprehensive look at the available options.

The researchers then looked at how consumers reacted when two large aggregators were temporarily unable to display flight information and fares from a leading carrier. Between December 2010 and June 2011, due to a fight over distribution fees, Orbitz didn’t show American Airlines’ flight offerings. Expedia also delisted American flights for three months during this time.

When they weren’t displaying American fares, Orbitz and Expedia saw a significant drop in visits and browsing compared to other travel websites, find Akca and Rao, who examined search and purchase behavior before, during, and following the dispute periods. American’s site did not see a change in its visits. During the dispute, Orbitz saw a 3 percent decline in purchases.

The researchers conclude that shoppers who sense the service is less than comprehensive could stop using aggregators, as they did during the American dispute. And they find further support for this conclusion by focusing in on consumers who lived near American hubs, or other airports where American was primary. These shoppers continued to use aggregators, presumably because they knew American’s offerings and used aggregators to shop around. By contrast, many consumers who lived near airports where a competing airline such as United was primary stopped using aggregators during the dispute—because without American’s information, the aggregator wasn’t as useful.

Overall, the findings appear sobering for travel search aggregators—and raise questions about whether individual companies in other aggregator partnerships have more power than they may think.