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Ticket to ride: cheap flights, big money
The internet provides the perfect medium for last-minute, low-cost travel. A new breed of independent travel sites have sprung up to offer objective price comparison lists, while budget airlines have found an affordable way to sell cheap flights.

By editorial@silicon.com

Published: Thursday 29 March 2001

The dinosaurs of the industry - the national airlines and their agents - were at first left looking ludicrously overpriced and low-tech.

But five top US airlines are about to launch an online consortium, Orbitz, that will sell tickets for all them from a single website.

It's a simple concept and one that made companies such as Expedia and Travelocity household names with a whole generation of technology-savvy travellers.

There is, however, one difference: internet sites thrive on their value-for-money kudos. Low cost fares and online discounts are the order of the day.

American, Continental, Delta, Northwest and United airlines don't have to worry about low cost. Between them they have long controlled about three-quarters of the US domestic market, and according to a study by an MIT academic, Orbitz has the capacity to command up to 85 per cent of US online sales.

The same study reckons US air travellers will end up paying $3.2bn extra in air fares as the anti-competitive power of Orbitz leaves independent travel sites stuck in a new economy backwater.

The old guard may have lacked a trendy, new media tag but they have always made up for it in market share and industry clout, and now that the new economy is hitting the ground with a jolt, the bricks and mortar players are moving in.

We shouldn't sound so surprised. While internet travel is flourishing, it is possible for a virtually closed shop to emerge when that channel commands less than five per cent of US airline sales.