The story of how US Airways and Expedia.com, two corporate behemoths, took their dispute public.
11:00 PM, Dec 11, 2003 • By MATTHEW CONTINETTI
IT'S NOT EVERY DAY you see famous, brand-name American companies acting like 10-year-old girls. But that's exactly how US Airways and the Internet travel site Expedia.com are behaving in their squabble over electronic booking fees. Consider:
A few days after Thanksgiving, a sharp-eyed, well-fed US Airways employee, conducting a "routine" internal audit, discovered that Expedia.com had "arbitrarily" and "unfairly" increased the amount it charges to book a seat on a US Air flight. Time was, you understand, that Expedia only charged its customers $5 to buy a US Air ticket. But those days, it turns out, ended sometime in November, and Expedia had raised the charge to a whopping $8.99 per ticket. The service fee for all other airlines--Expedia's online travel database features over 400 these days--remained at $5. So you can see why US Air was peeved.
Which is why, on December 9, about a week after the malfeasance was discovered, the airline responded by withdrawing from Expedia, which accounts for about $280 million, or between 2 percent and 3 percent, of US Air's business.
But that's not all. The airline also took out advertisements in several major newspapers decrying Expedia's tactics. And, in another unusual move, they sent an email to anyone who has flown on US Airways, saying it was "with great disappointment" that US Air had made its decision to pull out of Expedia, but, alas, there were no other options: "[Expedia's] action--taken without notice--unfairly puts our customers in the middle of discussions with Expedia about its desire to significantly increase the commission it charges US Airways for selling our tickets," wrote the alliterative B. Ben Baldanza, senior vice president for marketing and planning.
Expedia representatives were also disappointed. "[US Air's decision was] unfortunate and unusual," says an Expedia spokeswoman. "But a loyal US Air customer probably didn't come to our site in the first place." Nanny-nanny-boo-boo.
So, you're probably wondering, what drove these two companies off the public relations cliff? The two companies had been in contract negotiations since June, a US Air spokesman said on Wednesday, and a dispute had arisen over the fees US Air paid Expedia for handling its online ticket booking. Egos were bruised. Feelings were sore. And, in order to up the ante, Expedia had raised the service fee, whereupon the brouhaha ensued. The contract negotiations, by the way, haven't stopped, and both parties hope to resolve things shortly. "We want to stay with Expedia, that's pretty clear," says the US Air spokesman. "But we won't do it at the expense of our customers."
This isn't the first time an airline has pulled out of Expedia.com's database over service fees. In 2002, during a similar contract dispute, Northwest Airlines briefly stopped selling tickets over Expedia. When that happened, Northwest didn't experience any noticeable loss in sales, and, likewise, US Airways doesn't expect much of a loss during its timeout, either. It's expected that, in the end, the two companies will resolve their differences, because US Airways needs Expedia at least as much as Expedia needs US Airways. From this customer's perspective, online travel booking is a marriage made in heaven, though not, it seems, an entirely happy one.