Airlines Work on Their Web Footing

"We tried to give customers some security in their purchases," said John Slater, the airline's managing director of distribution and electronic commerce. "The Internet had created insecurity in terms of where the low prices were."

The airline has been improving features on its Web site. Customers can print out boarding passes, change flights or seat assignments and check flight status. Those efforts come on top of its long-standing frequent-flier mileage bonus for direct Web site purchases. Northwest (NWAC Quote) has also tweaked its Web site, adding features like online check-in and French and Spanish language versions. "Even if the customer likes to buy another way, they may have an experience at our Web site that causes them to use our site for a future purchase," said Kurt Ebenhoch, a spokesman for the airline. Like Continental, Northwest has a lowest-fare guarantee.

Allowing customers to do more on the Web site has a side benefit of reducing customer service phone calls, said Al Lenza, vice president of distribution and e-commerce at Northwest.

Airlines save when customers book directly at their Web sites, because the airlines don't have to pay transaction fees to global distribution systems, which electronically connect travel suppliers' inventory to agencies, both online and off. (Online agency Orbitz, a unit of Cendant (CD Quote), has developed direct links with suppliers, allowing it to reduce its GDS transactions.)

The GDSs charge by trip segment. With a cost of about $4 per segment, a round-trip with one transfer each way costs $16. At first blush, it may not seem like much, but it adds up. Northwest paid about $180 million in online and offline GDS fees in 2003.

The efforts to woo direct customers are paying off. Continental's Slater said bookings at the airline's own Web site have grown by about 60% year over year. Its bookings through online agencies have grown at about half that pace. "Part of that is the online agencies' maturing audience," Slater said. "But part of it reflects the efforts we've made to bring customers directly to us."