Australian consumers behind on web travel fees

web travel fees thumb Australian consumers behind on web travel feesWith the Aussie dollar leading the greenback, it’s no surprise the US has become a destination of choice for travel-loving Australians.

But it seems Australia is lagging behind the US when it comes to booking holidays over the internet and paying fees and charges for the service.

A major online travel agency says Australia is one of the few countries in the world where booking fees are still a feature of the online travel market.

But pressure is growing for Aussie sites to cut booking fees, as the sector competes to stay ahead of airlines and hotel chains who are increasingly seeking to win consumers over the internet.

‘Surprisingly, Australia is one of the rare countries in the world that charges booking fees for online travel transactions,’ Expedia Australia and New Zealand general manager Nicholas Chu said.

‘We don’t charge booking fees in the US anymore, most of the countries in Europe don’t charge booking fees.’ cut booking fees 18 months ago in response to market demand, Mr Chu said, although it was not the first in the US to do so.

Research conducted by Expedia earlier this year found there is nearly universal hatred among Australian consumers – 75 per cent of us – for the booking fees.

‘In the US, which is a much more mature online travel market, everyone is aware of fees, and I can tell you that no one wants to pay fees,’ Mr Chu said.

‘Why would you pay an extra $50 for nothing, while if you book directly with the carrier you won’t have to pay the fee.’

Mr Chu’s comments come in the wake of action by the consumer watchdog against a group of airlines who failed to display airfares inclusive of all fees and charges.

The group of eight carriers, including Tiger Airways, Air Asia X, and Qantas subsidiary Jetstar, reached a deal with the Australian Competition and Consumer Commission (ACCC) last week.

But laws that prevent component pricing by airlines don’t apply to booking fees charged by online travel websites.

According to the ACCC that’s because travel sites charge fees across an entire booking, rather than per flight.

In Australia, online travel sites have captured about 20 to 30 per cent of the market, compared with 50 per cent penetration in the US.

Margins for online retailers are being squeezed as airlines and hotel chains compete by offering bookings directly from their websites.

Mr Chu said the industry must respond with greater transparency, cut fees and charges and focus on adding value for the customer.

‘What was quite interesting was that actually when people were aware of fees they were quite angry about those,’ Mr Chu said.

‘Why would they have to pay for something that they are doing by themselves?’

Mr Chu said fees contributed a small portion of revenue and Expedia had ‘been able to compensate for that with the increased volume’.

‘The whole idea is to offer consumers added value that they won’t get from the supplier direct.’

‘We need to be transparent, but we also need to bring something, we need to add value for consumers.’

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