Online travel agencies drop ticket booking fees

— -- Several major online travel agencies are permanently waiving the $7 to $12 fees they charge to book an airline ticket in an effort to lure travelers amid lackluster demand and increasing competition from the airlines themselves.

Agencies "want to hang on to customers, and hope that by waiving fees for airline tickets, they'll come back for something else," says travel analyst Henry Harteveldt of Forrester Research.

Expedia says a no-fee promotion launched in March had been a "positive catalyst" in boosting airline ticket sales. Sales were down 9% year-over-year in January and February but up by double digits in March and April. At the same time, the promotion had cost the company about $3 million a month, CEO Dara Khosrowshahi said in a first-quarter conference call in April.

The fees have prompted many travelers to use agencies as "online Yellow Pages" to shop for fares but then buy their tickets on airline websites that don't charge booking fees, Harteveldt says. He estimates that the airlines' websites will account for about 70% of online airline vacation bookings and 10% of corporate bookings this year.

Tom Botts, partner at consulting firm Hudson Crossing, says this week's announcements don't mean that all agency fees have disappeared. Many still impose "ankle-biter fees," he says.

For example, Travelocity, Orbitz and its sister site, CheapTickets, still charge a fee for tickets booked on two or more airlines. Such "interline" tickets account for more than 20% of airline ticket sales at Priceline, spokesman Brian Ek says.

Other agency charges are "even more confusing," Botts says. Last week, Expedia announced it was also eliminating change and cancellation fees for hotels, car rentals and cruises. Competitors Orbitz and Travelocity, meanwhile, still charge $25 for some hotel changes or cancellations.