K. They direct all consumers to one Internet address. And they decided early on to take direct advertising from new customers such as hotels and tour operations supplement their commission revenue. Before the Internet, travel suppliers took four-fifths of their bookings via traditional travel agents and paid these agencies 7 percent of sales in commissions. It allows the consumers to decide the prices of the tickets, when and where. Airlines, desperate to fill up their 747 seats, place the order from excess inventory.
Consumers pay a fee, but only if their plan schema is fulfilled.
At first, airlines were so eager to chase Priceline away. But soon many of them relented-though some of the bigger ones, including United, American and US Air tried to avoid Priceline. In the end, it is just so expensive to fly an airline with empty seats that it makes no sense to stay away from a Web site full of consumers offering to pay and fly. However, profits will go up. All the commission-free revenue would go directly to triple the net income in the airline industry.