How do flight comparison sites get cheap flights?
Logic would have it that unless the third party is receiving an incentive or discount from the airline, their prices couldn't be cheaper than fares available through an agent or airline. Some sites may even be more expensive after fees are added.
But booking sites do sometimes manage to have cheaper prices than the airlines – so how does that work? We asked the airlines in 2015 if they provided online agents with bulk discounts or if they had to pay the same for flights as a consumer would.
Qantas told us they don't offer "bulk discounts", but they do offer incentives for selling seats on their aircraft to certain "reputable travel agents".
Virgin's response to the question was unhelpful: "As a proud Australian airline, we want more Australians to travel and explore our beautiful country and beyond. Specific information is commercial in confidence". The crumb of information Virgin offered up was that it works with "many leading travel agencies and websites to ensure that choice and competition is passed on".
Flight Centre's spokesperson did a better job of explaining the ins and outs. Most of the airfares are loaded into what's called a Global Distribution System. This is a centralised reservation system that displays an airline's published rates and availability for flights to travel agents. "Margins (including commissions) are built into the published fares and will differ from agent to agent," the spokesperson told us.
Separate to this, there are also fares that agents will negotiate with the airlines. "These fares will be exclusive to us and they are relatively common," the spokesperson said.
So third parties can conceivably access cheaper prices for flights and potentially pass them on to consumers, but it's impossible to know which agents the airlines deem "reputable" and therefore do business with.
Are third party sites cheaper?
To find out if third-party sites will give you a better deal, in July 2015 we compared the prices of eight flights booked direct through the airline, with those on a range of third-party sites popular in search results for cheap flights. We checked prices on Zuji, Wotif, eDreams, BYOjet, Bestjet, Helloworld, STATravel, Last minute, Expedia, Webjet, Flight Centre and travel.com.au.
What we found:
- Flights were often available for less, or at least the same price, directly through the airline, without the hassle of a third party.
- When flights were cheaper through a third party, the price savings were often minimal. However, there were two instances where prices were more than $100 lower.
- Some sites search more airlines than others, so you may or may not be shown the cheapest airline flying that route, depending on the site you use.
Cheap flights turn expensive
Often flights that appear to be cheaper online turn out to be more expensive once booking and payment fees are added. Our spot check found that the popular booking site Webjet was consistently more expensive than booking directly due to booking fees. And many of the sites we looked at didn't display the full cost upfront. For example, Flight Centre's website doesn't include its $39-per-person online booking fee (on international flights) in the prominent price it displays when you search for flights, but adds it on once you've selected the flight (Flight Centre said this fee may not apply if purchasing the flight in-store). Under Australian Consumer Law, businesses are required to disclose any unavoidable fees as part of the total headline price rather than "dripping" them in throughout the online booking process.
Double fees for changes
It's common for airlines to charge fees for cancellations and changes, but if you need to cancel or change your booking through a third party, you may be hit with these fees twice. Many of the third-party sites tack on their own fees in addition to passing on the airline's.
For example, for flights booked through through BYOjet, a fee of up to $140 per passenger for amendments or cancellations may apply in addition to the airline's charges.
While third parties may hook you by advertising cheap prices, that price may not be guaranteed – even once you've booked. Some sites essentially offer a quote, which may change if the site can no longer buy the seat at that price. For example, Bestjet's terms and conditions say "all quotations are subject to availability of services quoted and are not guaranteed until the booking is confirmed and all electronic tickets have been issued. All prices are subject to change and availability may be withdrawn without notice". And we found similar clauses on a range of other third-party sites.
So, depending on how long the site takes to confirm and if it has charged your card, you could be left without the funds in your account, and potentially even without a flight. Provided the company is legit (see Scam sites), you should get your money back in such a scenario, but it may take time.
To find out how much of an issue this is we conducted a quick poll through our Voice Your Choice research panel in 2015. While it doesn't appear to be widespread, it does happen, with nearly 1 in 10 people booking on third-party sites saying they'd had a flight increase in price or become unavailable after booking on a third-party site.
If you've booked through a third party you should be wary of schedule changes made by the airline. Booking sites may not take responsibility for notifying travellers. For example, Helloworld says: "It is the passengers' responsibility to re-confirm all flight departure times with the relevant airline/s prior to departure. Whilst we will endeavour to send e-mail notification of any changes to the original itinerary, we will not be liable for any costs incurred as a result of passengers missing any flight due to not having re-checked the itinerary prior to departure".
There've been reports of fraudulent sites issuing fake tickets. Make sure you check the URL matches the site you were intending to visit, and if you've never heard of the site it's worth reading online reviews. Also, check if it's an Australian business, as it will be much easier to exercise your rights if something goes wrong. An Australian web address isn't sufficient proof – for example, au.eDreams.com is based in Spain and Tripsta.com.au is based in Greece.
While paying with a credit card will usually attract a surcharge, if you’re unsure about a site it could be worthwhile as it does provide chargeback rights, unlike the POLi and Bpay payment methods.
Who's responsible if there's a problem?
Using a third party could add another layer of confusion if you run into trouble. It means you'll be navigating two sets of terms and conditions, and they may not necessarily match up.
If there's a problem with the booking or flight, the party responsible depends on the circumstances. However, the conduct of both the booking site and the airline are bound by Australian Consumer Law which means they can't engage in misleading or deceptive conduct, or make false representations. You'll also be covered by consumer guarantees. If you run into trouble, the ACCC's advice is to contact the site you paid money to first, however, in some circumstances it may also be appropriate to deal directly with the airline.
Third-party sites and package deals
There is potential benefit in booking through a third party if you're booking a package deal. For example, if you book a hotel and flight package through Expedia and your flight schedule is changed, Expedia takes "ownership of the hotel booking" and lets you change or cancel the booking without additional costs.
Flight comparison sites are useful tools to establish which airlines fly particular routes. Once you've got an idea, check if prices are cheaper directly with the airline.
- If you find a cheaper flight with a third party, make sure they're legit:
- Read online reviews of the site.
- Check the ABN or business name on ASIC's register to ensure they are registered in Australia. This will make it easier to assert your rights if you need to.
- If you book with a third party:
- Check for any schedule changes directly with the airline.