US Airways halts ticket sales on Expedia

US Airways said it resorted to the drastic action after Expedia unilaterally and without warning increased the fee it charges consumers buying US Airways tickets from $5 to $8.99. Expedia charges the customers of other airlines $5.

Officials at US Airways said Expedia raised the consumer fee to $8.99 when the airline balked at paying higher fees to the travel agency for handling its bookings. The officials declined to detail what fees the airline pays, or how big an increase Expedia was seeking.

"Expedia wants us to pay more and we're not in a pay-more mode. We're in a cost-reduction mode," said David Castleveter, a US Airways spokesman.

A spokeswoman for Expedia, based in Bellevue, Wash., declined to discuss any details of the pricing negotiations.

The split is risky for both companies. US Airways emerged from bankruptcy protection this year, and Expedia is a small but important sales venue for the airline. According to US Airways, Expedia sold 2 to 3 percent of the airline's tickets in the 12 months ended Sept. 30, generating $280 million in revenue.

The airline described its action as "regrettable" in a statement but said it had little choice because Expedia's pricing policies put US Airways fares at a severe disadvantage with its competitors on the site.

For Expedia, the withdrawal of US Airways from its website undercuts its ability to attract customers. It already doesn't carry the fares of discounters like Southwest Airlines or JetBlue that largely shun the online travel agencies. Now it can't claim to have all the fares of even the traditional airlines.

Harry Harteveldt, a principal analyst on travel at Forrester Research, said he expects the two sides to settle their dispute quickly, but said it's also possible that other airlines might follow US Airways' lead. "It's not only a possibility but a strong likelihood," he said.

The dispute is part of a broader struggle within the airline industry. Air carriers are desperately trying to reduce the cost of selling their tickets even as online travel agencies like Expedia, Travelocity, and Cheaptickets are selling more and more of them and demanding greater compensation.

"These Internet travel agencies are generating more and more business, and they're flexing their muscles," said David Stempler, the president of the Air Travelers Association.

Five of the major airlines -- American Airlines, Delta Air Lines, Northwest Airlines, Continental Airlines, and United Airlines -- created Orbitz to go head to head with the other online travel agencies. Orbitz has yet to turn a profit, but it plans to sell shares to the public in the coming months.

Dust-ups between airlines and online travel agents have been occurring with greater frequency over the last two years. Expedia stopped selling Northwest tickets briefly during 2002 in a fee dispute. Some of the online travel agents also temporarily increased the fees they charged airline customers after the airlines halted agent commissions in 2002.

Forrester's Harteveldt said the airlines generally have seen little fallout from these fights. He said Northwest, for example, saw no noticeable dropoff in ticket sales when it temporarily parted ways with Expedia.

Alan Krensky, the president of Colpitts World Travel in Dedham, said brick-and-mortar travel agents, which not long ago were being written off as dinosaurs, are enjoying some advantages now. They recently gained access to fares that airlines previously had offered only on their websites, and they also carry the fares of all the traditional airlines and the fast-growing discounters.

"The traditional travel agency community now has the best fare content again," he said.

Bruce Mohl can be reached at mohl@globe.com.