Orbitz's "Price Assurance"

Diane Clarkson | June 16, 2008, 05:03 PM

Orbitz has launched a policy called “Price Assurance” whereby they will refund customers who purchase an airline ticket and then see the price fall.

Orbitz will foot the bill for amounts between $5 to $250.

How popular will this be? According to Expedia, only about 6% of air travelers purchase the qualifying identical itineraries. The Wall St Journal quotes an Orbitz spokesperson as saying "We expect to be sending out thousands of checks per month."

The skeptic in me notes how the possibility that Expedia is underestimating while Orbitz overestimates.

At first glance, one has to wonder how sending out “thousands of checks” per month can be a good idea, particularly for an online travel agency that has been struggling with market share.

A couple of thoughts here:

Firstly, if you accept the premise that concern ticket prices may fall is an obstacle towards early flight booking, then this program will assuage these fears – presumably resulting in a booking at Orbitz.

Secondly, Orbitz’s risk is minimized by the trajectory we’ve seen in airfare prices in the last year.

Other online travel agencies will have the opportunity to watch as Orbitz goes first in this experiment and judge if they want to duplicate it (not the first time that’s happened).