Air Carrier Deals Up Net Travel Ante

In a bid to chip away at Priceline.com's market share in the online travel sector, discount travel service Hotwire.com said Friday that Trans World Air Airlines and Hawaiian Airlines have signed on with the company to sell their inventory of unfilled airline seats.

Backed by six of the largest U.S. air carriers, the San Francisco, California-based company launched its Web site last month. It receives part of its investment from American Airlines, America West, Continental, Northwest, United Airlines and U.S. Airways.

According to industry estimates, over three million airline seats are unfilled each week. Because Hotwire.com offers consumers unsold seats held by its partners, the firm said it is able to offer significant discounts that other traditional travel outlets and rival Internet brokers cannot provide.

Target Priceline

Unlike Priceline's name-your-own-price service, Hotwire.com users receive a fixed-price discount fare and are not required to submit their credit card data before making a purchase.

However, the airline remains anonymous during the pricing process -- a practice the company says enables the airlines to discount fares more aggressively than they can in other channels.

On Hotwire, prospective travelers cannot choose a specified airline or flight.

With the field of online travel growing increasingly crowded, discount travel services say the niche's current climate is primed for competition. In a recent study, Forrester Research predicted that online travel sales will climb to US$29 billion by 2003, a four-fold increase from last year's level.

Ticket Slowdown

Many observers in the industry point to the slowdown in airline ticket sales at Priceline.com, which spearheaded the Web discount travel sector, as proof that consumers are looking elsewhere to book travel arrangements.

In its third-quarter earnings report issued earlier this month, Priceline.com said that its airline tickets sales have been waning. The company also forecasted that its revenue would decrease in the fourth quarter due to seasonal factors.

Despite its diversification initiatives, the name-your-own-price pioneer relies on airline ticket sales as its primary source of revenue.

Federal Check-In

Other Web ventures that are gearing to enter the discount travel fray have also encountered problems. Net travel site Orbitz.com, which is backed by a consortium that includes many of Hotwire's partners, has been the subject of ongoing investigations by the U.S. Department of Transportation (DOT) and the U.S. Department of Justice.

The agencies examined Orbitz's business plans after critics complained that the company would restrict access to flight information and low-priced tickets, ultimately elbowing out competition.

Orbitz is slated to launch in June.