Where to shop for airfare online

Given that the best place to book is with airline websites, the easiest place to shop is with Travel Search Engines (TSE). TSEs make it possible to search all flights from the airline websites.

Then, after selecting the right flight, they make it easy to click through to the airline site to book direct.The TSE shopping channel is gaining popularity on the heals of Yahoo's acquisition of FareChase, AOL's investment in Kayak, and several significant partnership announcements from SideStep (Amazon, American, etc.).However, TSEs still represent less than 15% of online airfare shopping, with online travel agencies (OTA) still making up the bulk of shopping. (Note: OTA conversion is now less than half of airline site. Many customers shop OTAs then book direct with airlines. That processs is much easier with TSEs.)

Wall Street has caught on to this trend and are adjusting their recommendations accordingly.Credit Suisse analyst Heath Terry issued a client note saying "we believe 2006 is likely to be difficult for the online travel agent model."Terry recommended against Expedia's shares, downgrading the stock to "Underperform" from "Neutral.""While Expedia owns the most valuable set of travel assets online, we believe that the pressure form suppliers, competitors and the emergence of the travel search model will intensify in the year ahead, impacting growth rates, booking margins and operating margins."See the full story at Yahoo.