Credit: Shutterstock photoPricelinePCLN discontinued its service "Name Your Own Price" for flights beginning Sep 1.
This service enabled travelers to submit a desired ticket price for a flight. The flights that were booked through the service before Sep 1 will still be valid for use. Priceline.com's Name Your Own Price for hotels and car rentals will still be available.
The company blamed declining competition in the airline industry as one of the major reasons for the discontinuation of its Name Your Own Price service.
Reduced Airline Competition
Over the last few years, the U.S. aviation industry has been witnessing several consolidations. It has seen multiple mega mergers, like the ones between Northwest Airlines and Delta Air Lines in 2008, United Airlines and Continental Airlines in 2010, and AirTran Holdings and Southwest Airlines Co. in 2011.
In 2013, the merger of AMR (American Airlines' parent group) and US Airways created American Airlines Group Inc. (AAL). The merger, which occurred after a bankruptcy filing by American Airlines, resulted in the formation of the largest airline internationally. Since the merger, the carrier is raking in huge profits.
With major U.S. airlines joining forces, the total number of carriers operating within the industry has decreased. According to a report in the Associated Press, more than 85% of the travel market in the U.S. is now dominated by four major carriers, namely United Continental Holdings, Inc. UAL , Delta Air Lines DAL , Southwest Airlines LUV and American Airlines Group.
Though this consolidation in the airline industry is proving to be a lot more disciplined in adding capacity than has been the industry's historical track record, it has resulted in reduced competition. This could be one of the major challenges facing the airline industry going forward.
Bottom Line
Priceline.com Inc. is one of the largest online travel companies in the world. The company's travel-related offerings cover hotel rooms, airline tickets, rental cars, vacation packages, cruises, "things to do" at customer destinations and travel insurance.
With people increasingly becoming price conscious, Priceline is focusing on new strategies to help customers get the best price and connect with deals faster and more easily than before. Priceline's strong position in international markets, growth opportunities in the domestic market, solid execution, prudent marketing strategy and strong financial position are among its positives. Moreover, Priceline belongs to an attractive industry, which is particularly positive for its business.
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Currently, Priceline has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
