Why did Airlines partner with

Priceline.com?

3. Flexible Participation agreement and other benefits

 Earlier, travel agents were the primary distribution mechanism for airline seats, and they
sold 85% of industry tickets. More than 90% of tickets sold were discounted to some extent
and discounts averaged 2/3 off the listed “full fare.”
 Airline participation agreement with Priceline.com did not require
 The airlines to make tickets available for any particular route, or to provide any
specific number of tickets;
 Particular prices or discount levels;
 Exclusivity in dealing with Priceline to sell discounted tickets
 Priceline.com provided airlines with ability to purchase stocks of Priceline if certain sales
levels were met.
Would you have bought the Priceline share at the time the
case story ends? Why?

As an investor whether we would have bought Priceline share depends on two factors:
• Short term Company Performance
• Long term Company Performance

Internet Brand Awareness Priceline Financials 1998, 1999

Among All U.S. Adults
100 4,82,410
80 6,00,000
60 78.8 4,00,000 57,831
40 51.4 Gross Profit (Loss)
48.6 2,00,000 35,933
20 37.4 32.2 Revenues
27.2 26.2
0 0 -1,288
1998 1999
-2,00,000
Revenues Gross Profit (Loss)

Percentage Aware