July 01, 2002
Meetings & Conventions: Newsline newsline.gif (8042 bytes)   GOVERNMENT AND TRAVEL AGENCIES CLAIM OLIGARCHY
Orbitz Faces Legal Probe
Orbitz online: Web site under scrutiny The online travel agency Orbitz is facing mounting complaints from travel and government agencies who view its relationship with five major airlines its main investors as an illegal trust. Federal rulings will likely set a precedent for how such coalitions will be allowed to function in the future.

At the heart of the complaints filed with the departments of Justice and Transportation, as well as at least one class-action suit filed by travel agencies, is the contention that Orbitz’s relationship with its investors (American Airlines’ parent AMR, Continental Airlines, Delta Air Lines, Northwest Airlines and United Airlines) constitutes an illegal oligarchy.

“I don’t know what agreements they make or how they make them, but I believe they’re in violation of the law,” said Richard Copland, CEO of the American Society of Travel Agents. Currently, travel agencies do not have access to the fares offered on the Orbitz Web site. (Through a deal signed in May with Aqua Software Products of Santa Ana, Calif., select agencies will be able to access those fares as early as next month, with a wider rollout to follow.)

Furthermore, airlines that are not investors must pay high service fees to display their fares on the site.

Some analysts believe Orbitz’s recent filing with the Securities and Exchange Commission to go public could ease tensions. The carriers currently invested would no longer have majority ownership and would thus lose their decision-making power. As a public entity, Orbitz also would have to disclose all earnings.

The outcome of the cases “might have significant repercussions in terms of airline tickets and sales,” said Henry Harteveldt, a senior travel industry analyst for Cambridge, Mass.-based research firm Forrester. The final form Orbitz takes will affect how airline coalitions sell tickets in the future, he added.

In the meantime, Orbitz plans to pursue the business travel market, plotting with airlines to make bookings through Orbitz count toward corporate volume discount programs.”


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