RealTime IT News

Orbitz Takes the Offensive

The airline-backed online travel site Orbitz went on the offensive Wednesday, telling a federal commission that government interference with its business could limit the consumer benefits of online travel, slow innovation and "protect high-cost intermediaries."

The National Commission to Ensure Consumer Information and Choice in the Airline Industry was meeting again today, this time in Chicago. The panel met last on June 12.

"The Internet has delivered more convenience, more choice and lots more low-fares to consumers," Orbitz General Counsel Gary Doernhoefer was to tell the commission in prepared remarks. "Consumers should continue to decide how and where they want to purchase travel, whether through traditional travel agents, online or directly from airlines, hotels and other suppliers."

The commission was created by Congress to examine the prices and practices of various Web sites, both independent sales sites and those run by the individual airlines.

Defending the role of the traditional travel agency, the The American Society of Travel Agents has taken the position that "airline activity threatens consumer access to price and schedule information..." and says that Orbitz "has denied travel agencies and their customers equal access to all published fares."

Orbitz, which has filed for an IPO, also released two letters of support from House Majority Leader Dick Armey. In a letter to U.S. Attorney General John Ashcroft, Armey said: "Orbitz has brought greater competition to the online travel marketplace. As a result of that competition, leisure and business travelers have enjoyed lower ticket prices and better service."

"Technological progress has made massive contributions to our nation's productivity," Doernhoefer testified. "Let it continue to do so in the travel industry. Let free market competition work in the travel distribution channel so prices fall and new technologies flourish."

Orbitz has been moving tolet travel agents have direct access to its Web-based search engine and its inventory of low-fare ticket prices, however.

AAA, the nation's largest leisure travel agency, testified at the earlier hearing that consumers are paying more for travel and losing valuable access to travel agent expertise and service as a result of the recent elimination of airline commissions.

AAA recommended equal access to airline inventory and pricing, regardless of distribution channel, "since 46 percent of the U.S. population does not use the Internet."

Meanwhile, United Airlines Senior Vice President of Planning Gregory T. Taylor told the commission that it needs to address escalating GDS (Global Distribution System) fees.

"Our largest and most important sales channel remains travel agents, linked to us through GDS systems," he said. "This distribution channel remains vital to United, and accounts for the sale of more than 70 percent of United Airlines revenue. However, he said that because travel agents rely on GDS systems, the reality of escalating GDS fees today makes travel agents United's "most-expensive distribution channel."

He stated United's willingness to offer its Web fares to any distribution outlet that offers United a low cost of distribution for all traffic, not just Web fares.

Orbitz is backed by American, Continental, Delta, Northwest and United Airlines and offers a what it calls a "large collection of discounted Web-only air fares."