The U.S. Department of Transportation (DOT) said that it will not prevent Orbitz, an online travel agency being developed by five major airlines, from beginning operations or require it to change its business strategy at this time. Orbitz is set for launch in June.
The department began its investigation due to concerns that Orbitz would unfairly reduce competition in the airline and airline ticket distribution businesses. In a letter to the company outlining the status of its investigation, the department said that it had concluded it did not have evidence that would justify stopping the company from beginning operations.
DOT said in a statement it had no evidence to justify stopping the start of operations but would monitor Orbitz’s operations to prevent any anticompetitive behavior.
“DOT will require Orbitz to report within six months from the date of official launch on the implementation of its business model and to disclose any changes from the plans and procedures examined by the Department,” as stated in a DOT news release.
The department also noted that Orbitz may create new competition in the online travel agency business. DOT further noted that federal law gives airlines and their agents as much flexibility as firms in other industries to decide how to sell their products and services, as long as they do not use unfair methods of competition.
Prior to Friday’s announcement, U.S. DOT Inspector General Ken Mead testified before the Senate Commerce Committee that there was little danger of any collusive activities around Orbitz. Saying, “If Orbitz software functions as it has promised “consumers could benefit from having access to a wider pool of options displayed free of bias.”
“Orbitz continues moving full-speed toward its June launch following [the] release of a DOT letter giving Orbitz the green light,” Jeff Katz, chairman, president and CEO of Orbitz. “After an exhaustive review of our business plan and corporate documents, the DOT has clearly confirmed our position that Orbitz is pro-competitive and fully compliant with the law.”
Orbitz is funded by United Airlines parent UAL Corp. (NYSE:UAL), Delta Air Lines (NYSE:DAL), Continental Airlines (NYSE:CAL), Northwest Airlines (NasdaqNM:NWAC) and American Airlines parent AMR Corp. (NYSE:AMR).