Orbitz Scores a (Small) Victory

Two formal complaints filed by the American Association of Travel Agents
against the airlines and airline consortium Web ticketing operation Orbitz
have been dismissed by the U.S. Department of Transportation.

The complaints, one filed in 1999 and one last March, alleged that the
carriers and later the airline-owned travel site attempted to “impede
consumers’ access to travel agencies.”

Most of the issues raised are slated to be investigated in other contexts,
the DOT said. For Orbitz, this appears to be a minor victory, considering
that the possibility of
Congressional intervention was raised in mid-July at a House subcommittee
hearing in Washington.

The travel agency trade association has long been concerned with dwindling
commissions paid by the airlines, and much of this ruling has to do with that
aspect of the complaints. However, from the ASTA’s point of view, the arrival
of Orbitz on the scene merely exacerbated the
situation.

In June the U.S. Department of Transportation, after several
hearings, issued an inconclusive report on Orbitz, the third most visited
travel site. The agency cited no anti-competitive fallout from Orbitz so far,
but it said the ticket venture could potentially have a negative effect on
airline competition. A fuller report based on the hearings is due out in
November.

At one of the hearings, ASTA Executive Vice President and COO William A.
Maloney contended that “airline activity threatens consumer access to price
and schedule information, preventing optimal choice-making in the purchase of
air travel.”

However, in the order dismissing the complaints, the DOT wrote that: “We see
no evidence in the record that the carriers have colluded either among
themselves or with Orbitz to eliminate base commissions and at the same time
not make their low Internet fares available for sale through CRSs (Computer
Reservation Systems).

“We similarly see no evidence that any of the respondents has monopolized,
attempted to monopolize, or combined or conspired to monopolize any relevant
market in air transportation. … the carriers are generally free … to
choose the channels and the terms for distributing their services.”

Orbitz, which has an IPO pending, is owned by American Airlines, United
Airlines, Continental, Delta and Northwest Airlines.