Orbitz being challenged to the White House - Are these guys serious?

Reuters ^ | 7/30/02 | Peter Kaplan

[stromsfriend]

Rivals of the airline-owned ticket distributor Orbitz head to the White House on Tuesday to try to convince the Bush administration to curb the venture.

Executives from Orbitz competitors such as Travelocity.com and Expedia Inc. said they will take their competition concerns about the airline joint venture into a series of meetings with high-level officials in the White House, the U.S. Transportation Department, and members of Congress.

"We appeal to the Administration to intervene immediately and decisively -- before irreparable harm to consumers and competition occurs," five industry executives wrote in a letter to President Bush.

The letter also was signed by an official with the trade group that represents U.S. travel agents. It was released by the group on Tuesday morning.

In the meetings, the dissenting executives plan to tell

government officials that a key provision in Orbitz's charter is anti-competitive and should be stricken, either by regulators or lawmakers.

"Certainly our message to the administration and Congress is (that) this has been going on for a long time and it's time to act," said William Hannigan, chairman of Sabre Holdings Corp. which owns Travelocity.

The provision at issue, known as a "Most Favored Nation" or "MFN" clause, prohibits participating airlines from giving their lowest fares to any other online travel site without offering them to Orbitz as well.

UNFAIR ADVANTAGE?

Critics charge the clause gives Orbitz an unfair advantage and could be bad for consumers.

Orbitz is owned by AMR Corp.'s American Airlines, UAL Corp.'s United Airlines, Continental Airlines Inc., Delta Air Lines Inc. and Northwest Airlines Corp.

The airline-owned venture has been under investigation by the transportation department and antitrust enforcers at the Justice Department since its began operations a year ago.

Critics say the government has been studying the issue long enough. They want regulators or Congress to take immediate action.

Orbitz officials have dismissed the charges as complaints from disgruntled competitors who are trying to use the government to fend off a competitive challenge.

Officials with the airline-owned venture say they are able to offer consumers lower-priced tickets because Orbitz gives the airlines favorable terms. Competitors could get the same favorable treatment from the airlines if they offered the same terms, they say.

But Orbitz's critics say they have been unable to get the same low fares from the airlines.

"We're at the point where someone else has got to make this fair," said Sam Katz, chairman and chief executive of the travel distribution division of Cendant Corp. .

In a review last month, the transportation department said it had found no anti-competitive fallout so far from Orbitz, but added the venture still could potentially have a negative effect on airline competition.

The review balked at reaching any "definitive" conclusions about Orbitz's effect on the online travel market because of the ongoing probe by the Justice Department.

"The administration really seems to be preoccupied with the airline bailout," said William Maloney, executive vice president at the American Society of Travel Agents. "They don't seem to be focused on what's going on with Orbitz and the effect on consumers."

[stromsfriend]

THis article caught my eye because I have used Orbitz.com to book some flights before and it troubles me that Expedia and Travelocity would have such access to the White House to try to stamp out competition

I know there's no way that Bush will let these two well funded (Expedia was just sold to USA Networks by Microsoft - TVLY is owned by SABRE which has had a virtual monopoly on airline reservation systems for 20 yrs) companies that handle 70% of online travel sales try to go over the regulating agencies and shut down a company simply because it offers a better biz model.

both Expedia and Travelocity have exclusive marketing agreements with the big boys: MSN, Yahoo and AOL. An both are established brands.

Over the past year Orbitz has been cleared by the DOT twice and the DOJ once!

Long live free commerce and competition!

[mattdono]

While you may be right, if I see another one of the D@MN pop-ups, I am going to have to hurt someone.

[A Vast RightWing Conspirator]

I find Travelocity the better of the 3 by far at this time.

Expedia is always more expensive, usually way more expensive. As for Orbitz, I did try to use them, more than once, and I could not find what I was looking for. I guess I should try them more often.

[SteamshipTime]

it troubles me that Expedia and Travelocity would have such access to the White House to try to stamp out competition

Have you been under a rock for the past 50 years? The U.S. has been a fascist economy for quite some time now. All large companies now have D.C. offices and at least three D.C. "law firms" on their payroll. Once the latest round of reactionary legislation gets signed, the back-scratching, palm-greasing, kickbacks, favors and bribes, er, I mean, campaign contributions, will really kick into high gear.

[SteamshipTime]

Long live gun-toting women with torn bodices!

[Frumious Bandersnatch]

I've looked at Orbitz (as well as travelcity, priceline, etc.) too, and found that I could generally get a significantly better deal by going directly to the airlines via the internet.  In my mind, they were all talk and no walk.

[ifhult45]

Travelocity and Expedia are just angry because prior to Orbitz they enjoyed splitting their own monopoly. Its ridiculous--I don't know who even cares about it besides them anyways? All the average consumer (including me, for that matter) cares about when they're shopping for things is the cheapest price. I used to get it from Expedia, then I learned about Orbitz and I switched. I got lower prices and less hastle. The other companies are just bitter. Maybe if they put as much effort into their service as they did going after their competition, people wouldn't turn to their competition.

[lysistrata_SF]

This just seems so ridiculous to me. Orbitz and it's business model have been reviewed 3 times and every time it is found to be acceptable. What are these guys trying to prove? Anyway, as far as I am concerned the business that gives consumers the best rate is the business that gets my dollar. I've used all three of those big travel sites before. They can really vary on who has the best deal but I've bought from Orbitz the most often.

[monday]

Did you read the whole article? The problem as I see it is that Orbitz is owned by the Airlines. If they can undercut Travelocity and Expedia and drive them out of business then as an online monopoly owned by the airlines, the airlines could collude to sell tickets at any price they agree on online. It would certainly no longer be competitive.

[SteamshipTime]

Horrible isn't it. Just the other day, I drove past three gas stations located on the same corner, all selling gas within a tenth of a cent of each other.

Like a good citizen, I immediately contacted the DOJ's Antitrust Hotline.

[stromsfriend]

Did you read the whole article? The problem as I see it is that Orbitz is owned by the Airlines. If they can undercut Travelocity and Expedia and drive them out of business then as an online monopoly owned by the airlines, the airlines could collude to sell tickets at any price they agree on online. It would certainly no longer be competitive.

The airlines put up Orbitz's initial funding, but Orbitz charges a $5 fee for tickets and filed for an IPO a couple of months ago, so these guys are trying to be an independent business.

And I think this is a way different story than the gas companies. The INternet is a brand new medium and Travelocity and Expedia are trying to stamp out their only competiotn so far.

[stromsfriend]

About the pop-ups, I went to http://www.panicware.com and downloaded the FREE *(don't get the pay one) pop-up stopper. it has worked well for me, you just have to hold "control" down if you want something to pop up.

[stromsfriend]

Yes - long live the french women of Liberte!

(Catherine Deneuve)