Expedia backs rival Orbitz in clash with American Airlines
Expedia Inc. is hiding pricing information for American Airlines flights on its websites in a display of solidarity with Orbitz Worldwide Inc., the Chicago company that is enmeshed in a contract dispute with the nation’s third-largest carrier.
The online travel giants are warring with American over the airline’s attempts to take greater control of the way it sells tickets and other services.
The Texas airline is seeking new contract terms that would drive down its cost of doing business with online agencies such as Orbitz and Expedia and the global clearinghouses that provide the ticket data they peddle over the Internet, analysts said.
“You have to keep in mind that the online travel agencies have a lot at stake in this game,” said Douglas Quinby, senior director of research at PhoCusWright Inc., a travel research firm. “They are really trying to call American’s bluff on this.”
Starting Wednesday, Expedia said, it had “adjusted” the way American flights are displayed online, pushing the carrier’s logo to the far end of its search matrix and running the words “see flights” where American’s lowest fares normally would appear. Expedia’s properties include Hotwire and TripAdvisor Media Group.
“This has been done in light of both American Airlines’ recent decision to prevent Orbitz from selling its inventory and a possible disruption in Expedia’s ability to sell American Airlines tickets when our contract with American Airlines expires,” Expedia said in a statement. A spokesman for the Washington company wouldn’t say when the agreement ends.
American accused Expedia of “favoritism,” adding, “This discriminatory action is unwarranted, especially considering that American has taken no action against and continues to operate in good faith with Expedia.”
American pulled its inventory of tickets for American and American Eagle flights from Orbitz on Tuesday after a judge in Cook County, Ill., refused to grant a preliminary injunction sought by Travelport, Orbitz’s corporate parent, which is also locked in a contract dispute with the carrier.
Travelport had sought to block American from canceling contracts with the online travel agency until the Chicago court determined whether doing so also would breach agreements with global distribution systems controlled by Travelport.
American is pressuring travel agencies and ticketing clearinghouses, such as Travelport’s Worldspan and Galileo, to use an electronic pipeline created by the airline, called AA Direct Connect, to handle all transactions with the carrier. The move would diminish the role of global distribution systems that have acted as the industry’s intermediaries for the last three decades.
“I don’t think American really wants to sever these relationships,” Quinby said. “American is playing a game where they believe that they have enough leverage where they can negotiate better terms out of Orbitz.”
Consumer advocates worry that if other major carriers follow American’s lead, traditional and online travel agencies like Orbitz, Expedia and Priceline could lose the ability to display the best available fares to bargain-minded consumers.
At stake, they say, is the complex technology that has revolutionized how consumers shop for flights over the last decade, providing price transparency that has made it easy for travelers to compare fares — and difficult for airlines to hike prices.
“As soon as the information isn’t all there, you can’t compare apples to apples, the complete costs of all the offers in the marketplace,” said Kevin Mitchell, chairman of the Business Travel Coalition. “That will absolutely drive all the fares up.”
