American Airlines may stop offering tickets through Orbitz
In a move intended to cut costs, American Airlines has notified online travel agency Orbitz Worldwide Inc. that it might stop offering its tickets through the travel website, beginning Dec. 1.
The move by the nation’s third-largest airline is part of its efforts to push travel agents such as Orbitz to get booking data directly from the airline instead of from distribution companies that charge carriers a fee, an American Airlines spokesman said.
Orbitz Chief Executive Barney Harford announced American’s threat to pull out Thursday in a conference call to discuss his company’s third-quarter earnings. Although Orbitz’s operating earnings were up 7%, the stock plunged 17% on news of American’s move. Shares rebounded 3.2% on Friday, to $5.81.
Harford did not say what effect the move by American would have on Orbitz, but he said the change would reduce competition and hurt customers’ ability to compare airlines side by side.
“By taking this action, American is attempting to limit travelers’ choices when they can least afford it,” Harford said.
For every ticket booked through a travel agent like Orbitz, American pays a ticketing fee to the agent and a booking fee to a global distribution system that supplies ticket prices and schedules to agents. In this case, the distribution system is operated by New Jersey-based Travelport, which owns a controlling interest in Orbitz.
In a statement, Travelport said American’s move would be “detrimental to airline customers, travel agencies and consumers.”
American Airlines spokesman Ryan Mikolasik said the airline was working to reduce the fees it pays to third-party distributors so it could lower ticket prices and better compete with low-fare airlines such as Southwest.
Mikolasik rejected the idea that the move would lessen competition, noting that American also offers its tickets through websites such as Travelocity, Expedia and Priceline. Mikolasik said American had no plans to sever its relationship with those other online services.
Jay Sorenson, president of IdeaWorks, a Wisconsin-based travel and airline consulting company, said he was not surprised to hear about the move by American.
“It’s a company that is doing what it should to minimize its costs,” he said.
Last month, AMR Corp., the parent of American Airlines, reported third-quarter net income of $143 million, its first profit in three years.
And, Sorenson said, it is not certain that American actually will stop offering tickets through Orbitz.
“I don’t think either side wants it to happen,” he said.