AMR's American Airlines Wins Court Ruling
12-21-2010, 10:56 PM
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AMR's American Airlines Wins Court Ruling
AMR's American Airlines Wins Court Ruling, Pulls Flights From Orbitz Site
AMR Corp.’s American Airlines won a court ruling allowing it to pull listings from Orbitz Worldwide Inc. and said it will immediately stop displaying and selling tickets on the online travel site.
Yesterday’s decision by an Illinois state court in Chicago lifted a temporary restraining order granted last month that prevented American from dropping Orbitz, according to the Fort Worth, Texas-based airline.
American has developed a system of its own called Direct Connect that provides fare pricing and options directly to larger online travel agencies. The carrier also is trying to drive more bookings through its own website at AA.com.
“In today’s competitive marketplace, it is important for American to be free to customize its product offerings to improve the customer experience, as well as distribute its products in a way that does not result in unnecessary costs,” Ryan Mikolasik, a spokesman for American Airlines, said in an e- mailed statement.
Allowing American Airlines to drop Orbitz marks the “first shot in a long battle that’s going to be engaged” by all airlines in 2011, said Kevin Mitchell, chairman of the Business Travel Coalition, a group that represents corporate travel managers and is critical of American’s plans.
“When American pulls inventory from Orbitz, consumers will not have the ability to compare all apples to apples” on fare pricing, Mitchell said in a phone interview.
Sabre Holdings Corp., the parent of Travelocity.com, said in a statement that American’s actions will “make it much harder and more costly for agents and consumers to easily comparison shop among airlines, which will result in increased prices for consumers.”
Injunction Denied
The Circuit Court of Cook County denied a request for a preliminary injunction by Travelport LP, the travel-reservation systems provider whose affiliates partly own Orbitz, said Brian Hoyt, a spokesman for Orbitz, in an e-mail yesterday.
Revenue earned on American Airlines tickets and associated products such as rental cars accounted for about 5 percent of Orbitz’s revenue for the nine months ended in September, Hoyt said. Most of the affected ticket volume will be replaced by other suppliers, he said.
American is pushing online travel agencies to obtain flight and fare information directly from it instead of through global distribution systems such as Travelport’s Galileo and Worldspan, Orbitz Chief Executive Officer Barney Harford said in November in a conference call with analysts.
Travelport said in a separate statement that it’s “disappointed” with the court’s ruling on the restraining order and that the case will continue until a final judgment is made.
‘Detrimental’ Plans
“Travelport believes American Airlines’ plans to force a more restrictive distribution model will result in inefficiencies and added costs and will be detrimental to airline customers, travel agencies and consumers,” Jill Brenner, a spokeswoman for Travelport, said in the statement.
Two lawyers for Travelport, Paul Chronis and John Schriver, didn’t immediately return calls and e-mails seeking comment.
Separately yesterday, Delta Air Lines Inc. said it notified three online travel sites, CheapOAir.com, OneTravel.com and BookIt.com, that it terminated them as authorized travel agents as of Dec. 17. Tickets purchased from those websites through Dec. 17 will be honored, Delta spokesman Trebor Banstetter said.
Delta is trying to increase bookings through its own website at Delta.com, Glen Hauenstein, executive vice president of network planning and revenue management, said on a Dec. 15 webcast of an investor presentation.
Travelport is owned by Blackstone Group LP.
The case is Travelport v. American Airlines, 10CH48028, Circuit Court of Cook County, Chancery Division (Chicago).
To contact the reporter on this story: Mary Jane Credeur in Atlanta at [email protected].
AMR Corp.’s American Airlines won a court ruling allowing it to pull listings from Orbitz Worldwide Inc. and said it will immediately stop displaying and selling tickets on the online travel site.
Yesterday’s decision by an Illinois state court in Chicago lifted a temporary restraining order granted last month that prevented American from dropping Orbitz, according to the Fort Worth, Texas-based airline.
American has developed a system of its own called Direct Connect that provides fare pricing and options directly to larger online travel agencies. The carrier also is trying to drive more bookings through its own website at AA.com.
“In today’s competitive marketplace, it is important for American to be free to customize its product offerings to improve the customer experience, as well as distribute its products in a way that does not result in unnecessary costs,” Ryan Mikolasik, a spokesman for American Airlines, said in an e- mailed statement.
Allowing American Airlines to drop Orbitz marks the “first shot in a long battle that’s going to be engaged” by all airlines in 2011, said Kevin Mitchell, chairman of the Business Travel Coalition, a group that represents corporate travel managers and is critical of American’s plans.
“When American pulls inventory from Orbitz, consumers will not have the ability to compare all apples to apples” on fare pricing, Mitchell said in a phone interview.
Sabre Holdings Corp., the parent of Travelocity.com, said in a statement that American’s actions will “make it much harder and more costly for agents and consumers to easily comparison shop among airlines, which will result in increased prices for consumers.”
Injunction Denied
The Circuit Court of Cook County denied a request for a preliminary injunction by Travelport LP, the travel-reservation systems provider whose affiliates partly own Orbitz, said Brian Hoyt, a spokesman for Orbitz, in an e-mail yesterday.
Revenue earned on American Airlines tickets and associated products such as rental cars accounted for about 5 percent of Orbitz’s revenue for the nine months ended in September, Hoyt said. Most of the affected ticket volume will be replaced by other suppliers, he said.
American is pushing online travel agencies to obtain flight and fare information directly from it instead of through global distribution systems such as Travelport’s Galileo and Worldspan, Orbitz Chief Executive Officer Barney Harford said in November in a conference call with analysts.
Travelport said in a separate statement that it’s “disappointed” with the court’s ruling on the restraining order and that the case will continue until a final judgment is made.
‘Detrimental’ Plans
“Travelport believes American Airlines’ plans to force a more restrictive distribution model will result in inefficiencies and added costs and will be detrimental to airline customers, travel agencies and consumers,” Jill Brenner, a spokeswoman for Travelport, said in the statement.
Two lawyers for Travelport, Paul Chronis and John Schriver, didn’t immediately return calls and e-mails seeking comment.
Separately yesterday, Delta Air Lines Inc. said it notified three online travel sites, CheapOAir.com, OneTravel.com and BookIt.com, that it terminated them as authorized travel agents as of Dec. 17. Tickets purchased from those websites through Dec. 17 will be honored, Delta spokesman Trebor Banstetter said.
Delta is trying to increase bookings through its own website at Delta.com, Glen Hauenstein, executive vice president of network planning and revenue management, said on a Dec. 15 webcast of an investor presentation.
Travelport is owned by Blackstone Group LP.
The case is Travelport v. American Airlines, 10CH48028, Circuit Court of Cook County, Chancery Division (Chicago).
To contact the reporter on this story: Mary Jane Credeur in Atlanta at [email protected].
12-22-2010, 07:18 AM
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Agreed Shiz. It is what helped kill the margins, so AMR winning this case will allow others to follow suit. It will allow better pricing, and less need to decouple fees. It will force more consumers to shop airline sites, and not one or two mass airline sites. (Bet there will be an app for that! 
)
LUV never when the way of internet ticket brokerages and they actually cost more on many legs. I will be quite curious to see if this gets legs at other airlines.
) LUV never when the way of internet ticket brokerages and they actually cost more on many legs. I will be quite curious to see if this gets legs at other airlines.
12-22-2010, 07:49 AM
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It will lead to higher prices, but it most definitely won't decouple added fees for everything. Most airlines are in love with the fees and I don't see that divorce any time soon without the government forcing them to do it.
12-22-2010, 07:59 AM
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I jut looked on orbitz from LGA to DFW for tomorrow and there apparently are no direct flights......Funny how AA wasn't listed.
AT will soon be gone to the SWA booking and United/Continental will soon be only one company....
Could be the end of the online aggregator....
AT will soon be gone to the SWA booking and United/Continental will soon be only one company....
Could be the end of the online aggregator....
12-22-2010, 08:33 AM
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This move by AMR is good for the airlines, good for AMR in that they are in the lead, and in the long run it will be neutral for consumers. GDS's like Travelport and Sabre will lose big time.
12-22-2010, 08:43 AM
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I disagree. Ticket aggregators like Orbitz and Travelocity bundle a lot of information about times/prices together but they do so while taking a large cut. Orbitz is 48% owned by Travelport which is a Global Distribution System. GDS typically adds about 5-7% to the cost of a ticket. It is no wonder that Orbitz wants to get it's data only from Travelport, their owner will make more money. If Orbitz is forced to get it's data only from AMR directly, Travelport is cut out the equation. LUV doesn't use a GDS at all therefore starts off with a 5-7% cost advantage. GDS is a middle-man that contributes nothing to the transportation of passengers except for their electronic information(technology) but they add to the cost. American is simply trying to cut them out to lower their costs.
This move by AMR is good for the airlines, good for AMR in that they are in the lead, and in the long run it will be neutral for consumers. GDS's like Travelport and Sabre will lose big time.
This move by AMR is good for the airlines, good for AMR in that they are in the lead, and in the long run it will be neutral for consumers. GDS's like Travelport and Sabre will lose big time.
I believe that LUV's cost advantage is somewhat negated by their marketing budget. I recall reading something years ago, that LUV chose to put their money into marketing, vs. paying fees to a GDS.
S
12-22-2010, 02:51 PM
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What gets you more value for the marketing dollar..."*ding, you're now free to move about the country*" or "out of the last eight online clearinghouse tickets i bought over the last few years, I think I might have flown in American once because they were 17 cents cheaper than anyone else but I'm not sure it was them".
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