American Airlines leaves Orbitz
Sign of strains between airlines, online ticket sellers
Last Updated: Wednesday, December 22, 2010 | 12:43 PM ET
The Associated Press
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American Airlines pulled its flights from the Orbitz travel website on Tuesday in a dispute that could eventually affect the way travellers buy airplane tickets online.
American Airlines is ending its association with Orbitz, the online travel service. Analysts believe it's a sign of impending changes in the relationship between airlines and online ticket agents. (Wilfredo Lee/Associated Press)The airline said its tickets sold previously on Orbitz are still valid. And American Airlines tickets can still be bought at the airline's own website as well as other travel websites.
American pulled its tickets from the Orbitz for Business site as well.
The dispute is the latest sign of strains between airlines and the companies that sell airline tickets, including online sources like Orbitz.
Airlines have traditionally paid sellers a commission. American also pays fees to the global distribution companies that provide the flight information.
Airline wants to cut global distribution systems
Now, American wants Orbitz to get that flight information directly from the airline, cutting out the global distribution systems. American has said that will reduce costs and allow it to make more personalized offers to customers such as hotels and car rentals.
'It seems like they want to scorch the earth.'—Henry Harteveldt, travel analyst
The global distribution systems have not moved as quickly as they could have to upgrade their technology, but American's move with Orbitz is "rather severe," said Henry Harteveldt, a travel analyst for Forrester Research. "It seems like they want to scorch the earth."
He predicted that travellers who want to fly on American will seek out its tickets on the airline's website. Travellers who don't know what happened with Orbitz, or don't care which airline they fly, are unlikely to notice American's absence from Orbitz, he said.
Move makes comparison shopping difficult
Traveller advocates have said American's move will make it harder to comparison shop.
"There is profit in confusion, there is profit in fragmentation of all the fares and the fees so consumers can't comparison shop," said Kevin Mitchell, chair of the Business Travel Coalition, which represents corporate travel buyers.
He said airlines ultimately would like to flip the current financial arrangement around and have travel agents pay them for access to flight information, rather than American paying every time someone else sells a ticket on one of its flights.
Delta is ending its association with online ticket agents CheapOair, BookIt and OneTravel. American's vice-president for sales, Derek DeCross, said in a statement that the airline needs 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."
Orbitz Worldwide Inc. called American's decision "unfortunate," and said it still offers flights from more than 400 airlines worldwide and would continue to seek a way to sell American tickets, too. It said American Airlines ticket add-ons like rental cars and hotel rooms added up to about five per cent of the company's revenue for the nine months ended Sept. 30. It said it believes that any American Airlines tickets it loses will be replaced by tickets on other airlines.
Also Tuesday, Delta Air Lines Inc. said it would stop selling tickets through three smaller travel websites, CheapOAir.com, OneTravel.com and BookIt.com effective, on Dec. 17.
Last week, a Delta executive told analysts that some ticket venues have more value than others. The airline wants "as direct a relationship and channel to our best customers as we can," said Glenn Hauenstein, Delta's executive vice-president for network planning, revenue management and marketing.
He said he's aiming for Delta's own website to be more like an Apple store, and suggested that other travel websites are more like Best Buy, with similar products but a different customer experience, he said.
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