Online travel site Orbitz sent an open letter to President Bush, defending itself after execs from rivals Expedia.com and Travelocity.com spent a day in Washington trying to persuade the Administration to curb the venture.
Jeffrey Katz, chairman and CEO of the airline-backed Orbitz, said that despite claims from rival airline ticketing operations, “there is no crisis” in the industry … “there is only the complaint of entrenched companies seeking to impede progress and innovation, and to preserve an inefficient but highly profitable business.”
But travel industry reps had a different view. “We appeal to the
Administration to intervene immediately and decisively — before irreparable
harm to consumers and competition occurs,” five industry executives said in a
letter to the President. The letter also was signed by an official with the
trade group that represents U.S. travel agents.
Executives from Orbitz’s competitors had a series of meetings with officials
in the White House, the U.S. Transportation Department and Congress, but they
did not meet with Bush.
The possibility of
Congressional intervention was raised in mid-July at a House subcommittee
hearing in Washington called to examine supplier-owned online travel sites
such as Orbitz.
The competition is most concerned about what is known as a “most favored
nation” clause, which prohibits participating airlines from giving their
lowest fares to any other online travel site without offering them to Orbitz
as well.
Travelocity and Orbitz’s other rivals say they have been unable to get the
same low fares from the airlines.
“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,” William Hannigan,
chairman of Travelocity’s parent company, was quoted by Reuters as saying..
Orbitz’ Katz said in his letter – referring to Expedia
and The Sabre Group’s Travelocity operation – that it “is
appalling that these companies, that are enjoying phenomenal success while
some airlines slip into bankruptcy,” have declared a “crisis” requiring
governmental help.
He went on to ask that the Departments of Transportation and Justice be
permitted to complete their review “on the merits alone, free from political
pressure.”
Last month the U.S. Department of Transportation, after several
hearings, issued an inconclusive report on Orbitz, the third most visited
travel site. The agency cited no anti-competitive fallout from Orbitz so far,
but it said the ticket venture could potentially have a negative effect on
airline competition.
Orbitz, which has an IPO pending, is owned by American Airlines, United
Airlines, Continental, Delta and Northwest Airlines.
