Orbitz Could Lose American Airlines Over Data Dispute

American Airlines (AMR) could pull its ticket listings from Orbitz (OWW) on Dec. 1 in a dispute over how the online travel website gets information about flights and prices.

The news on Thursday knocked down shares of Orbitz Worldwide Inc. by more than 17%.

Orbitz CEO Barney Harford said American was trying to force travel agencies to get information directly from the company instead of through middlemen called global distribution systems, or GDSs. He said American's strategy would limit consumers' ability to compare airline prices.

Orbitz is controlled by privately held Travelport Limited, which also owns the Worldspan and Galileo GDSs.

American spokeswoman Mary Sanderson said travel agencies could get more information tailored to individual consumers by connecting directly to American's reservations system, "and we won't have to pay as much for it." She said American must compete against low-cost airlines such as Southwest that largely skip the GDS operators and sell tickets cheaper on their own websites.

Despite that criticism, Sanderson said American still wants to negotiate a deal that helps both the airline and Orbitz.

Does Leaving Make Sense?

Airlines have been cutting costs to deal with high fuel prices and the recession, which caused business travelers and vacationers to cut back on flying. American has been very vocal about reducing its distribution costs as well.

Airlines pay the GDS operators each time consumers search a particular flight, look up a fare or book a trip. With so many consumers searching on the Internet, the airlines' costs can add up quickly.

Henry Harteveldt, a travel analyst for Forrester Research, said that if American carries out the threat to leave Orbitz, any savings it sees in lower distribution costs could be swamped by lost ticket sales. He said rivals such as Delta, United and US Airways were unlikely to leave Orbitz.

"This will make it more difficult for people to find American Airlines fares," he said. "By not appearing with the other airlines in travel agency searches, American could lose business."

Consumers can't find fares for Southwest Airlines Co. on Orbitz or rivals such as Travelocity and Expedia. But Harteveldt said Southwest can get away with that because it has a reputation for low prices. By contrast, he said, American "is a fairly generic airline."

American declined to say whether it would seek to pull its listings off Travelocity or Expedia (EXPE).

Orbitz shares fell $1.19, or 17.5%, to close at $5.63. Shares of American parent AMR Corp. lost 3 cents to close at $8.34.


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shimizu717

So American wants to dump Orbitz___GOOD! These so-called "help you & me" get so-called lower fares is just so much crap. I can look in Travel section of LA TIMES and find local travel agencies offering for less. My own travel agency has served me very well for 32 years. What gets me is why DELTA et al would dump these agencies in favor of big Internet companies who leave you hanging in even of trouble. Way to solve problem is for all airlines to join forces for a single fare system on any day and any time. Quit playing roulette with my money and get back to basics of a acceptable level of profits. I can fly Rt to Japan from LAX via SD for less than $.10/mile. Try to do that with a RT ticket between LAX & SD. I like flying foreign air carriers because they are cheaper and much cleaner (as a general rule) and pretty much always on time. John Mournian for less than

November 05 2010 at 5:29 AM Report abuse rate up rate down Reply