American Reaches Distribution Deal with Expedia, Hotwire

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American Airlines said late yesterday that it reached an agreement with Expedia Inc. to end a months-long stalemate over distribution costs and access and resume selling tickets through the online travel agency.

The Fort Worth, Texas-based airline said it will resume offering flight schedules and fares on Expedia.com and Hotwire.com for American and regional subsidiary American Eagle flights, meaning travelers will be able to book American flights for the first time in months on the two travel sites.

"We cannot comment on the specifics of our agreement, but we are delighted to welcome back American Airlines on all our sites and to offer our customers the choice of traveling on American Airlines within the United States or anywhere else it flies," Scott Durchslag, president of Expedia Worldwide, said in a statement.

Expedia said it will access American's fares, schedules and other customized travel products and services through a direct connection using aggregation technology from one of the nation's major global distribution systems, but did not specify which one. American spokesman Ed Martelle said the airline was "pleased to be working with Expedia again," but would not comment beyond the announcement.

The agreement ends a nearly four-month dispute over what American is willing to pay to list its flights through global distribution systems, which allow travel agencies and online travel sites to access airfares side-by-side. Expedia ended up taking American's flights off their website during the scuffle.

Analysts say that American finally reached a deal that would properly compensate Expedia, while allowing the airline to migrate bookings over to a lower cost direct connection technology over time.

"If Expedia shifts American Airlines bookings from the global distribution systems, it will lose the financial incentives it gets paid for each booked and flown flight segment [by the GDS firms]," said Henry Harteveldt, vice president and principal airline and travel analyst at Forrester Research. "I believe that Expedia was able to negotiate business terms with American that will allow the travel agency to recapture an acceptable amount of revnue when it moves to American's "direct connect" technology as well as potentially accepting lower segment fee rebates now for American flights."

He added that American may have made some commitments to Expedia to boost advertising sending, providing additional inventory access to Hotwire or other perks to sweeten the deal.

American has yet to hammer out a resolution with a similar dispute with Orbitz, a Chicago-based online travel site, however a source familiar with the two companies said talks are not progressing.

American has also temporarily withdrawn a lawsuit it filed in January against Sabre, alleging the GDS was biasing the airlines flight displays to make it tougher for agents to find American fares. The current agreement between American and Sabre expires on June 1. Sabre officials were not immediately available for comment.

American reached a resolution with Priceline.com over online distribution in January.

A spokesman for Hotwire, a subsidiary of Expedia, said the site was happy to be working with American Airlines again, but did not have any further comments.

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