American Claims Orbitz, Travelport Anti-Competitive in Suit
American Airlines filed suit against Orbitz, one of the nation's largest online travel sites, alleging the agency engaged in an anti-competitive scheme with its parent firm Travelport, to prevent major airlines from using technology to connect directly with their customers.
In a lawsuit filed in U.S. District Court in Fort Worth, Texas, American claims that Orbitz and Travelport, also the owner of the Worldspan, Amadeus and Apollo reservations systems, are trying to control ticket distribution and penalizing airlines and travel agency subscribers for bookings made through alternative technologies.
"As a result of defendants anti-competitive conduct, American has suffered significant harm in the form of exorbitant booking fees, outdated and inflexible technology, lost sales and loss of goodwill with the travel agency community, corporate customers and consumers," lawyers for American said in the complaint.
The suit comes about a week after American reached a deal to resume offering airfares through Orbitz competitors Expedia and Hotwire.com. American has since failed to reach a similar deal with Orbitz after pulling its fares off the site in December 2010.
Orbitz officials say that American is engaged in an attempt to shove a bad deal down its throat by using the court system as a bully pulpit.
"They're trying to use litigation as a scare tactic to try to bring us to our knees," Orbitz spokesman Brian Hoyt tells AOL Travel News "The very notion that somehow we are a monopolistic power is laughable."
Orbitz said it booked about $8.4 billion in airline trips in 2010, and had $274.6 million in net airline revenue. American represents about 5% of Orbitz's revenue, and the agency says that other airlines have made up the difference since American pulled its fares off Orbitz in December.
American says in the lawsuit it booked about $2.7 billion in airline tickets through Travelport's reservations systems.
Carrier officials did not comment directly, but American issued a statement saying the suit followed "extensive, yet unsuccessful" talks between American and Orbitz and Travelport to resolve a dispute over distribution of its fares and schedules.
Henry Harteveldt, vice president at Forrester Research, says he understands that distribution fees are one of the last areas of cost savings that airlines can control, but he believes the lawsuit is an extreme method of trying to force adoption of its direct-connect technology.
"It smacks of a petulant child," Harteveldt told AOl Travel News.
American is one of several airlines that have been trying to find cheaper ways of connecting with customers using so-called direct-connect technology. The system would allow American's corporate and leisure customers to book directly through the airline's system without going through the reservations providers like Worldspan, Galileo or Sabre Holdings, a former affiliate of American Airlines.
American in January filed suit against Sabre, alleging that firm biased its flight displays to make it harder for agents to find American's fares. The two companies later called a truce in their legal battles.
The reservations companies, or global distribution systems as they are now referred to, charge booking fees to the airlines that the carriers say have become a large expense.
American has developed its own direct connect technology with a firm called Farelogix, which it is also selling to other carriers including Air Canada.
The carrier claims to be doing this to protect access for traditional brick-and-mortar travel agencies, but in January, a coalition of 117 agencies and organizations including the American Society of Travel Agents and the Business Travel Coalition, formed a group called Open Allies for Airfare Transparency, in an effort to block American from implementing its direct-connect technology.