American Airlines May Pull Flights from Orbitz
The airline plans to stop sharing with the company on December 1st if a compromise more favorable to the airline cannot be made.
In a statement released by American Airlines, the company said "we will continue to negotiate in good faith to reach a viable, mutually beneficial agreement with Orbitz."
"AA's position remains that our distribution channels need to be cost-effective and efficient while also enabling more choices for customers through new products/service offerings," the statement continued.
Announcement of the news on Thursday led to a drop in shares of Orbitz Worldwide Inc. by more than 17 percent.
Canadian Press is reporting Orbitz CEO Barney Harford said the airline is attempting to force travel agencies to obtain information directly from the company instead of a middleman. Currently, travel agencies such as Orbitz obtain information from global distribution systems, which provide computerized airline information for booking tickets. Travelport, a privately held company who owns the Worldspan and Galileo global distribution systems, also controls Orbitz.
Mary Sanderson, a spokeswoman for American Airlines, told the Canadian Press that travel agencies connected directly to American's reservations system could get more information tailored to consumers, "and we won't have to pay as much for it." As it stands, airlines pay global distribution systems each time a customer books a flight.
American is competing with low-cost airlines, such as Southwest, who skip the middleman and offer discounted fares off their own website. Southwest tickets are not listed on travel agency websites such as Orbitz, Travelocity and Expedia, but reel costumers in because the carrier has a reputation for low prices.
Henry Harteveldt, a travel analyst for Forrester Research, told the Canadian Press he believes any costs saved by eliminating the global distribution systems will be combated by a loss in ticket sales.
"This will make it more difficult for people to find American Airlines fares," said Harteveldt. "By not appearing with the other airlines in travel agency searches, American could lose business."
American Airlines has not commented on whether or not the company is looking to pull its listings of Travelocity of Expedia.
Photo by randomduck on flickr.
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