Ramon Lopez/WASHINGTON DC
Low-cost specialist South-west Airlines has launched a lawsuit against on-line travel agency Orbitz in a bid to stop the service, developed by the top five US carriers - its biggest rivals - from displaying information on its prices and schedules.
In what is likely to become a test-case for the growing on-line travel business, Southwest claims Orbitz is using proprietary data without permission, and distributing false and misleading information.
Orbitz, owned by American Airlines, Continental Airlines, Delta Air Lines, Northwest Airlines and United Airlines, refutes Southwest's claim, saying it displays all publically-available fares and schedules without bias. Data on Southwest and other non-member carriers is bought from clearing houses. "There are no legal restrictions on the use of this public information," says Orbitz, which launches in June.
The US Department of Transportation recently cleared Orbitz to begin operations after concluding that it would not reduce competition, and although the DoT says it will "review" the service after its launch "to ensure that its actual operation will not be anti-competitive", Orbitz chairman, president and chief executive Jeff Katz, the ex-Swissair boss, says the ruling confirms "that Orbitz is pro-competitive and fully compliant with the law".
In delivering its verdict, the DoT ruled that Orbitz would obtain its information from open sources, reducing concerns about fare collusion, and suggested the service might create new - and "inherently desirable" - competition in the industry. It adds that it cannot hinder innovation "unless and until there is sufficient evidence of anti-competitive conduct".
Apart from the main members, Orbitz also has 35-plus associate airlines with KLM, LanChile and Lufthansa the most recent to join up. Orbitz reckons membership will reduce associates' ticket commission costs by 30%. In total, data from 450 airlines, including Southwest, will be posted on the system. Orbitz claims it will eventually account for 30% of sales in an on-line market which is becoming increasingly competitive. Airline-based operations are also underway in Europe and Asia, challenging established companies like the Sabre owned Travelocity travel website.
The Interactive Travel Services Association (ITSA), which opposes Orbitz, has expressed disappointment with the DoT ruling, but says that while the department "didn't flash a red light, it didn't give Orbitz a green one either".
Source: Flight International
