THE ONLINE DISTRIBUTION BATTLE
12 Oct 2000
In the tit-for-tat war between the US airline-owned Orbitz portal and online travel agents, it was Orbitz CEO Jeffrey Katz who first urged the US government to focus its sights on “questionable” CRS practices such as hidden booking fees, biased listings and the sale of sensitive customer data.
Katz argued these practices contributed to higher consumer costs and undermined confidence in online travel booking.
Last week he found an ally in the US Consumers Union, which claims that CRS regulations are necessary due to industry practices that sometimes prevent consumers from finding the best prices for airline tickets.
“The travel marketplace is filled with inaccurate and misleading information about ticket prices,” said Mark Silbergeld, a Consumer Union co-director. “When consumers are quoted prices for tickets, the consumers often presume that these fares represent the best prices among all of the available flights. But that’s not always the case.
“Sometimes, a seller may omit certain fares or certain carriers. When a consumer can’t find the cheapest prices the market has to offer, it raises disturbing questions about the sellers’ motives and
Rivals of Orbitz returned fire with the Interactive Travel Services Association (ITSA) telling a US Department of Transport enquiry that Orbitz and its owners should be prohibited from offering exclusive access to discount fares only on Orbitz. ITSA argues that each Orbitz owner should make discount fares offered on Orbitz available to any third party distributor on commercial reasonable terms.
ITSA says, “By taking these steps, the Department would ensure that consumers continue to have access to independent and unbiased fare information, the industry will continue to innovate to improve customer service, and new entrants and expanding airlines will be able to compete more effectively.”
The launch of Orbitz – founded and financed by American, Continental, Delta, Northwest and United airlines – has been postponed until June 2001.
Katz says that the online travel marketplace is not working. Websites selling travel can’t make money while consumers remain dissatisfied with the online travel purchase experience. Katz is sniping at Travelocity and Expedia, the current competition.
Expedia has retaliated by arguing that airline-owned travel services, whether they are delivered over a computer, the telephone or otherwise “should be supervised by the CRS rules because they generate many of the same concerns with regard to airline competition and consumer benefit that the (US) Department of Transport designed the CRS rules to prevent”.
Independent travel services – which according to Expedia are those not owned by airlines – “should not be supervised by the CRS rules as their business model demands that they promote airline competition and consumer benefit – irrespective of the medium of