Orbitz has cleared a major hurdle with a decision by the US Department of Transportation (DOT) to sanction the June launch of the online travel agency planned by five US airlines. The department says that it does not have evidence that would justify stopping the company from beginning operations. Several opposition groups are claiming that Orbitz will unfairly reduce competition in the airline ticket distribution businesses. DOT told Orbitz that it will review the company’s operations six months after its scheduled launch to ensure its operation will not be anti-competitive. Orbitz is an attempt by the five largest US airlines – United, American, Delta, Northwest and Continental – to combine their now separate Internet ticket distribution structure. In giving Orbitz a green light, DOT accepted testimony from the airlines that Orbitz will obtain its fare and schedule information from already available sources, and the airlines would not collude on fares. The department noted that the company is not requiring airlines to give it exclusive access to any fares, or denying access to such fares to competing travel agencies. The DOT decision comes at a time when evidence is emerging of the growing power of airline online websites. According to Jupiter Media Matrix, an e-market intelligence company, ratings data from February 2000 and February 2001 shows that unique visitors to travel sites generally increased 23.5 percent. Airline sites recorded a traffic increase of 26.1 percent, from 8.2 million to 10.4 million, while visitors to online agencies grew by only seven percent, from 14.4 million to 15.4 million. In one of the latest attacks on the airline initiative, Massachusetts Institute of Technology Professor Jerry Hausman has warned that Orbitz will be the “market power ringmaster” forcing airline customers to pay an additional US$3.2 billion in higher airfares. Hausman’s study was financially supported by Orbitz opponents, including Southwest Airlines and the American Society of Travel Agents (ASTA). Hausman said the result of Orbitz will be reduced competition among Internet travel sites, higher airfares, and reduced innovation. Further, he said, the yet-to-be-launched Orbitz will be anti-competitive and the harm to consumers will not be offset by any demonstrable pro-competitive benefit. “The Orbitz agreement contains a prohibition against competitive advertising on the Orbitz airline booking path, which effectively will eliminate heightened attention to special fares or discount carriers,” he said. Orbitz dismissed Hausman’s report, claiming “the study was a last-ditch attempt to thwart what the travel global distribution systems feared most: superior technology that gave better information and access to low fares directly to consumers.” Several consumer organisations have also written to the DOT to complain about Orbitz, which will account for four out of five tickets sold in the US. In their letter to DOT, the consumer groups complained, “We could very well end up with three major airlines and no independent travel agent industry helping consumers navigate to the best terms and conditions of travel. This would be very different from anything we have ever known, and it bodes poorly for consumers.” The DOT decision was welcomed by Jeff Katz, chairman, president and CEO of Orbitz. “After an exhaustive review of our business plan and corporate documents, the DOT has clearly confirmed our position that Orbitz is pro-competitive and fully compliant with the law. “Already, almost 25,000 consumers are booking tickets on Orbitz and responding positively to our advanced-technology ‘beta’ site, and the number continues to grow each day,” Katz said.