Update: Orbitz confirms fares from American Airlines will no longer be available on Orbitz and Orbitz for Business, effective 21 December 2010. "We are confident that our consumer value proposition remains strong," a spokesman says.
Original story:
Travelport said a judge in Chicago denied its request for a preliminary injunction against American Airlines, which sought to remove its inventory from Orbitz.com.
The move paves the way for American Airlines to pull its inventory off Orbitz.com, although no such action has been taken, with the airline confirming only that it is establishing "next steps and will communicate plans shortly".
Travelport says despite the adverse ruling, "the case will continue on its merits until the request for a declaratory judgment is adjudicated. Travelport remains confident that it will ultimately prevail on the merits of the matter."
A judge in Chicago on Nov. 19 temporarily blocked American Airlines from terminating its contracts with Orbitz Worldwide Dec. 1.
The judge in the Circuit Court of Cook County in Chicago granted Travelport's motion for a temporary restraining order and thus barred American Airlines from ending its agreements with Orbitz.
If American had gone ahead and terminated its contacts with Orbitz, as it had notified the online travel agency it would do Dec. 1, then American Airlines' flights would have disappeared from Orbitz.com.
In mid-November, Travelport won a temporary restraining order barring American from pulling its inventory off Orbitz, a move that the airline originally indicated could take place Dec. 1 with the termination of the American-Orbitz Worldwide contract.
Hearings involving Travelport and American Airlines over the Orbitz issue, with Travelport arguing that an American pullout from Orbitz would violate the American-Travelport GDS full-content agreement, are continuing in Chicago Dec. 17.
American Airlines is pushing a direct-connect strategy for travel agencies and GDSs, and was locked in court battles with Travelport over its desire to remove inventory from Travelport-controlled Orbitz.
Travelport is poised to begin biasing certain American Airlines' flights by including an airline surcharge to travel agencies in fare displays, fare quotes and shopping displays beginning Dec. 20.
This means that some American Airlines fare displays in Travelport's Galileo, Worldspan and Apollo GDSs would appear more expensive than some competitors' fares, and travel agents using the GDSs and consumers shopping on online travel agency websites outside the U.S. likely would look beyond American Airlines for flights.
Orbitz says in a statement:
"We will continue to seek an arrangement with American Airlines to distribute American’s tickets on Orbitz.com and Orbitz for Business. Revenue earned on American Airlines tickets and the associated ancillary products – including destination services, car, hotel and insurance – booked on our Orbitz.com and Orbitz for Business sites accounted for approximately 5% of Orbitz Worldwide total revenue for the nine months ended September 30, 2010.
"In the near term, we believe that if American Airlines removes its flights from our websites, most of the impacted ticket volume will be replaced by other suppliers, and we will continue to earn most of the associated ancillary revenue."
American Airlines adds in its own statement:
"We remained confident that we would prevail once all of the facts were considered and applaud the court's decision to dissolve the temporary restraining order.
"In today’s competitive marketplace, it is important for American to be free to customize its product offerings to improve the customer experience as well as distribute its products in a way that does not result in unnecessary costs."
The backdrop to the controversy is that several weeks ago Travelport apparently increased the booking fees it charges American after the airline revealed its intent to remove its inventory from Orbitz over distribution costs and the direct-connect issue.
American then revealed it would begin charging travel agents outside the U.S. a Booking Source Premium -- or surcharge -- for American bookings to recoup Travelport's higher GDS fees.
American was slated to begin leveling the surcharges Dec. 20 and would collect them from travel agents beginning in February through debit memos.
Quick to wade in today was the Business Travel Coalition, with chairman Kevin Mitchell claiming the ruling is "merely the first shot" in a wider battle.
"The stakes in this conflict are clear: either an improved airline industry and distribution marketplace centered around the consumer, or one that subordinates consumer interests to the self-serving motivations of individual airlines endeavoring to impose their wills on consumers and the other participants in the travel industry.
"Single-supplier direct connect proposals, like the one advanced by American Airlines, can cause massive fragmentation of airfares and ancillary fees depriving consumers of the ability to compare the total cost of air travel options across all airlines."
American Airlines is clearly not making many friends with passenger groups either. Charlie Leocha, director of the Consumer Travel Alliance, says:
"At its core, this dispute has nothing to do with business agreements, legal arguments, or distribution technologies. This is simply a heavy-handed attempt by American Airlines to prevent consumers from easily searching and comparing its fares against those of other airlines.
"In short, the only 'direct connect' American really seems to want is a ‘direct connect’ to consumers’ wallets. American appears to have no idea why we fly. We fly to get from point A to point B in the most convenient and cost-effective manner possible. We don’t fly to be manipulated by proprietary airline reservation systems that limit our choices, prevent comparison shopping, and hide the real cost of travel."
NB: Additional reporting by Kevin May.