Major broadside fired back at American Airlines today by Travelport as it finally reacts to the antitrust lawsuit filed against it and Orbitz last month.
In documents filed at the District Court for the Northern District of Texas in Fort Worth, Travelport slams the airline's lawsuit as "not a genuine antitrust action brought by consumers suffering from excessive or artificial prices increases".
The damage alone to Orbitz from "bullying" by AA has been substantial, Travelport claims, with the online travel agency losing more than half of its market capitalisation in the past six months.
AA's behaviour is "opportunistic" and only brought about to enhance its "already substantial commercial bargaining leverage", Travelport alleges.
The filing is the first official response (after the initial "significant inaccuracies" reaction) from Travelport to the antitrust lawsuit issued by AA on 13 April 2011.
The original lawsuit claims:
"Travelport effectively controls the distribution of airline tickets to a large number of business travelers. Travelport and Orbitz have entered into agreements with one another and with others to exclude competition and maintain Travelport’s monopoly power."
Travelport says the lawsuit is an "unabashed" effort by AA to secure a better position ahead of contract negotiations between the pair for the renewal of their existing distribution agreement.
The airline's power, Travelport claims, is already being felt following its decision to remove fares from Orbitz at the beginning of the row in November last year.
Travelport claims there is "nothing new or different in the marketplace" that warrants an antitrust lawsuit, adding that the airline has had to cite old cases and market definitions, pre-deregulation of the distribution model in the US.
Urging the court to dismiss the action for "failure to allege facts establishing a plausible market in which Travelport operates", the filing adds:
"Stripped of its antitrust pretext, AA’s real complaint is that the marketplace has not embraced AA’s unproven and inefficient direct connect technology and that GDSs remain highly valued by many airlines and travel agencies.
"GDSs continue to offer proven, cost effective distribution services for AA and many other airlines, and compete intensely with each other on price, quality, and content to encourage both airlines and travel agents to continue using their services.
"GDSs also vigorously compete with other distribution channels that now account for a majority of air ticket distribution in the United States. Contrived market definitions cannot mask these contemporary business realities."
The other major area of concern for Travelport is around AA's accusation that the GDS dominates the US marketplace for distribution of airfares.
A market share of "significantly" below 50% of US agencies rules out any argument that Travelport has a monopoly in the country, the filing says.
In a separate filing also made today to the same court, Travelport has asked that the case be heard in an Illinois District Court, where the other and existing legal battles between the pair are taking place.
The filing comes just a week after the Department of Justice announced it would be investigating GDSs on antitrust issues.
American Airlines, in reacting to the Travelport's answer to the airline's antitrust suit and Travelport's motion to dismiss, says it indeed believes that Travelport's actions are anti-consumer. Says Ryan Mikolasik, a spokesman for American Airlines:
American firmly believes that Travelport's conduct has harmed not only American [Airlines], but also U.S. consumers, and is in violation of the federal antitrust laws, specifically Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, as well as provisions of Texas law. We believe that the court will deny Travelport’s motion to dismiss. Travelport’s rhetoric and claims that American – or any airline – has market power over Travelport is simply ludicrous and a smokescreen designed to draw attention away from its monopolistic and anti-consumer practices.