Published on Thursday, April 14, 2011
American Airlines has filed a lawsuit against GDS Travelport LP and its online travel agency Orbitz Worldwide in an attempt to cut its distribution costs.
The suit filed in a Texas court claimed Orbitz, which is 48% owned by Travelport, was using monopoly power to impose anti-competitive terms and conditions on airlines.
American said Orbitz and Travelport had doubled its booking fees for reservations made outside the United States and subsequently made American's fares appear more expensive than they actually were to consumers outside the US.
The airline withdrew its fares from Orbitz last November after which it was dropped by Expedia, but it has since reached a new agreement to sell its product through the latter online travel agency.
Orbitz, which owns several brands including ebookers in the UK, described American's lawsuit as a baseless tactic to try to force it to adopt an airline ticket distribution model that limited consumer choice and inhibited competition.
It claimed American had wanted Orbitz to use a direct link to its inventory instead of a global distribution service which negotiates prices. Orbitz has the backing of the Business Travel Coalition, which clamed consumers and travel managers do not support American's 'direct-connect' proposal.
"Having failed to force Orbitz to adopt unproven technology that does not meet the needs of our customers, American Airlines is now resorting to groundless litigation in a desperate attempt to revive an unsuccessful strategy," Orbitz said in a statement.
"Orbitz will defend itself with vigor and is leaving open all possible options to seek relief from American Airlines' predatory actions."
By Linsey McNeill
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The recent insolvency of Low Cost Travel Group, one of the large players in the travel industry had a big impact on the travelers, hotels and all related players from both wholesale & retail arms. There were about 27,000 people on a holiday who had booked through the company comprised of a €200 million wholesale arm and €500 million OTA / retail arm.