Expedia.com Criticizes Orbitz-Funded Study - Update

An Expedia.com executive today scoffed at an airline-industry-funded study that accused Expedia.com and Travelocity.com of using their political clout to prevent the launch of Orbitz, the airlines` controversial online ticketing venture.
“We`re very confident in our ability to compete with them on a level playing field,” Expedia.com Marketing Director Suzi LeVine said today. “Our lobbying efforts are to insure that level playing field.”
Released Wednesday, the Orbitz-funded study opined that the Orbitz launch would strengthen rather than stifle competition in the travel industry.
“New entrants in travel distribution are being met with substantial opposition from the old guard and from leaders in the online travel marketplace,” the report says. “More specifically, the agency community is opposing consumer-direct distribution by travel suppliers, and in particular, attempts to aggregate multiple suppliers onto a single site.”
But LeVine called the report a smokescreen, contending that the Internet travel industry is merely trying to prevent Orbitz from squeezing Expedia.com and other companies out of the business.
Specifically, Expedia.com and other Orbitz antagonists want regulators to prevent Orbitz from maintaining a “most-favored-nation” clause, under which Orbitz would be entitled to the terms of any deals airlines sign with Orbitz competitors.
A collaborative effort owned jointly by American Airlines, Delta Air Lines, Continental Airlines, Northwest Airlines and United Airlines, Orbitz intends to offer a one-stop-shop for online ticketing.
While LeVine says Expedia.com does not object to the formation of Orbitz, she said the project has the potential to give airlines a stranglehold over airline ticketing.
But John Ash, who co-authored the Orbitz-funded report, criticized Internet travel giants like Expedia.com and Travelocity.com for leading the charge against Orbitz, which has yet to sell a single ticket.
“Let the free market work,” Ash said Wednesday, pointing out that Travelocity.com and Microsoft-owned Expedia.com now control more than 70 percent of the third-party online ticketing industry.
The report accuses travel agencies and operators of travel industry “global distribution systems” (including Travelocity.com owner Sabre) of maintaining artificially high ticket-booking prices, in a bid to pad their own profits.
LeVine questioned the report`s findings. “It`s almost comical to suggest that anybody other than the airlines have traditionally set street prices for airfares,” LeVine said.
Since reports about Orbitz first surfaced in 1999, consumer advocates, travel industry groups and regulators have expressed concern about the proposed project.
By obscuring the need for travel “middlemen” Orbitz could squeeze other competitors out of the market, Orbitz detractors contend.
Orbitz came under fire in January, when some 20 state attorneys general sent a letter warning company executives that their proposal was skating on thin regulatory ice.
The joint venture has also been the subject of congressional hearings.
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