Competition, Orbitz-Style

30th May 2001

The airline-funded travel site gets ready to take off - and some fear it will be the Standard Oil of the skies.
Can you feel the hype? If you`re anywhere near the travel industry - and, really, over the holiday weekend, who wasn`t? - that warmth you feel is the presses heating up in anticipation of the launch of Orbitz, the travel site run by major U.S. airlines. Though there isn`t much new to report - Internet News went so far as to base an entire piece on a Goldman Sachs client advisory on the site - a handful of reporters filed pieces on the site, which is set to go live next month.
The New York Times` Laurence Zuckerman covered Orbitz`s issues in a piece that ran in the Sunday travel section. Once the site launches, he wrote, “the world will finally begin to find out whether Orbitz is the Standard Oil of online travel, as its critics have charged, or just another Web site that sells airplane tickets.” As Information Week noted, many consumer advocacy groups would agree with the Standard Oil moniker; 25 of them recently asked the Department of Justice to halt the site for fear that the airlines will give preferential rates to Orbitz.
Nonsense, Orbitz CEO Jeffrey G. Katz told Zuckerman, arguing that the site plans to offer travelers every available rate on every available flight from just about every airline there is, and to display those options strictly by price rather than give preference to themselves. In a bit of pretzel logic, Katz explained, “The five airlines who financed this couldn`t possibly agree on who would benefit from bias, so there has to be no bias.”
The fortune tellers at Goldman Sachs seemed to agree, calling Orbitz “a competitive offering” in online and offline airfares, car rentals and cruises, though according to Internet News, the report also noted that Orbitz isn`t quite so competitive in non-air travel services, especially vacation packages, where Expedia and Travelocity clearly have it beat.
While the is-it-competitive argument promises to rage for the foreseeable future - the Transportation Department, while not taking any immediate action, has said it will keep its eye on Orbitz - other observers feel the whole thing is overheated. In fact, Sam Galeotos of told the Times that airlines don`t always put their best fares online anyway. “If you really want to get a cheap fare,” he advised, “call our call centers.”


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