Orbitz vs. American Airlines: The traveler is the loser

By | January 22nd, 2011

Maybe you’ve heard about the little dust-up between American Airlines and several online travel agencies, including Orbitz and Expedia.

Maybe you’ve noticed that when you go fare-shopping on those travel sites, you aren’t offered any American flights.

Maybe you’ve said to yourself, “So what?”

“It’s really an inside baseball kind of story,” admits William Swelbar, a research engineer in MIT’s International Center for Air Transportation.

But not so fast. Yes, the intramural spat between airlines and travel agencies may seem irrelevant, but there’s a lot at stake. The future of how you buy airline tickets could hang in the balance.

Here’s what has happened: Late last year, American Airlines invited Orbitz to switch the way it manages tickets from a traditional reservation system to a new one that American had developed, called Direct Connect.

Actually, American insisted.

When Orbitz declined the invitation, American pulled its tickets from the online travel agency. Then Expedia, the largest online travel agency, stopped selling American tickets in a related dispute.

Then Sabre, one of the largest reservations systems for travel agents, retaliated by “de-preferencing” American Airlines tickets on its displays, which essentially made American fares the last choice for tens of thousands of agents. Sabre also raised American’s booking fees, claiming that the airline wasn’t offering access to its full content by withholding information about extra airline fees from its reservation systems.

Since then, there have been lawsuits, court injunctions – and lots of rhetoric.

“This is a dispute over which company or travel industry sector controls price information,” says Edward Hasbrouck, a consumer advocate. “But consumers’ interest is in price transparency, which nobody in the industry really wants.”

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In other words, airlines and travel agencies are squabbling over how they show you ticket prices. Agencies want to display it their way; airlines want to show you the prices the way they want. Neither necessarily has your interests in mind, in Hasbrouck’s view.

Online agencies typically show “base” airfares, minus any taxes and optional fees. They allow travelers to compare prices between airlines, but those comparisons have become increasingly difficult to make in the past two years, as air carriers have removed once-included items from the ticket price, such as checking a bag or making a seat reservation. Generally, airlines have refused to disclose these fees to travel agents in a meaningful and comprehensive way.

By withholding the fee information and waiting until the end of the reservation to disclose it, airlines stand to make more money because their tickets appear cheaper, and they can pocket all the profits from the extra fees that they charge later. Travel agencies want access to the information, and they say that they want to disclose it earlier so that they can keep their customers from being surprised by these fees at the airport. Plus, they hope to sell you the extras up front, potentially earning them a bonus or a commission.

Orbitz has kept a low profile in recent days, saying only that it is still trying to iron out its differences with American. “We have not closed that door,” says spokesman Brian Hoyt.

  • Had to fly American through O’Hare. What a nightmare – going to destination, 2 hr. wait past scheduled flight time; coming back, 2 hrs. late leaving, missed connection, agent (and rude too) lied about availability of food at hotel. I’ll do everything I can NOT to fly with them again.