American Airlines withdraws fares from Orbitz

American Airlines has withdrawn fares for sale through US online travel agency Orbitz and its subsidiary Orbitz for Business.

The carrier said the decision to discontinue displaying and selling fares through Orbitz came after it failed to come to an agreement with the company.

The move came immediately after a US court ruling allowed the airline to cancel contracts amid a dispute with the online travel agency and parent company Travelport.

The airline acted as it battles Orbitz and Travelport, the online travel agency’s largest shareholder, over the distribution of fares.

The carrier is putting pressure on agencies and GDSs such as Travelport’s Worldspan and Galileo to use its AA Direct Connect to handle all transactions with the carrier. The move would lower American’s distribution costs and reduce the role of GDSs.

American accounted for about 5% or $28.8 million of the $575.1 million in net revenue Orbitz generated in the first nine months of 2010.

Douglas Quinby, senior director of research at travel research firm PhoCusWright, reacted to the Orbtiz move by saying: “It’s very clearly a shot across the bow for all (global distribution systems) and also online travel agencies about the future of distribution.

“All of the (online travel agencies) are watching this very, very closely, and other airlines as well.”

American informed Orbitz that it would terminate its contracts on December 1 after the travel site baulked at adopting Direct Connect.

Travelport responded by gaining a temporary court restraining order, claiming that by blocking sales on Orbitz, American would cause Travelport harm and breach a service agreement with Galileo.

American said it was acting fully within its contractual rights in terminating its arrangements with Orbitz.

The court yesterday refused to grant a preliminary injunction, allowing the temporary restraining order to lapse.

Although American pulled its fares from Orbitz, Travelport said it would still pursue its lawsuit.

“Travelport remains confident that it will ultimately prevail on the merits of the matter,” the company said.

The airline’s sales vice-president Derek DeCross said: “American Airlines regrets any inconvenience this may cause our customers. While we could not reach an agreement with Orbitz, we are committed to letting customers know of the multitude of options they have to purchase travel on American Airlines.

“In today’s competitive marketplace, it is important for American to be free to customise its product offerings to improve the customer experience as well as distribute its products in a way that does not result in unnecessary costs.”

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