December 21 - Travelport / American Airlines Lawsuit Merely The First Shot

The Battle Over the Ability to Shop and Compare in the Travel Marketplace Is On

The consumer is unwittingly at the center

December 21, 2010, RADNOR, PA -
Business Travel Coalition (BTC) today commented on the implications of the ruling handed down in Chicago today by Judge Martin Agran in Travelport, LP v. American Airlines, Inc. The Circuit Court of Cook County, in Case No. 10 CH 48028, decided in favor of American Airlines. While the outcome unfavorably impacts Orbitz customers and Orbitz For Business corporate clients, by reducing fare searching, booking and servicing efficiencies, travel professionals the world over have recognized that this lawsuit represents merely the opening skirmish in the larger battle for the future of the open marketplace for travel.

“The stakes in this conflict are clear: either an improved airline industry and distribution marketplace centered around the consumer, or one that subordinates consumer interests to the self-serving motivations of individual airlines endeavoring to impose their wills on consumers and the other participants in the travel industry,” stated BTC Chairman Kevin Mitchell. “Single-supplier direct connect proposals, like the one advanced by American Airlines, can cause massive fragmentation of airfares and ancillary fees depriving consumers of the ability to compare the total cost of air travel options across all airlines.”

According to BTC, the industry and public policy debate over American Airlines’ Direct Connect plans has been raging for the past year moving clearly to the consumer forefront with American Airlines’ unprovoked assault on Orbitz. Over the course of that debate, American Airlines has repeatedly changed its rationale for why Direct Connect is needed, arguing at various times that it is about cost containment, product customization and technological innovations, among other reasons. The failure of these shifting explanations to convince airline industry stakeholders to embrace the unproven system then led to a new strategy from American Airlines of blunt threats aimed at Orbitz.

Mitchell points out, “When an airline must constantly change its rationale for implementing a program, or in the case of Orbitz, resorts to threats to gain acceptance of a new business model, it vividly demonstrates that there is in fact no unmet market need requiring a solution. Whether in North America or Europe, what American Airlines is selling, nobody in the downstream distribution chain, to BTC’s knowledge, is saying they want.”

Interim results from a currently open BTC survey of corporate travel managers point to an overwhelming rejection of American Airlines’ attempts to change the distribution system model to its unique advantage while driving corporate travel departments’ costs up and undermining their ability to adequately service their travelers.

• 94% of surveyed travel managers indicate access to all airfare and ancillary fee information is either indispensably important or very important for their corporate managed travel programs.

• 87% believe that in advocating its Direct Connect strategy American Airlines is endeavoring to secure higher fares-paid by undermining the independent travel distribution system and corporate managed travel programs and by driving more consumers to where comparison-shopping, expert advice and corporate travel policies are non-existent.

• 88% of travel managers who oppose American Airlines’ Direct Connect believe that the program will result in fragmentation of airfares and fees and that without access to all air travel options travelers will pay higher prices.

• 98% do not support American Airlines’ Direct Connect strategy.

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