House members seeking investigation of Orbitz

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By Jennifer DiSabatino

(IDG) -- A month after the Department of Transportation requested new information from Orbitz LLC about its potentially anticompetitive behavior, 24 members of the House of Representatives have asked the Department of Justice to step up its probe of the online travel agency funded by the major U.S. airlines.

In an April 23 letter, the legislators, mostly Democrats, expressed concern "about potential anticompetitive effects of Orbitz, the online travel venture jointly owned by the five largest U.S. airlines, on the travel industry, e-commerce and customers." The letter went on to request that R. Hewitt Pate, the deputy attorney general, intensify his investigation.

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A version of the letter is available online (download PDF).

The online travel site, which launched last June (see "Online travel site Orbitz officially lifts off," link below), claims that it can find and list the greatest number of low fares and rates for air travel, hotel rooms and rental cars. Orbitz says its technology is behind its ability to find fares; its competitors say Orbitz has demanded unfair business contracts with travel suppliers, particularly airlines.

Orbitz was founded by United Air Lines Inc., American Airlines Inc., Delta Air Lines Inc., Northwest Airlines Inc. and Continental Airlines Inc. and now has the support and backing of most major U.S. airlines. The exception is Southwest Airlines Co., which refuses to pay fees to have its fares listed and has gone so far as to remove its fare pricing information from Airline Tariff Publishing Co., the Dulles, Va.-based airline consortium that publishes airfares to travel agents and other airlines.

"The evidence is clear: Orbitz is harming competition," said Antonella Pianalto, executive director of the Interactive Travel Services Association (ITSA). A Washington, D.C. lobbying group, the ITSA was founded by Orbitz competitors, including Travelocity.com Inc. and Expedia Inc.

Analysts have said in the past that they doubt there is any evidence that Orbitz harms consumers.

Orbitz is also promising to provide what it calls "direct connect" by the end of the year, said Orbitz spokeswoman Carol Jouzatis. Direct connect would bypass the global distribution systems used by travel agents and airlines to track fares and schedules, meaning that they would no longer have to pay fees to post information, as they do now. One such global distribution system is owned by Sabre Holdings Corp. in Fort Worth, Texas, which also owns Travelocity.

Last month, Orbitz came under renewed federal scrutiny amid charges that the online travel site has unfair access to airline bargains.

In response, the U.S. Department of Transportation sent a letter to Orbitz requesting information on its business plans and contracts (see "DOT revisits Orbitz investigation," link below).