American Airlines has received a favorable court decision from a judge in Illinois this afternoon, allowing it to pull its fares from the search results displayed by online booking engine Orbitz. The move, lifting a temporary restraining order, allows the carrier to remove their flights from the results that are displayed online for passengers. They have already made the necessary technical changes required; Orbitz is currently not displaying any results for travel on AA.
Ultimately the fight comes down to a fight over the costs of publishing the fare information and the various ways that travel agents (including the online booking engines) can get the data to display to their customers. American wants Orbitz to source their price information through a new system that they’ve built, Direct Connect, rather than through the traditional Global Distribution Systems like Amadeus or Sabre. Orbitz, on the other hand, doesn’t want to be pigeonholed into only being able to acquire fare information from a single source.
American is trying to control costs – publishing data into the GDSes is expensive – and increase revenues – the Direct Connect platform allows for more ancillary revenue options such as baggage fees, “special” seat assignments, Mileage Multiplier and similar offerings. At the same time, it also allows the airline to skew other search results if it chooses based on the agency selling the seats rather than providing all customers equal opportunity to the same inventories.
Orbitz claims they are trying to protect consumers by ensuring that the best price can be offered. Of course, Orbitz has not flied suit against Southwest that I’ve seen trying to force them to offer those fares online so that argument might be a bit skewed.
This conflict is not new. American has been pushing vendors towards the Direct Connect platform for more than a year now. Their ultimate goal is to shift as much of the indirect sales channel – tickets not purchased directly from the airline – to the new platform as it offers the best margin opportunities. They haven’t gone so far as to pull their data from all other channels similar to Southwest’s practices or those of some other, smaller carriers. At the same time, however, this case will clearly serve as a bell weather for the future of indirect sales channels. If American is successful in dictating distribution channels to each vendor it could significantly segment the marketplace.
The lawsuit will continue – this was just a temporary injunction being lifted – but it is not clear what the ultimate resolution of the case will be nor the timeline for such. Either way, consumers lose. Transparency leads to lower prices and this move is one that certainly reduces that.
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