The Orbitz Edge

By eweek  |  Posted 2001-05-28 Print this article Print

The Orbitz Edge

But Orbitz does have cutting-edge technology. Its fare search technology, from Massachusetts software company ITA Software, pulls fares and routing data directly from airline databases — bypassing Computer Reservation Systems (CRSes) — then filters it with powerful, PC-based computers, said Jeremy Wertheimer, president and CEO of ITA.

"This software does a better job of finding good fares," Wertheimer said. "Orbitz has good technology. Orbitz is going to be the sum of the technology they have and all of the other things that they do."

Another Orbitz advantage is its promise to cut the fees its member airlines pay to intermediaries for accessing CRSes through companies such as Amadeus Global Travel Distribution, Galileo International, Sabre and Worldspan.

Those CRS companies charge a commission for every transaction. Airlines already avoid CRS fees when customers book flights directly on the airlines Web sites. But with Orbitz, airlines can avoid paying CRS charges incurred while selling tickets through other online travel sites, which typically rely on a CRS for booking, Jouzaitis said.

Orbitzs system is essentially its own CRS, with a database of domestic flights. Orbitz plans to combine the advantages of both the airlines Web sites and the independent travel agencies, including exclusive e-fares, but will also display flight options offered by many carriers.

Not everyone is happy about that. Just a few weeks ago, Dallas-based Southwest filed a lawsuit in federal court in California, accusing Orbitz of giving consumers incorrect information about Southwests fares and flights.

Orbitz posts Southwests published schedules and fares, but Southwest blocks it from selling the airlines tickets or displaying Southwests online specials. Southwest sells about 30 percent of its tickets at its Web site, generating about $1.7 billion annually, but it blocks other Internet travel sites such as Expedia from selling its tickets.

Like Southwest, other airlines have become more aggressive in selling tickets online to bypass CRS fees, and have made significant investments in technology and improvements to their Web operations in the last few years. In a bid to draw travelers away from the third-party sites, they have tacked on features such as cut-rate Web-only fares, online check-in, wireless and e-mail travel alerts, and reservations for hotel rooms, cars and vacations.

American, for example, paid about $1.3 billion in commissions to travel agents and online travel sites such as Travelocity and Expedia last year. The airline is looking for ways to sell more tickets for less, said John Samuel, Americans vice president of e-business.

Orbitz could be the vehicle, but its too early to tell, Samuel said.

"Jeff [Katz, CEO of Orbitz] is going to have to prove his product has better features and provides better customer service," Samuel said. "Time will tell."


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