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American Airlines Seeks To Ground High-Flying Orbitz

Posted  April 21, 2011

American Airlines has filed a lawsuit in the U. S. District Court for the Northern District of Texas against the second-largest online travel website – Orbitz Worldwide – and its largest stakeholder, Travelport, for allegedly engaging in monopolistic acts.

The complaint alleges that Orbitz, based in Chicago, colluded with Travelport, based in the United Kingdom, to block an independent avenue for ticketing created by American Airlines, based in Texas.  Travelport owns 48 percent of Orbitz.

American Airlines contends in its complaint that Travelport and Orbitz violated Sections 1 and 2 of the Sherman Act by using their control over the distribution of air fare information to maintain their monopoly power and to hinder the development of alternative technologies that could help consumers find cheaper fares.

Airlines pay fees to web sites such as Orbitz to include their fares in an on-line forum in which consumers can compare rates with those of other airlines.  American Airlines alleges that Travelport controls 30 percent of all airline ticket sales made by U.S. travel agencies, and used that market power to undermine American Airlines’ “AA Direct Connect” ticketing service through various anticompetitive acts, including:  restrictive terms in agreements with participating airlines; long-term agreements with travel agents that incentivize exclusive use of Travelport; and unreasonable refusals to deal with technology companies whose products threaten to erode Travelport’s market position.  American Airlines contends that such practices have allowed Travelport to double book fees for reservations made outside the United States, and to misrepresent American Airlines’ fares, damaging its relationship with consumers.

Travelport and Orbitz counter that American Airlines filed the lawsuit after contract negotiations between American Airlines and Orbitz broke down and American Airlines is merely using the suit to force better terms with Orbitz and with other similar websites with which American Airlines is negotiating.  American Airlines renewed its alliance with Expedia earlier this month.

Tagged in: Antitrust Litigation,