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But tell me is it good for the consumer?

2003-04-26 , ,

dollar Orbitz, a travel site launched in mid-2001, has been advertising heavily recently. It positions itself in the same sphere as the better known sites (expedia, sabre, travelocity, priceline) and claims deals unavailable elsewhere- hustling "The Most Low Fares to Planet Earth". Sounds good, but is it? Consider that it was created by American, Continental, Delta, Northwest and United Airlines in an attempt to avoid being marginalized as mere service providers. Like all the others it tries to bundle together hotel and car rentals with the increasingly cheapened commodity of air transportation. Consider also that the travel industry has piled up their own travel agents as collateral damage in their fight to undercut one another, turning their advocates and salespeople into competitors. This "channel conflict", as it is known, should be familiar to anyone in the computer industry where the likes of Compaq, HP, Microsoft and Novell try to sell direct to big customers after resellers establish the accounts. A weak analysis but interesting set of links is here. It looks to me like an attempt at collusion not disintermediation. It walks enough like a duck that in 2001 the U.S. Department of Transportation issued a report and at the urging of Congress launched an investigation but came to the narrow conclusion that at 24% market share Orbitz was not able to control the market (Reuters report at news.com). That interpretation fails to consider that by squeezing out the travel agents, restricting access to alert and delay data, granting sweetheart deals to itself and leveraging the hub and spoke airport scheme against hoteliers they do have a strong influence and a strong incentive to try to get away with as much as they can before the next peek at their business practices, something the current Administration is unlikely to order. For us the rule is: check the fares online but also call the travel agent.

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