American Airlines Pulls From Orbitz In Negotiation Move

By November 04, 2010
American Passport

American Airlines will stop its partnership with online travel site Orbitz as of December first, unless a new contract is negotiated.

Orbitz announced AA’s move according to today, in a US Securities and Exchange Commission filing.

The airline is trying to prod Orbitz to acquire flight and fare information directly from the airline, rather than “through a global distribution system such as Sabre Holdings Corp. or Travelport LLC’s Galileo and Worldspan,” as Orbitz CEO Barney Harford explains in the same Bloomberg article.

While Harford said that there is no indication that other airlines will make this into a trend, there were still industry repercussions. The news caused a big stir, with the largest fall in Orbitz stock price since February, down eighteen percent according to GigaOm. Harford has referred to American Airlines’ effort as a “broad attack by American on the travel distribution landscape.”

Industry members are saying that American does not likely intend to stay off of Orbitz’s site. President of aviation consultant Ideaworks Jay Sorensen explains that American cannot afford to pull itself off of a global distribution source, and this move is a negotiation tactic and not a solution. He adds that the airline is not striving to remake the industry, but is simply threatening.

But American’s spokesperson, Mary Sanderson, disagrees with Harford’s summary of the situation. There are a “range of issues,” that the two companies are discussing, she says. Their conversation continues, wihle American Airlines pays millions of dollars to Sabre and Galileo, the previously mentioned global distribution systems that provide airline information to larger online travel agencies.

These systems that American Airlines has taken umbrage with are a source of great efficiency, according to Harford. An attempt by American “to force a move to a more restrictive distribution system may violate the airline’s contract.” Possible ramifications include either more airlines joining American, or responses from other online travel sites.

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