Airline Ticket Brokers Face Antitrust Suit

FORT WORTH (CN) – In a federal antitrust complaint, American Airlines claims that Travelport and Orbitz conspired to monopolize the airline ticket business and exclude competitors, including American, and retaliated against the airline for creating its own “direct connect” system.




     Travelport operates three global distribution systems (GDSs), which provide flight and fare information from airlines to travel agents, and controls ticketing for a large number of business customers who use those agencies. “In the past year, over $2.7 billion of American’s sales were booked through Travelport’s GDSs,” the complaint states.
     “Because Travelport provides virtually 100 percent of the bookings for a large number of corporate customers whose travel agents subscribe to one of Travelport’s GDSs, it has monopoly power over American,” and charges the airline “tens of millions” in booking fees, which it shares with travel agents, the airline claims.
     American says it created its own efficient, less expensive direct connect system to provide booking services to travel agents. The airline says that Travelport is so threatened by this system that it has gone to great lengths to keep American out of the market, in an “unlawful multi-part anticompetitive scheme.”
     Travelport imposed contract terms on airlines to deter them from competing and has “incentivized travel agents to use Travelport’s GDSs exclusively,” American says. It says that Travelport has refused to deal with technology companies “whose products threaten to erode barriers to entry in the distribution of airline services to travel agents.”
     In retaliation for American’s direct connect system, “Travelport doubled American’s booking fees for reservations made outside the United States, and subsequently intentionally misrepresented American’s fares in a manner that made them appear more expensive than they actually were to consumers outside the United States,” the complaint states.
     “Additionally, Travelport caused American’s flights to be displayed less frequently relative to other airlines’ flights, thereby causing American to sell fewer airline tickets to customers traveling to and from the United States.”
     In short, American says, Travelport has deprived airline passengers “of the benefits of competitive distribution of airline tickets and product innovation.”
     The airline says that despite an agreement to work with American in implementing its new technologies, Orbitz – “the third largest online agency in the U.S.” – entered a contract with Travelport that prohibited it from forming a direct connect contract with any airline, including American.
     “When Orbitz’s failure to fulfill its direct connect obligations with American caused American to terminate Orbitz’s authority to book travel on American flights, Travelport agreed to make financial contributions to Orbitz to help make up for that lost business,” American claims.
     “Travelport, Orbitz, and other industry participants have, in fact, stood ‘shoulder to shoulder’ in punishing American for promoting the use of technology that could disrupt their monopolistic distribution system,” American says.
     Travelport sued American in Chicago in November 2010, claiming that the airline had been “putting its corporate knee on the neck” of Orbitz to get it to change its business model “to one that AA believes will more thoroughly stuff AA’s pockets.”
     American demands an injunction and damages from Travelport and Orbitz for antitrust violations and tortious interference.
     Its lead counsel is R. Paul Yetter with Yetter Coleman in Houston.

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