Orbitz Debuts Air Discount Deal

Site offers UA coupons to customers booking cruise or vacation packages through Jan. 20

By: R. Scott Macintosh

In its efforts to become the premier site for online travel shoppers, Orbitz is offering a new cruise and vacation promotion that includes discounts on United Airlines, an arrangement it hopes will be just the first to involve its airline owners.

Orbitz, which was created by five major domestic carriers including the bankrupt United, is offering the travel incentive through Jan. 20 as a part of a “wave season” promotion. It is the first time the Internet site has paired cruise and vacation packages with airfare discounts.

Customers are given coupons worth a total of $100 or $300, depending on the length of their cruise or vacation packages, that can be used for tickets anywhere that United flies.

Although the travel coupons are good through Dec. 15, the future of the bankrupt airline itself is uncertain as it struggles to reorganize under Chapter 11.

“We don’t expect there to be any changes,” said Barbara Buckridge, the vice president of transportation for Orbitz. “If something were to happen, United would have guidance in terms of protection just as in the terms of their tickets.”

Regardless of United’s future, Orbitz plans to work with all of its airline owners on similar promotions as it expands its online products to encompass more categories. For example, deals involving rental cars to hotels to getaways all potentially could be packaged with incentives to fly.

“A lot is under development,” said Buckridge. “We are always trying to pull together from our resources. We have many different opportunities to work with the airlines.”

Since Orbitz was launched in 2001, its airline ownership has raised concerns among competitors about the company’s ability to dominate the distribution and pricing of airline tickets. The anti-trust question has involved Orbitz in lawsuits and government investigations.

For competitors, Orbitz’s business practices are questionable because of its ability to use its own suppliers to create packages that no one else can offer.

“It’s unfair competition,” said Pat Funk, vice president of operations for the Association of Retail Travel Agents (ARTA). “Our average member couldn’t begin to touch this type of thing.”

On the whole, Orbitz is just one part of an industry radically changed by technologies that allow suppliers to make transactions more directly with buyers, ultimately lowering the price of travel and making it difficult, if not impossible, for traditional distribution systems to compete on price.

So far Orbitz has cleared anti-trust investigations by the U.S. Department of Transportation, which last fall rejected charges by the American Society of Travel Agents (ASTA) that Orbitz engaged in anti-competitive practices. Last month a federal audit cleared the company of similar allegations, concluding that Orbitz had not gained enough of a market share to control online pricing. Orbitz is the third most used travel site, behind Expedia and Travelocity.

In another challenge to Orbitz, a federal judge in Los Angeles is expected to rule this month on whether a lawsuit filed by five travel agencies can be pursued as a class action.