LOS ANGELES Downplaying the U.S. Department of Transportation’s
determination that Internet fares do not need to be regulated, the
chairman and CEO of Orbitz emphasized his firm’s commitment to
customer service in a speech at the PhoCusWright Executive
Conference here.
Although critics continue to rail against the travel site
including five California agencies who filed an antitrust lawsuit
Jeffrey Katz said his company’s unwavering focus continues to be
its customers.
“As long as we are an airline-owned entity, that’ll be the
case,” Katz said of the ongoing criticism. “We spend most of our
time on our customers and customer satisfaction. That we continue
to do very well.”
Katz briefly discussed the DOT’s recent decision not to extend
GDS rules to Orbitz and its Web competitors, saying only that his
company clearly differs from the GDSs and, therefore, does not
warrant such regulation.
Instead, he focused on what he called the bright spots in the
current travel climate, citing a 6% increase in travel this
Thanksgiving over last year. Internet travel spending in general is
up nearly 40% for 2002, coming against an 8% decline in travel
spending overall, he added.
He also spoke highly of Orbitz for Business, the corporate
travel product launched in September, proclaiming that a corporate
customer with a $4 million annual travel budget can save $800,000
per year on fares and fees.
Orbitz’s Supplier Link technology, which lets airline suppliers
process Orbitz transactions without a GDS, also has proven popular,
Katz said. Three of Orbitz’s airline owners American, Continental
and Northwest participate, and another eight carriers, including
non-Orbitz owners, are set to join the arrangement in the next
quarter.
Katz said he wouldn’t rule out the possibility of Orbitz someday
offering agents a booking tool alternative to the GDSs, but he said
nothing is planned now.
Traditional agencies don’t offer Orbitz much in the way of
competition, added Katz, who suggested offline agents are
old-fashioned and unable to compete with companies such as his
own.
“Our competition today is for the heart of the traveler whose
ultimate tendency is to call Myrtle,” Katz said. “I like Myrtle,
but I don’t think she has what it takes to compete. Orbitz has good
customer service 24 hours a day and low prices. Who else offers
that?”
Katz rejected claims that Orbitz’s existence stifles
competition, stating that the company’s airline owners actually
conceived of the site “to create competition and opportunity” when
Travelocity and Expedia were “duopolizing” the online market.
Corporate Two-Step
Also at the travel industry research firm’s conference:
" PhoCusWright President Philip Wolf said that the major online
players’ expansion into corporate travel has been one of the major
stories of the year, along with Web fares.
Expedia last week introduced its own corporate travel
product.
“It’s like a dance hall where the music got turned up louder and
faster, and everybody’s stepping on each other’s toes,” Wolf
said.
" Paul Blackney, president and CEO of Worldspan, spoke about the
challenges facing traditional agents, predicting that traditional
agents will account for just over half of all travel purchases
within five years. Noting the shift online, he said Worldspan has
diversified itself from a GDS into a technology provider for
multiple sales channels.
In mid-December, the company is scheduled to roll out a product
for agents that provides published, negotiated and Web fares in a
single search. Worldspan teamed with FareChase on development of
the product, Total Fares.
" Barry Diller, chairman and CEO of USA Interactive, said his
company’s long-awaited travel TV channel and accompanying Web site
will be launched sometime in the second half of 2003. The
as-yet-unnamed entity represents a “screen-indifferent approach” to
selling travel, Diller said one that will mirror the path his
company took with the Home Shopping Network and corresponding
HSN.com site.
" John F. Davis, chairman and CEO of Pegasus Solutions,
suggested that online travel sites should aggressively pursue
merchant-model hotel room sales, whereby agencies buy the rooms in
bulk and resell them with a sizable margin built into the
price.
Merchant-model room sales now account for less than 2% of all
room nights, but Davis predicted that number could be as large as
10% in the next few years.
