FOR
IMMEDIATE RELEASE
Friday,
April 13, 2001
Contact:
Bill Mosley
Tel.:
(202) 366-5571
DOT
34-01
DOT Decides Not To Prevent Orbitz’s Launch
The U.S. Department of Transportation (DOT) has concluded that it will not prevent Orbitz, an online travel agency being developed by five major airlines, from beginning operations or require it to change its business strategy at this time
The department began its investigation due to concerns that Orbitz would unfairly reduce competition in the airline and airline ticket distribution businesses. In a letter to the company outlining the status of its investigation, the department said that it had concluded it did not have evidence that would justify stopping the company from beginning operations. However, DOT also told Orbitz that it would review the company’s operations after its scheduled launch in June to ensure that its actual operation will not be anticompetitive.
DOT will require Orbitz to report within six months from the date of official launch on the implementation of its business model and to disclose any changes from the plans and procedures examined by the Department. If Orbitz conducts its operations in a way that violates antitrust laws or principles, the department has the power to take effective action at that time and has said that it will do so.
The department noted that Orbitz will obtain its fare and schedule information from sources already used in the marketing of air transportation, thereby reducing concerns that it would enable its owners to collude on fares.
In addressing concerns that Orbitz would have exclusive access to the airlines’ lowest fares, the department noted that the company is not requiring airlines to give it exclusive access to any fares or denying access to such fares to competing travel agencies. Orbitz will give rebates to airlines that make all of their publicly available fares available for sale through its system, but the airlines are free to offer such fares through other travel agencies.
The department noted that Orbitz may create new competition in the online travel agency business, which is inherently desirable. DOT further noted that federal law gives airlines and their agents as much flexibility as firms in other industries to decide how to sell their products and services, as long as they do not use unfair methods of competition.
DOT said that it should not hinder innovation unless and until there is sufficient evidence of anticompetitive conduct, adding that it intends to address related concerns about the airlines’ use of the internet. These issues, which will be addressed through DOT’s current rulemaking on computer reservation systems (CRSs), include consumer protection through adequate disclosure on travel websites, and the role of so-called “neutral” sources of information in consumer choice. The department’s CRS rules currently do not cover online travel agency activities.
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