DOT Gives Orbitz a Yellow Light: Serious Competitive Issues To be Closely Monitored

Apr 16, 2001, 01:00 ET from ITSA

    WASHINGTON, April 16 /PRNewswire/ -- While the Department of
 Transportation's decision not to interfere with the launch of Orbitz, the
 major airline jointly owned travel web site, is disappointing, the agency's
 decision gives a yellow caution light to the airlines' new online venture.
     "We never urged the government to prevent Orbitz's launch," said ITSA
 Executive Director Antonella Pianalto.  "Rather, we advocated that the DOT and
 Department of Justice closely examine the arrangement and suggested that
 action be taken to correct the anti-competitive flaws in Orbitz's exclusive
 access to discounted Internet fares before its launch."
     DOT has all but ignored the compelling views expressed by 23 of the
 nation's state attorneys general, members of Congress, major consumer
 organizations, an MIT economics professor, smaller airlines and online and
 bricks and mortar travel agents by choosing not to alter the current structure
 of Orbitz's joint venture agreement or its Charter Associate contract, even
 though there is a serious potential for collusion and anti-competitive
 activity.
     Although DOT didn't flash a red light, it didn't give Orbitz a green one
 either. DOT stated clearly that it has "serious concerns about incentives
 toward exclusivity, however limited ... (and) will monitor these developments
 closely."  Also, DOT concluded that implementation of Orbitz business and
 operating plans "may give rise to competitive concerns," and that government
 intervention should "be designed to correct a failure of market forces."
     "Despite DOT's decision, we are encouraged that DOT has "lingering
 concerns that Orbitz may operate in ways which might be anticompetitive and
 will monitor those concerns after launch ..."
     "We are also hopeful that through the serious ongoing investigation at the
 Department of Justice, antitrust enforcers will use their authority to protect
 competition by preventing Orbitz from using an exclusive arrangement with its
 airline owners to the detriment of competitors and consumers," said Pianalto.
     ITSA is the trade association for the online travel services industry.
 
 

SOURCE ITSA
    WASHINGTON, April 16 /PRNewswire/ -- While the Department of
 Transportation's decision not to interfere with the launch of Orbitz, the
 major airline jointly owned travel web site, is disappointing, the agency's
 decision gives a yellow caution light to the airlines' new online venture.
     "We never urged the government to prevent Orbitz's launch," said ITSA
 Executive Director Antonella Pianalto.  "Rather, we advocated that the DOT and
 Department of Justice closely examine the arrangement and suggested that
 action be taken to correct the anti-competitive flaws in Orbitz's exclusive
 access to discounted Internet fares before its launch."
     DOT has all but ignored the compelling views expressed by 23 of the
 nation's state attorneys general, members of Congress, major consumer
 organizations, an MIT economics professor, smaller airlines and online and
 bricks and mortar travel agents by choosing not to alter the current structure
 of Orbitz's joint venture agreement or its Charter Associate contract, even
 though there is a serious potential for collusion and anti-competitive
 activity.
     Although DOT didn't flash a red light, it didn't give Orbitz a green one
 either. DOT stated clearly that it has "serious concerns about incentives
 toward exclusivity, however limited ... (and) will monitor these developments
 closely."  Also, DOT concluded that implementation of Orbitz business and
 operating plans "may give rise to competitive concerns," and that government
 intervention should "be designed to correct a failure of market forces."
     "Despite DOT's decision, we are encouraged that DOT has "lingering
 concerns that Orbitz may operate in ways which might be anticompetitive and
 will monitor those concerns after launch ..."
     "We are also hopeful that through the serious ongoing investigation at the
 Department of Justice, antitrust enforcers will use their authority to protect
 competition by preventing Orbitz from using an exclusive arrangement with its
 airline owners to the detriment of competitors and consumers," said Pianalto.
     ITSA is the trade association for the online travel services industry.
 
 SOURCE  ITSA