Enterprise pulls cars from Orbitz after dispute

By | March 29th, 2011

Enterprise Holdings, which owns and operates the largest fleet of rental cars in the world under the Alamo Rent A Car, National Car Rental, and Enterprise Rent-A-Car brands, will announce tomorrow that it is ending its relationship with Orbitz.com and its sister site CheapTickets.com on April 1 after “months of difficult discussions.” I asked Pam Nicholson, the president and chief operating officer of Enterprise Holdings, to explain the decision and what it means to travelers.

Why are you removing your inventory from Orbitz?

With Alamo and National on the Orbitz site for the last 10 years, we thought it only made sense to work with them to add our flagship brand, Enterprise, as well. However, after several months of good-faith negotiations with Orbitz, we are discontinuing our efforts.

What happened?

There are two important reasons. First, their curious decision to de-list our National and Alamo brands, which greatly limits consumer choice.

In addition, Orbitz is insisting on unacceptably high commission rates from the Enterprise brand, which, in turn, would make renting a car less affordable. That means none of Enterprise Holdings’ three brands will be listed on Orbitz.com or CheapTickets.com as of April 1.

Other than not being able to book any Enterprise cars on Orbitz, what effect will this have on consumers?

Enterprise Holdings and its regional subsidiaries continue to own and operate nearly one million vehicles, the world’s largest fleet of passenger vehicles. As a result, we are able to offer the Alamo leisure brand to deal-shopping customers as well as the National brand to business travelers and other frequent renters.

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In addition, Enterprise – the largest car rental brand in North America – is available both on and off airport and has the largest network of locations in the industry. Enterprise Holdings’ three car rental brands may still be booked directly online, through our websites, or through various other third parties such as travel agencies or online sites including Travelocity and Kayak.

Shouldn’t Orbitz have the right to carry whichever of your products it wants?

We have been serving car rental customers since 1957. We have learned many things along the way, particularly how difficult it is to fully meet the changing transportation needs of consumers with only one brand. As a result, we maintain three separate rental car brands at the airport, each with a unique service offering.

In my opinion, Orbitz’s current stance violates the best interests of consumers, our company and our industry. In fact, many consumers may not be aware that Orbitz intentionally limits the number of brands on its website.

Can you describe in terms my readers would understand what an “unacceptably high” commission rate is?

I can’t divulge specifics, but please keep in mind that we try to keep our car rental brands priced consistently on all online travel sites. So if one site begins charging unacceptably high rates, it can, in turn, have an impact on rates across the board.

So you’re worried this could snowball to other brands and other sites?

As the leader of the car rental industry, we have a responsibility to keep our product affordable and to aggressively advocate for the rights of consumers. For example, we lead our industry in the fight to curtail excise taxes that unfairly single out rental car customers. Today, rental car taxes account for as much as 20 percent of the cost in many markets, placing our industry’s customers among the highest taxed in the United States. These escalating taxes, combined with unacceptable commission costs imposed by third parties such as Orbitz, mean more and more consumers no longer will be able to afford to rent a vehicle.

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This isn’t the first dispute with Orbitz. In 2008, you sued the online agency, right?

Yes. In April 2008, we filed a lawsuit, which is a matter of public record, alleging that Orbitz was willfully violating their online listing agreement. At the time, we stressed that the lawsuit wasn’t just about Orbitz deliberately violating their contracts with Alamo and National, it also was about violating the trust of consumers.

We stated in our press release that the loss of revenue was bad enough, but what was much harder to calculate was the long-term impact on fair competition and consumer choice. We eventually reached an agreement with Orbitz, but our fundamental viewpoint on the importance of consumer choice and trust has not changed.

What would it take to resolve this?

We would have preferred a different outcome. At this point, it would take Orbitz maximizing customer choice at rates that keep car rentals affordable.

Orbitz responds:

We think Enterprise is a great company. We value the relationship. We entered into good-faith negotiations with a valued partner. We could not come to an agreement on economics and Orbitz has chosen to work with another supplier.

It’s important to point out that we’re going to continue to distribute Enterprise through our private-label business which powers a number of airline and other travel sites. And to they are going to still be distributed through Orbitz For Business.

Also, there is no termination, so that would be the wrong language to use. The contract ended.

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