The early results are in, and the new and controversial online travel site, Orbitz, is mostly living up to its promise of low fares and customer-friendly service. Orbitz was spawned in the late 1990s, when airlines were struggling to reclaim some of the revenue earned by travel agents and Web sites for distributing tickets (commissions paid for domestic flights totaled $2.1 billion last year). Five carriers – American, Continental, Delta, Northwest and United – joined forces to create what became Orbitz.
The Orbitz edge: Its airline partners have agreed never to offer lower fares to competing sites and to sometimes offer the best deals exclusively through Orbitz. In theory, that would mean that no competitor could beat Orbitz – but in the convoluted world of airline fares, theories sometimes work as well as yesterday’s boarding pass.
In some cases, Orbitz members offer lower fares on a competing site. How is that possible? Industry experts see a variety of explanations. For example, some sites may have access to ticket inventory that is sold through consolidators – essentially, tickets that are sold in bulk – which may be priced even lower than the ones offered directly by Orbitz members to the Orbitz site.
In addition, travel sites use different computer-reservation systems that have different inventory levels of certain tickets. So the tickets allotted to Orbitz at a certain low price may sell out more quickly than the tickets allotted to a competitor at the same or higher price. But once Orbitz’s cheapest deals are gone, a competitor’s price might slip below Orbitz’s next-best offer. Finally, ticket prices change by the second, and no matter how fast a computer system is, it can’t update deals instantly.
So for now at least, the charge by competitors that Orbitz is anticompetitive – designed to use the airlines’ power to set ticket prices and drive competing sites out of business – seems overblown. The U.S. Department of Transportation, which tentatively gave Orbitz a green light to launch this spring, plans to review it for antitrust concerns later this year.
Aside from pricing, Orbitz gets high marks. Its Web site sports a simple, airy and almost minimalist look – a welcome change from the cluttered electronic storefronts run by Travelocity and Expedia. What’s more, its booking mechanism is the best among online travel agencies. From fare search to purchase, buying travel on Orbitz is seamless and intuitive. But as our survey shows, Orbitz should be just one stop on your search for lower fares.
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