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Pull the Plug on Orbitz?
Opinion · April 15, 2002

These aren't the best of times for highflying Orbitz, the low-fare travel site owned by the nation's major airlines. The Justice Department is investigating the dot-com to determine whether its agreements with suppliers are anticompetitive. And a survey recently revealed that some of its airfares were up to $2,000 cheaper than those quoted by rival online travel agencies Expedia and Travelocity, suggesting that the government has every reason to be concerned.

Should someone just pull the plug on Orbitz?

Closing down the site would delight a long list of critics. Travel agents who are worried about what they call "disintermediation" - or being eliminated as middlemen - regard Orbitz as a poster child for the process. Orbitz competitors Expedia and Travelocity and their lobbying arm, the Washington-based Interactive Travel Services Association, want it gone, too. Never mind the journalists who cover Orbitz and have been put off by its arrogant corporate culture.

These groups don't need a good reason to see the lights go out at Orbitz. But the traveling public, which doesn't give a damn about disintermediation, profit margins or a company's conceitedness, deserves more. It should get an explanation for why it won't be able to buy a $185 ticket from Boston to Dallas, when the lowest fare it can find elsewhere online is $1,423 (those rates are courtesy of the survey published by The Wall Street Journal).

In order for the public to support a shuttering of Orbitz, the government - or someone else - must prove true anticompetitive behavior. Internal e-mails, documents or contracts that not only show Orbitz colluded with its airline owners to withhold the best fares, but that its long-term goal is to drive its competitors out of business so that it can then raise fares or ticketing fees indiscriminately. Transportation officials reportedly paid a visit to Orbitz headquarters in Chicago last month to review sales figures and business deals, looking for clues.

There are those who think the case against Orbitz is already compelling enough. How about revelations of the site's Most Favored Nation clause, which prevents airlines from offering low fares to other sites without also giving them to Orbitz on the same terms? What about the dramatic difference in ticket prices between Orbitz and its other online rivals - isn't that evidence of some kind of wrongdoing? What of the site's owners, American Airlines, Continental Airlines, Delta Air Lines, Northwest Airlines and United Airlines? Isn't that enough?

Not really. The MFN clause is old news, leaked to the press when Orbitz was still called "T2" - shorthand for Travelocity Terminator. The fare spread, while remarkable, only proves that Orbitz offers low prices. As for the site's pedigree, there's actually an argument to be made that the airlines are passive investors rather than actively participating in the site's day-to-day decisions.

I believe Orbitz is so well-run that the airlines couldn't possibly have much to do with it. It's easy to navigate, intuitive and user-friendly. Its customer service is far better than what its airline owners offer their passengers. I recently heard from a reader who had inadvertently hit the "enter" button twice on her computer and booked two rooms for the same night at a hotel through Orbitz. I asked the site's customer service representatives about it and they promptly authorized a refund of the $102.20 no-show fee charged by the property. If I'd asked any of the owner-airlines a similar question, I'm sure I'd still be waiting for an answer.

So go ahead, shut Orbitz down. But not unless there's irrefutable evidence that site is run by monopolists who are conspiring to raise airline ticket prices. Not without a figurative smoking gun that's evidence of anticompetitive behavior. Not without proof that Orbitz will hurt the traveling public permanently and irreparably.

Good luck.

Christopher Elliott is a travel commentator based in Key Largo, Fla. All e-mailed questions may be edited, condensed or republished at the site's discretion.