Online travel site Orbitz officially lifts off

With claims of technological superiority and unbiased results, Orbitz LLC has officially entered the lucrative online travel market.

Today marks the official launch of the Chicago-based start-up, which had been in test mode with beta users for several months.

Financed by Delta Air Lines Inc., Continental Airlines Inc., Northwest Airlines Inc., United Air Lines Inc. and American Airlines Inc. and supported by 450 other U.S. and international carriers, Orbitz has been the subject of antitrust inquiries by the U.S. departments of Justice and Transportation (see story).

The government has taken a wait-and-see attitude, but Orbitz's main competitors, Bellevue, Wash.-based Expedia Inc. and Fort Worth, Texas-based Travelocity Inc., are backing efforts to stop or curtail the venture, as is one airline, Dallas-based Southwest Airlines Co., which has accused Orbitz of publishing misleading and incorrect fare information (see story).

One big point of contention is whether Orbitz would automatically get unpublished fare information for which its competitors must bargain, said Kate Rice, an analyst at online travel research firm PhoCusWright Inc. in Sherman, Conn.

"That's still up for debate," she said, but if it is the case, it would raise questions about whether Orbitz was engaging in anticompetitive practices.

The published rates are those found on airline Web sites and those that are also sent to travel agents and online travel agencies through global distribution systems (GDS).

Sometimes, however, airlines want to sell tickets on flights that aren't full and will do so through unpublished discounted fares. For customers, these discounts can mean hundreds of dollars in savings on a single ticket.

While the legal fight will likely continue, the three big online travel sites are fighting for customer loyalty and claims of technological superiority.

Orbitz has built its technology from the ground up in about a year, said CIO Kevin Malover. Built by starting with the customer interface and then working backward, Orbitz searches airline, hotel, car rental, cruise and other vacation services for consumer fares, Malover said. While the service isn't yet intended for use by travel agents or businesses, a transition to a business-to-business model would be relatively easy, he said.

Malover said distributed object computing makes Orbitz better than its main competitors. "I think the difference is that we've taken the heavy lifting off the mainframe systems," he said. With distributed object computing, Orbitz can split its searches by type, so a hotel search would be done on a different server than an airline search, Malover explained.

Distributed object computing will also make it easier for Orbitz to eventually serve travel agencies, corporate travel services and corporate intranets.

Rice, however, said she is unconvinced, from a user standpoint, that the technology is any better. Expedia and Travelocity have been improving their search engines for years and they both have good features, she said. And Orbitz's claim that it can retrieve 10 times as many results is not a big plus, she added.

"You know, you don't need a zillion fares. You need one that's going where you want to go roughly when you want to go. That's what gets lost," Rice said.

However, since online travel sales are still a relatively small percentage of overall travel sales, and since online travel is one Internet market that is increasing despite the economic downturn, there is room for Orbitz, Rice said.

"It's just a market with huge potential, and I think there's room for a third player," she said. "They have to do a lot right and not make any mistakes."

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