DOT refuses to block launch of Orbitz travel Web site

While many critics of the unlaunched, airline-backed travel Web site Orbitz claim that it is an anticompetitive monster in the making, the U.S. Department of Transportation ruled Friday that a company has to actually do something anticompetitive before it can be branded anticompetitive.

Set to launch in June, Orbitz has the financial backing of United Airlines Inc., American Airlines Inc., Delta Air Lines Inc., Northwest Airlines Inc. and Continental Airlines Inc. More than 20 state attorneys general and the American Antitrust Institute lobbied to block Orbitz's launch or to radically alter its business plan of offering the lowest available Web air fares. The DOT instead viewed Orbitz as a potentially consumer-friendly entrant into the travel distribution arena.

DOT officials determined that there was no evidence sufficient to stop the Web site's launch, but they promised that the department would review Orbitz's operation in December to see if the worst-case scenarios envisioned by critics come true. The agency noted that Orbitz will be obtaining its fares from publicly available sources and had struck no deals giving it exclusive rights to the lowest fares of its airline owners.

In a statement on Friday, Jeff Katz, chairman, president and CEO of Orbitz, said, "Orbitz continues moving full-speed toward its June launch following today's release of a DOT letter giving Orbitz the green light."

Wrangling over the Chicago-based company began a year ago, when the DOT announced its investigation and the Senate Commerce Committee scheduled a hearing to discover more about Orbitz's business model. Since then, no legislation has been filed seeking to block the site's launch, and the DOT inspector general determined Orbitz wasn't organized to be anticompetitive.

Henry Harteveldt, a senior analyst at Cambridge, Mass.-based Forrester Research Inc., believes Orbitz's addition to the marketplace will be good news for consumers because it can challenge Inc. and Expedia Inc. for market dominance.

Travelocity had been particularly active in lobbying against Orbitz, and Harteveldt said he hoped the DOT ruling would push all three companies to focus more on business than infighting.

"It's time for these guys, all of them, to stop behaving like political brats," he said. "All they've been doing is making a bunch of policy institutes and lawyers rich."

The Department of Justice still has an open investigation of Orbitz. But last summer, that agency indicated that it was awaiting the DOT report before it took any definitive action.


Copyright © 2001 IDG Communications, Inc.

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