Judge sides with American Airlines in Orbitz pullout [BREAKING]

American Airlines OrbitzThe verdict is in! In the legal battle between Travelport and American Airlines over the latter’s decision to pull its inventory out of Orbitz, Judge Martin Agran decided in favor of American Airlines. Orbitz has been ordered to stop selling the airline’s tickets and displaying its fares.

American announced last month that it would be withdrawing its inventory from Orbitz as early as December 1, 2010 in a bid to streamline its booking operations and trim some cost. This is a clear outcome of the change in economic conditions, as airlines have gained more negotiating power relative to online travel agencies as a result of the slow recovery. Customers with more disposable income don’t have to hunt as hard for bargains, putting the booking sites at a disadvantage heading into 2011.

According to a statement by the Business Travel Coalition:

While the outcome unfavorably impacts Orbitz customers and Orbitz For Business corporate clients, by reducing fare searching, booking and servicing efficiencies, travel professionals the world over have recognized that this lawsuit represents merely the opening skirmish in the larger battle for the future of the open marketplace for travel.

Business Travel Coalition Chairman Kevin Mitchell explains, “The stakes in this conflict are clear: either an improved airline industry and distribution marketplace centered around the consumer, or one that subordinates consumer interests to the self-serving motivations of individual airlines endeavoring to impose their wills on consumers and the other participants in the travel industry.” He adds “Single-supplier direct connect proposals, like the one advanced by American Airlines, can cause massive fragmentation of airfares and ancillary fees depriving consumers of the ability to compare the total cost of air travel options across all airlines.”

Unsurprisingly, the business travel community isn’t thrilled with American’s move to pull out of Orbitz. In a recent survey, the Business Travel Coalition found that 94 percent of travel managers say that “access to all airfare and ancillary fee information is either indispensably important or very important for their corporate managed travel programs.” And, 98 percent oppose the American Airlines strategy of disintermediation via the Direct Connect initiative.

The consumer side of the travel world is also less than thrilled with this legal development.

The Consumer Travel Alliance released a statement opposing American’s decision, as well. Charlie Leocha, the organization’s director, said, “At its core, this dispute has nothing to do with business agreements, legal arguments, or distribution technologies. This is simply a heavy-handed attempt by American Airlines to prevent consumers from easily searching and comparing its fares against those of other airlines. In short, the only ‘direct connect’ American really seems to want is a ‘direct connect’ to consumers’ wallets.”

Ratcheting up the intensity, he continued, “American appears to have no idea why we fly. We fly to get from point A to point B in the most convenient and cost-effective manner possible. We don’t fly to be manipulated by proprietary airline reservation systems that limit our choices, prevent comparison shopping, and hide the real cost of travel.”

Keep in mind that these reactions are to the American Airlines strategy and not to the legal decision.

So, what does this mean for you? Well, if you don’t fly American or use Orbitz, your world doesn’t change at all. If you do use Orbitz, it looks like you won’t have access to flights on American Airlines. American Airlines loses access to the Orbitz customer base, which likely consists heavily of bargain-hunters and occasional leisure travelers … not the stuff on which you build a business, frankly. With consumers becoming more comfortable spending again – not to mention the loosening of corporate travel budgets, which is arguably more impactful – airlines are back in the driver’s seat. If you buy because of brand loyalty to American, your world won’t change – likewise Orbitz.

UPDATE: Click here to see what Orbitz has to say about the ruling.

[photo by boeingdreamscape via Flickr]

TSA to impede travel market recovery? Not buyin’ it

TSA airport security

When I finally crawled out of bed and caffeinated Saturday morning, I made the rounds on Twitter and found a bold statement by travel journalist Christopher Elliott: “Thanks to TSA, 2011 could be a flat year for travel”. Despite the digging he did, I’m just not buying it. Passenger inconvenience, especially when it comes to leisure trips, isn’t likely to have a major effect on the travel industry in 2011.

You’ve read it from me on Gadling before: it isn’t the leisure traveler that defines the travel market; it’s the business traveler. These are people who have no choice but to hit the road, whether because they are instructed by their bosses or because they recognize business opportunities that they need for growth or simply to keep their companies alive. As business conditions continue to improve in the broader economy, demand for flights is likely to increase, and those buying tickets will have relatively little choice in the matter.

We’re looking back on what’s shaping up to be a positive year for the travel industry, particularly the airlines. And, according to Elliott, on his blog, “2011 was shaping up to be the best year for travel since the recession began.” He cites expectations of higher prices, even if only slightly, but pent up demand by travelers for “long-postponed vacation[s].”

Thanks to TSA, 2011 could be a flat year for travel http://bit.ly/gsbOfTless than a minute ago via web

The next year of the recovery could be imperiled, however, by new measures implemented by the Transportation Security Administration, specifically body scanners. In fact, Elliott writes:

But now that the Transportation Security Administration has introduced full-body scanners at many American airports, and subjected those who opt out of the machines to an “enhanced” pat-down, the 2011 outlook has changed, say travelers.

To support this claim, he talks to Jeff Cohen, an Austin, Texas-based securities trader, who claims to be “torn about whether I’ll travel more next year or not.” Cohen tells Elliott he goes on “a couple of large trips a year” and had a big one in mind for the first half of next year, “to somewhere exotic.” Now, Cohen tells Elliott, “[T] he recent TSA crackdown has me rethinking that.”

Further, the Consumer Travel Alliance sees the traveling public as generally unlikely to increase its travel activity. Elliott continues:

A majority (46 percent) say they will travel “about the same” as they did this year. Slightly less than a third (30 percent) will travel more, while just less than a quarter (23 percent) will travel less. This contradicts several earlier surveys, which had predicted a significant upswing in travel next year.

The key word here is consumer. The focus, here, is on leisure travel. The needs of business travelers are again overlooked.

Let’s consider Cohen’s case for example. So, he’s rethinking his leisure travel plans for next year. If he has to hop on a plane to close a deal or bring in a new client, is he going to do that? Would he sacrifice a two-hour flight for a 10-hour drive do so? I don’t know the guy, but drawing on my white-collar experiences, I think I know how he’d react to a major business opportunity a few states away … and it wouldn’t involve turning the key to the ignition.

The business traveler really has little choice in whether to hit the road. Could he skip a business opportunity or pass on a project in favor of something local – or to wait for a gig nearby to arise? Of course. But, that would mean turning down the very fees that put food on the table. Sales professionals need to travel to bring in business, fulfillment teams (e.g., the folks who provide the good or service sold) may have to take to the friendly skies and support sometimes needs to be provided on site. This is just how the nature of commerce has evolved. If conditions continue to improve, more of these people will be buying plane tickets.

And, they’ll pay more for them.

The nature of business travel, given that it occurs in order to support subsistence or the accumulation of wealth (both important), is that it is inelastic, at least relative to leisure travel. There is effectively no choice but to get on a plane, unless extreme measures are brought into the equation. Since business travel relatively inelastic, these travelers will pay more, which supports a continued travel industry recovery.

The fact that business travelers tend to be willing to pay more for their tickets also means that they have less choice in whether to fly. Sure, there are tools out there such as videoconferencing and online collaboration software that can provide a substitute, but a recovering market means that there’s more capital available, which facilitates investment in face-to-face meetings. When your boss tells you to travel, you travel.

As a result, the decision to travel is itself relatively inelastic for the business traveler.

So, if the business traveler is the backbone of the travel industry recovery, the TSA is unlikely to get in the way in 2011, even if every passenger listens to the snap of a rubber glove before an invasive pat-down begins.

Now, let’s take a closer look at the leisure traveler. The impact of the TSA security measures may involve a bit of hype there, too.

Even before Thanksgiving, the close to two thirds of consumers thought the body scans weren’t a big deal, with 70 percent stating they didn’t expect the enhanced security measures to slow travel down during the busiest travel season of the year.

Further, economic growth, if it occurs, will provide consumers with more disposable income. Those who have an interest in travel are likely to become more ambitious, taking the trips they’ve always wanted to. Elliott finds many who disagree with this assessment, but there’s nothing like having a freshly filled checking account to alter your perspective.

We all love to hate the TSA, and I’ll admit that I’m among the many in that camp. There’s nothing worse than waiting in a long security line at a crowded airport. The notion of having to devise and carry out strategies for getting through the checkpoints faster indicates the absurdity of what goes on in airports today. Efficiency is as low as customer service, and there’s little we can do about it.

That said, will body scans and pat-downs impede a travel market recovery next year? It doesn’t seem likely. General global economic trends will determine how many people get on planes next year, not the policies crafted and implemented by government employees.

[photo by oddharmonic via Flickr]

Turkey-nomics: Five reasons airline fees irritate OpenSkies CEO this Thanksgiving

Thanksgiving turkeys and air travel economicsWe’re all fed up with just about every aspect of air travel. The seats are cramped, the employees are rude and the TSA is trying to feel us up. We’re told that fares are cheaper than ever, but nobody seems to care about the high rates of unemployment and under-employment that have come to characterize our economy … meaning that these “cheap tickets” have a proportionately higher impact than appearance would dictate.

Meanwhile, the extra fees being tacked on haven’t been a big hit with most consumers, leading to an additional dose of animosity this holiday travel season. Well, one air carrier is fighting back. Dale Moss, CEO of OpenSkies, seems to be pretty fed up with the situation. In response to a report by the Consumer Travel Alliance, he took the time on the OpenSkies blog to remind his customers that his airline doesn’t charge extra fees for anything.

So, what got Moss all charged up? The Consumer Travel Alliance did some digging into the issue of hidden airline fees and found some disturbing (and downright bizarre) data:


1. Turkey equivalents: appalled at how much your Thanksgiving bird cost you this year? Well, Americans will buy the equivalent of 12.6 million of these gobblers when paying the extra fees associated with air travel during the holiday.

2. The big number: in case you aren’t tuned in to turkey economics, that adds up to $167 million in additional fees paid by consumers.

3. The small number: it’s based on the average cost of a 12-pound turkey this year: $13.25.

4. The profundity: the airlines could use this extra cash to buy a 12-pound turkey for every household in California.

5. The affected: according to the Air Transport Association, 24 million Americans will take to the skies during the 12-day Thanksgiving holiday travel season.

“Feathers are flying over hidden airline fees, because Americans are justifiably angry that they can’t see the true costs of air travel, nor compare the price of different flights against one another,” said Charles Leocha, director of the Consumer Travel Alliance. “Airlines expect consumers to dig through thousands of words of gobble-gobbledygook to find even the most basic fees. We say stuff that. It’s time to talk turkey and show consumers what their tickets will cost with all the fixings included.”

[photo by richcianci via Flickr]

Consumer Travel Alliance report finds major U.S. airlines not disclosing most fees on websites

A typical passenger traveling from Washington, D.C. to Orlando must check seven airline websites, visit 47 web pages and scan 11,000 words to find baggage fees alone, states a new report issued by The Consumer Travel Alliance, a non-profit organization promoting consumer interests on travel policy issues.

The CTA analysis tracked the time and effort it would take a typical two-bag traveler needing extra legroom to find and calculate the total cost of a flight from Washington, D.C. to Orlando, Florida. The analysis not a single one of the seven airline websites in the study offered a page or chart with specific fee information regarding extra legroom or seat upgrades. Although the airline sites disclosed baggage fees, those fees were often multiple clicks away from the main page and buried in diagrams and legal fine print.

“The airlines are asking travelers to put on a blindfold and hand over their wallets every time they buy a ticket,” said Charles Leocha, director of the Consumer Travel Alliance. “There is no way for a traveler to find the vast majority of extra fees charged by airlines on their websites, because those fees aren’t even listed. That’s why two-thirds of air travelers said in a recent survey that they had been surprised by hidden fees at the airport. If airlines want to charge ancillary fees, they should be required to disclose those fees through every distribution channel in which they sell their tickets.”

The analysis also refuted frequent airline claims that all of their ancillary fees are listed on their websites. For example, a spokesperson for the airline industry told Bloomberg on September 17th that “fee information is already available on carrier Web sites.” In another news story, the same spokesperson said that “airlines post their fees on their websites …” and went on to claim that “there’s nothing hidden about the fees by the US airliners that have fees.”Earlier this year, CTA released the results of a study showing that hidden fees charged by airlines on popular routes can increase the base cost of an airline ticket by an average of 54 percent for a typical traveler with two checked bags and extra legroom, or by an average of 26 percent for a comparable one-bag traveler. One of the routes examined in that earlier analysis was used as the basis for this current review.

Travelers concerned about the issue of hidden fees can visit MadAsHell, a joint effort of the Consumer Travel Alliance, Business Travel Coalition, and American Society of Travel Agents, to sign a petition urging the U.S. Department of Transportation (DOT) to take action to make those fees fully transparent.

The analysis examined a single traveler with two checked bags wishing to obtain extra legroom on a flight from Washington, D.C. to Orlando, Florida. Base prices for the analysis were drawn from a popular online travel site. The analysis recorded the time and steps required to enter those fees manually, visit each of the websites of the seven airlines flying that route, attempt to locate the fees for checked baggage and extra legroom, and then calculate the full price of each itinerary.

[Image via Flickr user Fly For Fun]