Orbitz weighs in on American Airlines ruling [BREAKING]

by Tom Johansmeyer on

American Airlines is out of Orbitz as of today. This ends a legal tangle with Travelport that was initiated back in November when the airline announced its intention. According to a statement from Orbitz, “It is unfortunate that as of December 21, American Airline flights will no longer be available on our Orbitz.com and Orbitz for Business sites. We are confident that our consumer value proposition remains strong. Orbitz Worldwide has access to more than 400 airlines globally and sells tens of millions of air tickets each year.”

The statement explains that American Airlines tickets and “associated ancillary products – including destination services, car, hotel and insurance – booked on our Orbitz.com and Orbitz for Business sites accounted for approximately 5 percent of Orbitz Worldwide total revenue for the nine months ended September 30, 2010.” While American Airlines does not account for 5 percent of the online travel agency‘s revenue directly, the lost ticket sales comes with an additional loss of revenue based on customer behavior.

Orbitz believes that it will be able to generate enough ticket volume with inventory from other airlines to recoup most of what it is losing in regards to American and that it will “still continue to earn most of the associated ancillary revenue.” Further, Orbitz says it is still seeking an arrangement with American.

From the fourth quarter of 2009 through the end of the third quarter this year, Orbitz generated $800 million in sales for American airlines, which shows just how much was at stake in this relationship.

The full unedited statement from Orbitz is below:

“It is unfortunate that as of December 21, American Airline flights will no longer be available on our Orbitz.com and Orbitz for Business sites. We are confident that our consumer value proposition remains strong. Orbitz Worldwide has access to more than 400 airlines globally and sells tens of millions of air tickets each year.

[“]Revenue earned on American Airlines tickets and the associated ancillary products – including destination services, car, hotel and insurance – booked on our Orbitz.com and Orbitz for Business sites accounted for approximately 5% of Orbitz Worldwide total revenue for the nine months ended September 30, 2010. In the near term, we believe that most of this ticket volume will be replaced by other airline suppliers, and that we will still continue to earn most of the associated ancillary revenue.

[“]Orbitz Worldwide is one of the largest travel companies in the world. We will continue to seek an arrangement with American Airlines to distribute American’s tickets on Orbitz.com and Orbitz for Business. For the most recent four quarters that we have announced — from the fourth quarter of 2009 through the third quarter of 2010 – Orbitz Worldwide generated over $800MM of sales for American Airlines.[“]

[photo by

Judge sides with American Airlines in Orbitz pullout [BREAKING]

by Tom Johansmeyer on

The 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]

No parades at Disney’s California Adventure for most of 2011

by Leigh Caldwell on

One classic part of the Disney theme park experience – the afternoon parade – will be missing from Disney’s California Adventure for most of next year.

The Pixar Play Parade can be seen at the park through Jan. 3, but then it’s not expected back until November. The hiatus is a result of a major overhaul of Disney’s second California theme park.

The Orange County Register reports that Disney will have roaming street shows, called Pixar Pop-Ups, in the parade’s place. The mini-shows will feature characters from popular Pixar movies such as The Incredibles and Monsters, Inc.

The overhaul at Disney’s California Adventure is expected to be complete in 2012. Disney is spending $1 billion on the project to makeover the theme park. For most of next year, the major projects will be worked on.

What does that mean for visitors? Lots of construction walls, and temporary closings of corridors, eateries, shops and other venues at the park. While Disney regularly closes rides and venues for refurbishment, these kinds of major interruptions are always a risky business, because many potential visitors may decide to delay a trip to Anaheim until they can see the finished project.

[Image credit: Flickr user HarshLight]

Daily Pampering: Peninsula Hotel Beverly Hills adds glamour to guests stay

by Melanie Nayer on

In Beverly Hills, everyone is red carpet-ready, all the time. Photo ops are an art form and whether you’re in jeans or a designer gown, there’s always a reason to be red carpet-ready. Thanks to the Peninsula Hotel, Beverly Hills guests can also get their glamour on with the “The Red Carpet-Ready Experience.”

Just in time for the upcoming “Awards Season” in Hollywood, this unique Peninsula Academy offering is a unique opportunity for guests to be photographed in a style that captures the glamour of celebrities on the Red Carpet at a movie premiere, the Emmys, or the Academy Awards.

The “Red Carpet-Ready Experience” begins in the privacy of the guests’ hotel room or suite, with a hair professional stylist and makeup artist. The stylist will consult with female guests, who will have the unique opportunity to borrow exquisite pieces from the hotel’s exclusive Henri J. Sillam jewelry boutique to glamorize their gowns. The guests will then be photographed by award-winning Hollywood photographer Ryan Forbes, whose work has appeared in Town & Country, Conde Nast Traveler and Elle Décor.

For the full Red Carpet experience, guests can be photographed against The Peninsula Beverly Hills’ step-and-repeat banner, a backdrop like those used at Hollywood movie premieres and awards events. A week later the guests will receive a selection of proofs from which to select the perfect portrait.

The price for your red carpet debut? This Hollywood-style pampering costs you $950.

Want more? Get your daily dose of pampering right here.

Extra airline fees could mean better service! This is the FUTURE

by Tom Johansmeyer on

Soon, airlines could make all their profits on the extra fees you pay. Seriously. Yesterday, the Department of Transportation revealed that airlines have had their most profitable year since it started tracking the data back in 2002. And, a good chunk of revenue came from baggage fees, reservation change fees and ancillary fees. In the third quarter alone, it was good for more than $2 billion. So, the foundation is in place. All the airlines need to do is build on it.

And, it looks like some are trying to do that.

According to MSNBC, US Airways President Scott Kirby said that baggage fees and ancillary fees could add up to 100 percent of the airlines profits this year. We’re not talking about some future development, here. This is now. We’ve been talking for a while about how airlines are coming to rely on these fees. Last year, it was an issue of surviving the recession; this year, it’s been about driving profits. Regardless of prevailing economic conditions, it’s clear these fees aren’t going anywhere. It would stand to reason, therefore, that they’d become a larger part of airlines’ profits over time.

But, 100 percent? How would that work? Let’s take a look.First, think about the trend in reduced amenities, putting aside the weird stuff you read about this morning. Food isn’t free, and you’re paying for bags and premium coach seating (think exit row and bulkhead). This lowers airline costs on an available seat mile basis.

Now, what does it mean to lower costs? Well, it provides the elbow room to compete more effectively on fares – translation: cheaper tickets. So, in theory at least, this puts more butts in seats. The lower cost, however, erodes profit per available seat mile, because there isn’t as much revenue assigned to it.

This is where the fees come in.

If all you buy is a seat, you score! You’ll have the chance to get it for less than you would have paid otherwise. If you’re the kind of person who goes to the movies and sneaks in your own snacks, you’re all set. But, the minute you need something else, you’re going to have to pay. This is where the airlines can make their profits. Essentially, getting you into a seat becomes a marketing opportunity for everything you sell. Going back to the movie theater example, it’s equivalent to the previews you see that implore you to go out to the lobby and grab some popcorn. And, they can pump up the prices on food, liquor, bag-checking and so on to make up what they’re effectively giving away on a break-even seat.

Of course, this is a bit oversimplified, but you get the idea. The future of airlines may be to turn a cheap seat into an opportunity to up-sell you on everything else. Frankly, it isn’t a bad idea. In addition to making tickets cheaper, the flight attendants will need to sell in order to help the airline turn a profit. Sales without service is usually a fool’s errand, so a shift in strategy of this sort will lead to better passenger treatment. Maybe we’ll actually be treated like customers!

All these extra fees may not be such a bad idea after all. The airlines don’t realize this, but if they make all their money on the amenities, they’ll actually have to deliver an enjoyable experience.

Let’s pay less to pay extra and be treated like human beings in the process.

[photo by Augapfel via Flickr]