Orbitz faces Justice probe

By Jayne O'Donnell
USA Today

WASHINGTON — The Justice Department has subpoenaed major airline owners of the travel Web site Orbitz, a sign that its lengthy review has evolved into a formal probe into whether the site's contracts with airlines violate antitrust law.

Justice officials are trying to find out how often airlines are giving the lowest fares to sites other than Orbitz and whether Orbitz's contracts amount to an agreement between airlines not to compete vigorously, according to lawyers familiar with the probe.

Orbitz competitors claim the airline site often posts the lowest fares and some that aren't available on any sites other than the airlines' own.

While that might make fare-shopping easier for consumers now, competitors say airlines will have little incentive to continue slashing fares on Orbitz if other sites cease to be competitive. In less than a year, Orbitz has become one of the top Web sites in airline ticket sales, along with Travelocity and Expedia.

Those issues were raised with government officials before Orbitz started last June. The Department of Transportation said then that Orbitz could increase competition among travel Web sites, but promised to keep the matter under review.

Orbitz's fast growth and a continuing clamor from competitors have spurred both agencies to look closely at the Web site's impact.

The DOT's Orbitz review appears to dovetail with its preparation of new rules governing the computer reservation systems that travel agencies on and off the Internet use to compare fares and book air travel. Airlines are required to treat all reservation systems equally. If the DOT extends the rules to Web sites, airlines could be required to list the same fares on all Web sites as they now do for reservation systems.

Orbitz says it's the best deal for consumers, because it's the best deal for airlines. Airlines say they pay higher fees to other reservation systems than they pay to the system Orbitz uses.

Cendant's move last year to buy Web site Trip.com is also expected to factor into the Justice probe. Cendant also owns a reservation system, Galileo, and it aims to turn Trip.com into a major Internet seller of travel services. If Orbitz was crushing competition as other travel sites claim, new competition would be unlikely, some antitrust experts say.

"There's clearly plenty of room in this industry for more competition," says Orbitz' Carol Jouzaitis.

The Justice Department could sue Orbitz to force it to drop clauses in contracts with airlines that encourage them to give Orbitz the best fares. The DOT could issue a "cease and desist" order against Orbitz if it found airlines were colluding on prices.