Orbitz Won't Take Off Until Spring
Travel Web site Orbitz has delayed its official launch
until next June to allow plenty of time to prepare for what it hopes
will be a deluge of customers seeking to book cheap airline reservations
and make other low-cost travel arrangements. The phased-in launch - which includes a "monster" beta test - is
aimed at perfecting customer service prior to launch, Orbitz chief
Jeffrey Katz told reporters during a conference call today. "We will
throttle the number of people that we'll let on there," he said, "because
you really want to ensure that there is (full) testing done. Until that's
done we don't want the world to hammer on Orbitz."
Next month Orbitz will open its airfare search engine so consumers
can compare prices, and in February will allow registered participants -
as many as 100,000 - to book flights through Orbitz. In April the
test will expand to include hotel reservations, auto rental and
other travel services, then comes the full launch in June.
The site's search engine finds the lowest fares, allowing participating
airlines to slash so-called computer reservation system (CRS)
booking fees paid by travel agents to search flight and fare data.
CRS fees for typical round trip flights cost $10 to $16, a cost that
could be cut by one-third.
The company previously envisioned a launch of June 2000, but
Katz does not see the one-year lapse as a setback. "The huge market
out there today and all the data....say the market is screaming for
something
different," he said, "and it is far better in my view to do it right
rather than
fast."
Consumers will be shown fare discounts ranging 35 percent to
70 percent, sometimes more, but most often at the lower end of the
range, Katz said. The search engine will scan online fares and other
offerings. "Web-only fares and normal fares are all going to be
presented as one integrated display. Anybody who wants to know what
his or her options are is going to see it best in Orbitz," he said, citing
consumer research.
The company, owned by American, Continental, Delta, Northwest
and United Airlines, has drawn criticism from consumer and
industry groups, as well as lawmakers. Concerns have led to
antitrust reviews by the Department of Justice (DOJ) and the
Department of Transportation (DOT), but Katz is confident that
Orbitz will be cleared in both investigations.
At a July hearing before the Senate Commerce Committee, DOT inspector
general Kenneth M. Mead told the panel that if Orbitz becomes successful
enough to eliminate its two major competitors - Travelocity.com and
Expedia.com - it could easily "develop the power to charge premiums to
other participating airlines, benefiting its equity owners to the
detriment of
other airlines and resulting in higher fares to consumers."
He urged establishment of interim provisions that would require airlines to
make available any fares they provide Orbitz to any other entity willing to
offer the same booking fee rebates as Orbitz.
Katz notes that Travelocity and Expedia hold more than 70 percent of the
business of offering multiple online airline schedules, charging that the
companies have resisted change that could help consumers. Orbitz
will take a 5 percent commission, the same as travel agents.
In addition to the five equity airlines, the site has signed up at least
25 charter carriers to include in its fare searches.
Orbitz is on the Web at http://www.orbitz.com.
Reported by Newsbytes.com, http://www.newsbytes.com.