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Buy.com in deal with United Airlines

The duo will jointly operate BuyTravel.com, to launch later this year with much the same inventory of airline tickets, hotel rooms, and travel packages as other travel sites.

Buy.com is expanding its online store again, this time by forming a partnership with United Airlines.

Under the agreement, announced today, United and Buy.com will jointly operate BuyTravel.com. Expected to launch later this year, the site will offer the much the same inventory of airline tickets, hotel rooms, and travel packages as other travel sites, according to Buy.com spokeswoman Jennifer Blanchfield.

BuyTravel.com will be unique in becoming the first third-party site to offer United's discounted excess-inventory fares, however. Buy.com and United also will attempt to market such excess-inventory fares from rival airlines, Blanchfield said.

Buy.com's entry into the online travel market comes as observers have started predicting a shakeout in the industry. According to Forrester Research, leading travel sites such as Yahoo, Expedia, Travelocity and Southwest Airlines will reinforce their dominance in the near future, freezing out mid- and lower-tier players.

Because general travel sites such as Travelocity and Expedia have been operating for years, International Data Communications analyst Barry Parr thinks it's a little late for anyone to try to build a standalone travel site. But Parr said that Buy.com should be able to use its customer base to build the travel site.

"Buy.com has lots of customers that trust them to have the lowest prices," Parr said. "The move makes sense."

Under cover of Amazon.com's well-documented growth, Aliso Viejo, California-based Buy.com has quietly expanded its own offerings. Although the company added a music store and a surplus electronics store in May, the company doesn't want to compete toe-to-toe with the Amazons of the world, but instead wants to become an "e-commerce portal," according to Blanchfield.

"We're not looking to be the next Wal-Mart," Blanchfield said. "We're looking to get into the key markets and provide customers value in those areas.

Buy.com's move is one of the first it's commented on publicly in months. The company has been in a self-imposed quiet period since April, when it began shopping itself around to investment bankers interested in taking the company public.

That the company has not yet filed an IPO is testament to the fear investors have of the company's low-price model, analysts say. Buy.com has pledged to sell its non-surplus products at prices lower than online competitors, and promises to refund the difference if customers find a lower price elsewhere.