Orbitz vows to cut airlines' costs
The online travel site launches Supplier Link, which lets it book reservations directly into an airline's reservation system, bypassing central ticketing systems.
The Supplier Link technology has gone live with American Airlines and will do the same with three more carriers, including US Airways, later this year. Orbitz, which is owned by a consortium of airline companies including American, said it has signed up a total of nine airlines to use the system.
Orbitz asserts that linking directly with Supplier Link can save airlines significant amounts of money by bypassing global distribution systems used by travel agencies and other travel sites. American, for example, could save as much as 77 percent on booking costs for every ticket generated through Supplier Link, Orbitz said.
Traditionally, travel agencies book flights by going through global distribution systems, such as Sabre, Galileo and WorldSpan. Under the global distribution system, airlines pay fees for each segment of a trip. For instance, a round-trip itinerary connecting through a hub would involve four segments. Orbitz said it would charge airlines a flat fee for each ticket, with no additional fees for segments, rebooking or cancellations. The company didn't immediately release the amount it will charge.
Orbitz CEO Jeff Katz said in a statement that Supplier Link could ultimately decrease consumer fares, though American's statement did not mention passing on reduced costs to consumers.
Critics of Orbitz have complained that its ties to the airlines give it an unfair advantage and enable the company to dominate the industry by offering lower fares than other sites or agencies.
The airline industry has been desperately looking for ways to trim costs as consumer and corporate spending on travel drops. Several airlines have eliminated the commissions they paid to travel agencies for booking flights.