Priceline, Northwest call it quits

The online travel agency stops offering the airline's tickets following a dispute over distribution terms.

2 min read
Priceline.com on Tuesday announced it has stopped offering Northwest Airlines retail tickets, following a dispute over distribution terms.

Priceline.com had already stopped selling the airline's tickets under its "Name Your Own Price" program in May 2002. Now it will stop offering Northwest tickets altogether, effective Tuesday, the company said in a statement to the U.S. Securities and Exchange Commission.

Lowestfare.com, which is is owned and operated by Priceline.com, will also stop offering the tickets.

"Ticket sales will be made up by other participating airlines, and (the company) does not believe the cessation of sales of retail airline tickets on Northwest Airlines will have a material adverse effect on its results of operations or financial condition," the statement said.

Northwest said in a statement that it will no longer offer the tickets "due to Priceline's high distribution costs, particularly global distribution system costs, on some of the airline's lowest-yielding ticket sales."

"Northwest concluded that is uneconomic for the airline to continue selling its product at Lowestfare.com. Northwest expects to sell these low-yield tickets through more cost-effective distribution outlets," according to the statement. The airline said that tickets sold through Priceline's sites accounted for a "very small amount" of overall ticket sales volume "and an even smaller fraction" of its revenue.

Northwest has had problems with another travel Web site, Expedia, over pricing. Yet the airline has an interest in online travel sales, being one of the founding members of Orbitz and the owner of an undisclosed share in Hotwire. Orbitz was recently acquired by travel and real estate company Cendant in a $1.25 billion deal.