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Tech Industry

Microsoft wants DOJ to investigate airlines

MSN Expedia, the software giant's Net-based travel group, and other agencies will ask the feds to investigate possible antitrust practices by U.S. airline carriers.

    Business makes strange bedfellows, indeed.

    On one front, Microsoft continues its battle in the landmark antitrust case brought by the Justice Department. On another front, the software giant is turning to the federal agency to investigate possible antitrust practices by U.S. airline carriers.

    MSN Expedia, Microsoft's Net-based travel services group, and other online travel agencies will be represented by three travel agency associations who are jointly filing a complaint against the airlines with the Justice Department. The associations include the Interactive Travel Services Associations, the American Society of Travel Agents, and the Coalition for Travel Industry Parity.

    "The filing, which is imminent, will ask the Justice Department to look at the anti-competitive practices of airlines in the way they are trying to control the sale of airline tickets over the Internet," said James Ashurst, a spokesman for the American Society of Travel Agents.

    "Travel agents book 80 percent of airline tickets currently," Ashurst said. "As the Internet continues to develop, travel agents should not be barred by business practices that make it nearly impossible to sell tickets through this medium."

    At present, travel agents receive a maximum eight percent with a $50 cap for airline tickets sold over the counter, industry experts noted. For tickets sold and processed over the Internet, the commission stands on average at five percent with a $10 cap at most large airlines.

    "At the moment the total online travel industry is just a blip on the screen," said David Kirby, the editor and publisher of the industry's Interactive Travel Report, adding that the online industry, which includes the airlines' own sites, book about two percent of all bookings.

    Still, he noted that even with only two percent of booking coming online, the top three online agencies fall within the top 50 of all travel agencies and are closing in fast on the top 20. "That is a fairly significant amount," Kirby added.

    "Airlines have made it quite difficult for online agencies," said Kirby. "It seems pretty clear that airlines what to drive traffic to their own sites."

    Kirby said that airlines will increasingly upgrade their sites to encompass services for all travel needs, from airline tickets, to car rentals, and hotel reservations.

    He cited a study by Jupiter Communications that said that by the 2002, 60 percent of all airline bookings will be done by airline sites.

    "All in all, it doesn't look so good for online travel agencies," added Kirby.