t last, the Justice Department has
weighed all the evidence and has concluded that Orbitz is not evil.
Actually, that's a rough paraphrase. Orbitz might well be evil, but
that wasn't the question the Justice Department's antitrust experts
were trying to answer. The specific question was this: Does Orbitz
harm consumers?
Now there are lots of ways a company can harm consumers. It can
offer poor service. It can lie, cheat and steal. It can engage in
deceptive advertising, trickery, mind control, mass hypnosis, even
voodoo economics.
But in the narrow field of antitrust analysis, these don't count
for much. There actually are very few ways to harm consumers in the
context of antitrust law, and the biggest sin of all (some might
say the only sin) is to raise prices by reducing competition.
The Justice Department looked at Orbitz, looked at the date it
was launched (June 2001), looked at what has happened to air fares
since then (the phrase "like a brick" comes to mind) and concluded
that Orbitz could not possibly have caused fares to rise. Therefore
it has not harmed consumers. Case closed.
The question that was never asked is whether Orbitz is harming
airlines. Orbitz began life under the code name T2 (for Travelocity
Terminator). The airlines thought, at the time, that third-party
Internet sites were getting too big for their britches. The
airlines also were concerned that every sale through Travelocity
and Expedia would ring the cash registers over at Sabre and
Worldspan, eliminating one of the most promising features of the
Internet -- i.e., that it could bypass those greedy GDSs and their
ever-rising booking fees.
The strategy worked. Orbitz grabbed some market share and some
headlines, too, and the GDSs began to look for ways to keep the
airlines happy. Sabre, to take the leading example, offered
airlines essentially the same deal Orbitz did: It would reduce the
booking fees if they would allow Sabre to display all their cheap
fares.
So instead of just Orbitz, the airlines now have many more
places where they are contractually obligated to display fares that
will ruin their yields. Wouldn't it be ironic if the airlines tried
to dismantle Orbitz, only to trigger a Justice Department
investigation that such a move might "harm consumers"?
• • •
Thank you, Your Honor
his took entirely too long, but
U.S. District Court Judge James Rosenbaum finally got the message
and agreed that travel agents should receive the leftover funds
from the 1995 commission caps lawsuit.
This is the judge, you will recall, who presided over the
original class-action suit and who, when faced with a surplus at
the end of the case, twice decided to give the money to his
favorite charities. ASTA had to go to the U.S. Court of Appeals,
twice, to straighten him out.
Eight years after they were inadvertently left out of the
original litigation, we now can say to agents in Puerto Rico and
the U.S. Virgin Islands that the checks are in the mail.