Just days after American Airlines Group Inc. (AAL) cut its ties with Orbitz Worldwide Inc. (OWW), the premier passenger carrier agreed to restore airfare listings on the online travel company’s website.
On Aug 26, 2014, American Airlines had pulled out its fare listing from Orbitz and two of the latter’s affiliate websites – Cheaptickets.com and ebookers.com – over a fee dispute. Beginning Sep 1, the carrier was also supposed to drop U.S. Airways’ listings from Orbitz. However, corporate customers could continue to book their tickets through ‘Orbitz for Business’.
However, last Friday, the two parties reached a mutual agreement that will reinstate fare information about American Airlines and U.S. Airways on Orbitz websites. The news pumped up Orbitz’s share price by 3.4% on Friday trade on Nasdaq, while American Airline’s shares closed the day marginally in the red.
Founded in 2000, Orbitz offers online booking of air tickets for American Airlines as well as peers like United Continental Holdings Inc. (UAL), Delta Airlines Inc. (DAL) and JetBlue Airways, among others.
It is worth noting that American Airlines and Orbitz had been caught in a similar dispute in the past, when the former withdrew airfare information from the latter’s website in 2010. Thereafter, in 2011, American Airlines had sued Orbitz claiming that the travel agency had downplayed the carrier’s flights in results reflected against customers’ search queries. That dispute was, however, settled last year.
We believe the possible impact that Orbitz apprehended on its turnover due to the pullout of the nation’s largest carrier from its website, led to the quick settlement of the dispute. It could have considerably dragged down Orbitz’s position vis-à-vis peers like Expedia Inc. and Travelocity.
On the other hand, American Airlines, which might have had a lesser impact on account of the pullout, will now have all major online booking sites offering their tickets, including Orbitz.
American Airlines currently carries a Zacks Rank #3 (Hold).
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