Just when you thought that the months-long battle between air carriers and travel portals was coming to an end, in come the legal eagles.
American Airlines parent AMR (NYSE: AMR) is filing a civil antitrust lawsuit against Travelport and Orbitz Worldwide (NYSE: OWW), hoping to recover monetary damages from the harm caused when the booking specialists booted AMR flights from their sites four months ago.
Orbitz obviously begs to differ. It points out that AMR decided to pull its fares from Orbitz.com. It consider the "baseless" lawsuit "the latest in a series of tactics to force Orbitz to adopt an airline ticket distribution model that limits consumer choice and inhibits competition."
See the overhead seatbelt sign that just illuminated? Buckle up. Things are about to get bumpy.
Expedia (Nasdaq: EXPE) didn't have a direct beef with AMR, but it still pulled American and American Eagle fares off its portal at the time, in solidarity with its peers. AMR and Expedia made nice last week, but apparently, that didn't pave the way for an industrywide truce.
If portals provide fewer choices, consumers stand to lose the most. But both parties in this dispute could also suffer from its consequences.
Orbitz now trades at a fraction of its 2007 IPO price of $15 a share. While the company started out posting losses, it's occasionally profitable these days. However, it has failed to keep up with the revenue growth pace of larger rivals priceline.com (Nasdaq: PCLN) and Expedia. Even travel deals publisher Travelzoo (Nasdaq: TZOO) now commands a larger market cap than Orbitz.
AMR hasn't had it easy, either. In addition to legacy carriers' well-documented shortcomings, airlines are now staring at skyrocketing fuel prices that they may not be able to entirely pass off to its passengers.
In short, rather than trading blows, these two bloodied companies should be working together for their mutual benefit. There's already enough turbulence without Orbitz and American's fisticuffs.
Who do you think is right in this battle? Share your thoughts in the comment box below.
