American Airlines Group Inc (NASDAQ:AAL) announced earlier this week that their tickets will no longer be available through the online travel company Orbitz Worldwide, Inc. (NYSE:OWW)’s website. American Airlines management pointed out that the relationship with Orbitz was becoming too costly for them to handle. Henry Harteveldt of Atmosphere Research talked on CNBC about the announcement from American Airlines.
Harteveldt mentioned that the announcement was mainly due to failed talks between American Airlines Group Inc (NASDAQ:AAL) and the Orbitz Worldwide, Inc. (NYSE:OWW). Both the companies failed to arrive at an agreement on the business terms, costs, performance and technology, which forced this decision from American Airlines.
“[…] Orbitz just wasn’t performing, it was American’s worst performing online travel agency. They didn’t generate the kind of revenue or profits they wanted. It was too expensive. And they couldn’t help American retail the way they wanted. So the American pulled out,” Harteveldt said.
He added that the American Airlines Group Inc (NASDAQ:AAL) tickets are still available on other online travel websites like Expedia, Priceline, etc. He thinks that the Orbitz was becoming too expensive for American Airlines, which forced them to pull out of Orbitz, in spite of the brand value that the Orbitz possess.
Harteveldt pointed out at the dispute between American Airlines Group Inc (NASDAQ:AAL) and Orbitz Worldwide, Inc. (NYSE:OWW) from 2010, following which American was again forced to list their flights in Orbitz after a judgement from an Illinois court. Later in 2011, the American airlines sued Orbitz for violation of antitrust laws. Harteveldt mentioned that the American Airlines business fell by around 5% following the dispute in 2010. He added that American Airlines holds around 36% of total market in the US, which might get affected through this move. But he feels that the loss might be bigger for Orbitz.
Disclosure: None
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