| 250px | |
| Company type | Public |
|---|---|
| Industry | Travel services |
| Founded | 2001 |
| Headquarters | Citigroup Center Chicago, Illinois, United States |
Key people | Barney Harford, CEO |
| Revenue | US$767 million (2011)[1] |
Number of employees | 1,400 (2010) [2] |
| Website | corp.orbitz.com |
Orbitz Worldwide, Inc. (NYSE: OWW) is a leading global online travel company that uses innovative technology to enable leisure and business travelers to research, plan and book a broad range of travel products. Orbitz Worldwide owns a portfolio of consumer brands that includes Orbitz (www.orbitz.com), CheapTickets (www.cheaptickets.com), ebookers (www.ebookers.com), HotelClub (www.hotelclub.com), RatesToGo (www.ratestogo.com), the Away Network (www.away.com) and corporate travel brand Orbitz for Business (www.orbitzforbusiness.com). The company is headquartered in Chicago, IL, operates in over 140 countries and annually sells more than $11 billion in travel.
Background
editOriginally established through a partnership of major airlines, and subsequently owned by various entities, Orbitz.com – the flagship brand of Orbitz Worldwide – has been in operation since 2001.
Other Orbitz Worldwide online travel companies include: CheapTickets, and the Away Network in the Americas; ebookers in Europe; and HotelClub and RatestoGo, based in Sydney. Orbitz Worldwide also owns and operates Orbitz for Business, a corporate travel company. Orbitz was the airline industry's response to the rise of online travel agencies such as Expedia and Travelocity, as well as a solution to lower airline distribution costs. Continental Airlines, Delta Air Lines, Northwest Airlines, and United Airlines, subsequently joined by American Airlines, invested a combined $145 million to start the project in November 1999. It was code-named T2 — some claimed, meaning "Travelocity Terminator" – but adopted the brand name Orbitz when it commenced corporate operations as DUNC, LLC (the initials of its first four founding airlines) in February 2000.[3] The company began Beta testing early the next year, and Orbitz.com officially launched in June 2001. [4].
Pre-launch government review
editEven before the site began operating, the company faced intense antitrust scrutiny – because five of the six "major" airlines were collaborating on the project. Collectively, they controlled 80 percent of the US air travel market. Several consumer organizations, as well as Orbitz's primary competitors at the time (Expedia, Sabre, Travelocity, Galileo) spent significant amounts of money lobbying the United States Department of Transportation to block the project from the outset, and some 23 state attorneys general also voiced concerns due to the complaints of local competitors. When the DOT permitted the company to move ahead in April 2001, the competitive lobbying effort was switched to the Antitrust Division of the Department of Justice and the U.S. House Committee on Energy and Commerce.
Among the concerns raised were these:
- above all, the so-called Most Favored Nation provision, by which the airlines agreed not to cut deals with competing sites under more favorable terms than with Orbitz
- the airlines' agreement to release certain discount fares only to Orbitz or other entities at Orbitz low distribution cost, at the expense of its online and offline competitors
- that Computer Reservation System fee discounts extended to partner airlines would undermine competitors and damage the fledgling online travel industry
- that the airlines would coordinate efforts secretly to reduce discounts
- Orbitz was breaking out the service fee from the ticket price, not making the total price clear
In July 2003 – two years after the Orbitz launch – the Department of Justice ruled that Orbitz was not a cartel and did not pose a threat to competition. Orbitz's rapid growth had not impeded its online competitors' businesses which had continued to grow apace, and no evidence was found of price fixing. Additionally, changes in the marketplace had eroded both the advantages of the Most Favored Nation clause and the webfares that Orbitz had due to its low supplier cost.
The efforts by its competitors to generate government scrutiny and the corresponding media attention only heightened consumer interest in Orbitz and the new ways it would allow travelers to shop. Nielsen’s Net Ratings division reported in July 2001 that the Orbitz launch in June 2001 was the biggest e-commerce launch in over two years[5], with more than 2 million visitors during the month, exceeding the launch of sites such as Target.com and Walmart.com. Orbitz Worldwide travel sites now generate that many visitors each day).
Notes
edit- ^ "Orbitz Worldwide, Inc. Reports Fourth Quarter and Full Year 2011 Results". Orbitz Worldwide. 16 February 2012. Retrieved 27 February 2012.
- ^ "Hoovers". Hoovers. Retrieved 27 February 2012.
- ^ Edgar Online
- ^ "FundingUniverse". FundingUniverse. Retrieved 27 February 2012.
- ^ "NetRatings: Orbitz is Web's biggest e-commerce launch". Computerworld. 11 July 2001. Retrieved 27 February 2012.