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THE ONLINE TRAVEL INDUSTRY

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It's the middle of the summer travel season and, with the wealth of online travel services available, it could be easier to catch a connecting flight in Chicago on a Friday night than navigate the 14-billion-dollar online travel market. While Expedia and Travelocity have become household names, a new player, Orbitz.com, is hoping to tap into the business and become the premiere online destination for travelers.

Research shows that 50 percent of those who shop online compare prices on 3 or more Web sites, while 75 percent of online shoppers actually make the final purchase over the phone with a travel agent. This is understandable, as many people probably want a verbal confirmation that they have just bought 5 tickets to Paris and passes to EuroDisney for the family. Orbitz wants to change this, bringing all Web travelers to their site to find and purchase air travel tickets and more. Orbitz and most major online travel sites also handle car, rail, ship, and hotel reservations.

Orbitz believes they are unique, and they may well be, because they have the backing of major airlines including American, Continental, Delta, Northwest, and United. In fact, these companies are Orbitz investors. Orbitz also has agreements with over 450 airlines. The key here is the nature of the agreements. All participating airlines have agreed to offer Orbitz their lowest published fares. According to Jeffrey Katz, Orbitz CEO, the deal is simple: "We are the cheapest way for airlines to sell their product and, in exchange, we ask them one thing. 'Please give us all of your published rates, including rates you put only on your Web site.'" This is what separates them from the likes of Travelocity and Expedia. Apparently, with these agreements in hand, nobody can undercut Orbitz prices and, therefore, compete.

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The threat to competition has put Orbitz under the eye of consumer groups, the U.S. Department of Transportation, and anti-trust officials from the Department of Justice, who are currently investigating 25 complaints. Since Orbitz is backed by major airlines, many people are concerned that this will stifle competition and, ultimately, lead to higher fares.

To see what all of the fuss is about, THAT MONEY SHOW's Web team took a quick look at the three major services and found some interesting results. Using New York as a starting point, we looked at 3 itineraries: New York to L.A., New York to Toronto, and New York to London, England. All the itineraries were for the same time period in August, had a ten-day stay, and would have been booked more than a month in advance (if we actually took off). For the trip to Toronto, Travelocity and Expedia were tied, with Orbitz costing 22 dollars more. However, only Travelocity's fare was for a non-stop flight, and it was on one of those major airlines that has an agreement with Orbitz. For New York to L.A., Orbitz and Travelocity tied for the best fare, while the fares to London were identical across the board. It should be noted that Expedia always turned up the "lowest" fares, but these were for mystery flights that did not match our itinerary's hours (the dates are the same). The exact schedule, however, is only revealed after purchasing the ticket. A bit risky, but maybe right for some travelers.

So far, Orbitz does not show an edge on the competition. Perhaps the scrutiny they are under is not yet justified, but only time will tell. Regardless, the Web provides a vast number of resources, and there's more than one site to book your vacation with. Don't forget, your computer is connected to the Internet through a telephone, so be sure to call your travel agent and several airlines while you're shopping for rates. They may have competitive or even better fares. Be a smart consumer, spend as much time finding the best deal as you do planning your trip, and you'll likely save a bundle.




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