Expedia sees that American Airlines decision to delist its fare on Orbitzs website is a potential threat for online travel companies to display cheap airplane tickets and discount travel packages. In response to Americans actions, Expedia has moved American fares to the far end of Expedias display of available airlines. American Airlines prices are not being shown with other airlines on the Expedia initial result page.
Customers on Expedias website have to click on a link to a page elsewhere on the site in order to see American fares. Other airline prices are displayed on the first result page that a customer sees.
American Airlines says it wants to increase its online customer sales via its own website, thereby lowering its distribution costs. American has created Direct Connect, its own distribution path, which its wants Orbitz and other online travel companies to use to get flight information vs. using global distribution systems such as Travelport or Sabre.
American has to pay these global distribution companies whenever an airline ticket is purchased by a customer using the global distribution companys services. If American can bypass such companies, American can reduce its distribution costs.
Direct Connect, according to American provides a direct link into Americans host reservation system to facilitate the availability, shopping and pricing, booking, ticketing, and post-ticketing servicing transactions.
Expedia says that it is de-emphasizing American fares to show support for Orbitz and in anticipation of a possible disruption in Expedias ability to sell American tickets when its contract with American expires. Expedia believe that American Airliness proposed direct connect model will lead to higher costs and less transparency for customers.
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