American, US Airways Pull Business from Orbitz

Maybe it’s only temporary.

Maybe it’s just a negotiating ploy.

Nonetheless, in an industry-shocking move Tuesday that could have a domino effect, American Airlines announced it has pulled its fares off of online travel agency Orbitz.com and its affiliates, effective immediately.

American’s merger partner, US Airways, will pull its fares from Orbitz effective Monday, Sept. 1. Combined, American and US Airways account for 25 percent of the domestic air travel market.

American said it could not come to an agreement with Orbitz on a new contract. That also might bode well for traditional travel agents, something American Airlines president Scott Kirby alluded to in a statement.

“We have worked tirelessly with Orbitz to reach a deal with the economics that allow us to keep costs low and compete with low-cost carriers,” Kirby said. “While our fares are no longer on Orbitz, there are a multitude of other options available for our customers, including brick and mortar agencies, online travel agencies, and our own websites.”

That Orbitz will not be able to sell flights on American and US Airways is not only costly to the online portal, but ironic. American was one of several airlines that invested in Orbitz when the company was created in 2000.

Orbitz downplayed the significance of American’s ploy.

“Our sites offer hundreds of airlines which are eager to capture the revenue American is choosing to forego, and we will continue to show our customers a broad range of flight options to thousands of destinations in the U.S. and worldwide,” Orbitz said in a statement.

Nonetheless, the news shook Orbitz. Shares of Orbitz Worldwide closed at $8.04 on Tuesday, down 4.63 percent – and at one point it was down more than eight percent before rallying at close.

According to the Dallas Morning News, Orbitz’s 2010 annual report noted that for American Airlines, “tickets booked on our Orbitz.com and Orbitz for Business sites, including ancillary revenue from associated hotels, car rentals, travel insurance and destination services revenue, represented approximately 5 percent of our total net revenue.”

Whether this is a negotiating tactic on the part of the airline remains to be seen. American pulled this maneuver before, in 2010, in a similar contract dispute but did eventually return its fares to the online booking agent.