7 years ago

Travelport wins restraining order against American Airlines withdrawal from Orbitz

UPDATE: American Airlines issued the following statement about the Travelport restraining order:

“The court’s decision today will temporarily delay the implementation of our decision to terminate our relationship with Orbitz.  However, it is important to note that the temporary restraining order issued today is not a final decision on any issue, and is only intended to give the court and the parties more time to develop and present evidence.

“We are confident that once the court hears this evidence and is allowed to make a ruling on the full evidence, it will find that our decision to terminate Orbitz is fully consistent with all of our contractual obligations.  In the meantime, we will continue to pursue our efforts to bring newer technologies and lower costs to the distribution of our product.”

The original story follows:

A judge in Chicago today temporarily blocked American Airlines from terminating its contracts with Orbitz Worldwide Dec. 1.

The judge in the Circuit Court of Cook County in Chicago granted Travelport’s motion for a temporary restraining order and thus barred American Airlines from ending its agreements with Orbitz.

If American had gone ahead and terminated its contacts with Orbitz, as it had notified the online travel agency it would do Dec. 1, then American Airlines’ flights would have disappeared from Orbitz.com.

The hand-written temporary restraining order is in place until Dec. 2 and Dec. 3 when hearings are scheduled on a preliminary injunction.

It isn’t precisely clear from the temporary restraining order why the judge granted Travelport’s motion. The order merely says the “temporary restraining order is granted for the reasons stated on the record,” which could mean reasons argued in the Travelport complaint or orally in court.

Travelport sued American Nov. 5 alleging that American’s notice that it will pull flights out of Orbitz violates American’s contractual obligations to provide full content to Travelport affiliates, including Orbitz, on par with the inventory that American provides to competitors.

In addition, Travelport alleges that American pays Travelport a dramatically reduced GDS fee based on the full-content provision and that withdrawing content from Orbitz violates Travelport-American agreements.

Travelport owns 48% of Orbitz Worldwide stock.

At the PhoCusWright conference in Scottsdale, Ariz., yesterday, Cory Garner, American’s head of distribution strategy, told attendees that the airline’s “strategy is not to go dark on Orbitz.”

However, Garner said Securities and Exchange Commission regulations required American to notify Orbitz about its intent to end contracts Dec. 1.

Garner said American has good relationships with other major online travel agencies and that unique parts of the Orbitz-American agreements complicated American and Orbitz-Travelport dynamics.

The dispute between American and Orbitz-Travelport is over distribution economics and the airline’s push to require Orbitz to use AA Direct Connect to access American’s flights.

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Dennis Schaal

About the Writer :: Dennis Schaal

Dennis Schaal was North American editor for Tnooz.



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