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Travel Port Orbitz Complaint 4 13 11

Travel Port Orbitz Complaint 4 13 11

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Published by Tom Johansmeyer

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Published by: Tom Johansmeyer on Apr 14, 2011
Copyright:Attribution Non-commercial


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American Airlines, Inc., a Delaware corporation,Plaintiff,vs.Travelport Limited, a foreign corporation andTravelport, LP, a Delaware limited partnership,d/b/a Travelport;andOrbitz Worldwide, LLC, a Delaware limitedliability company, d/b/a Orbitz,Defendants.
)))))))))))))))))))))Civil Action No.: ______________COMPLAINTINTRODUCTION AND SUMMARY
Plaintiff American Airlines, Inc. (“American”) brings this suit to stop and recoverthe damages it has suffered as a result of the anticompetitive conduct of defendants TravelportLimited and Travelport, LP (hereinafter collectively referred to as "Travelport"). As thisComplaint describes, Travelport effectively controls the distribution of airline tickets to a largenumber of business travelers. American also brings suit against defendant Orbitz Worldwide,LLC, which operates an online travel agency and benefits from Travelport’s monopoly.Travelport has engaged in exclusionary conduct, and Travelport and Orbitz have entered into
Case 4:11-cv-00244-Y Document 1 Filed 04/12/11 Page 1 of 37 PageID 1
 2agreements with one another and with others to exclude competition and maintain Travelport’smonopoly power.2.
Travelport operates global distribution systems ("GDSs"). GDSs distribute airlinefare, flight, and availability information provided by American and other airlines to travel agents,and enable those travel agents to make reservations and issue tickets on the airlines' flights(hereinafter referred to as “the provision of airline booking services”). Travel agents rely almostexclusively on GDSs to sell airline tickets, and a majority of American’s passenger revenuescome from tickets sold by travel agents. As such, GDSs are the gatekeepers between American(and other network or "hub-and-spoke" airlines) and travel agents and their customers.3.
Five GDSs operate in the United States: Sabre, Galileo, Apollo, Worldspan, andAmadeus. Travelport controls three of the five GDSs—Galileo, Apollo, and Worldspan—whichtogether account for over 30% of all airline ticket sales made by U.S.-based travel agencies. Inthe past year, over $2.7 billion of American’s sales were booked through Travelport's GDSs.Travelport effectively controls the ability of American and other network airlines to distributefare, schedule, and availability information to Travelport's travel agency subscribers, includingdefendant Orbitz, and to obtain reservations and sell tickets through those travel agencies. Manybusiness travelers will only purchase tickets through the travel agency with which their companyhas a contract. Because Travelport provides virtually 100% of the bookings for a large numberof corporate customers whose travel agents subscribe to one of Travelport's GDSs, it hasmonopoly power over American.4.
Travel agents do not pay to use the services of the GDSs. Rather, the GDSscharge the airlines a supracompetitive “booking fee” for each reservation that a travel agentmakes through a GDS. American annually pays tens of millions in booking fees to Travelport.5.
The GDSs frequently share with the travel agents that use their systems a portionof the supracompetitive booking fees they charge the airlines for reservations made by theagents. Thus, when travel agents decide what GDS to use, they often have an incentive tochoose the GDS that charges the highest, not the lowest, booking fees.
Case 4:11-cv-00244-Y Document 1 Filed 04/12/11 Page 2 of 37 PageID 2
In recent years, American has developed an alternative method of providingairline booking services to travel agents—called AA Direct Connect—that is based on modern,efficient, flexible, and less costly technology than the technology that the GDSs use. AA DirectConnect allows American to provide its own flight, fare and other ticketing information directlyto travel agencies and compensate them directly for any bookings they make. Travelportrecognizes that AA Direct Connect poses a significant competitive threat to its power to chargesupracompetitive booking fees and its ability to impede technological investment and change.7.
Recognizing that American’s AA Direct Connect could undermine the GDSproviders’ dominance in the provision of airline booking services to travel agencies, Travelport,Orbitz, and other industry participants with an interest in preserving the GDSs' dominant marketpositions have engaged in a broad and unlawful multi-part anticompetitive scheme.8.
Specifically, Travelport has engaged in various forms of unlawful exclusionaryconduct intended to significantly limit the incentive and ability of its travel agent subscribers toshift bookings among different providers of airline booking services in response to ordinarymarket forces. In doing so, Travelport has ensured that American and other network airlines thatrely on travel agents to distribute tickets are dependent upon Travelport to access the criticalgroup of travel agents that subscribe to Travelport’s GDSs. In this way, Travelport has obtainedand maintained monopoly power over American and other network airlines. Travelport’sexclusionary acts and practices include:(i)
Imposing anticompetitive contract terms in their agreements with participatingairlines that severely limit the airlines’ ability to develop, promote, or usecompeting distribution channels;(ii)
Entering into long-term restrictive agreements with travel agent subscribers thatrequire or incentivize travel agents to use Travelport’s GDSs exclusively, ornearly exclusively;
Case 4:11-cv-00244-Y Document 1 Filed 04/12/11 Page 3 of 37 PageID 3

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