Expedia makes American Air fares harder to find

ATLANTA Fri Dec 24, 2010 11:19am EST

American Airlines jets taxi to and from gates at O'Hare International airport in Chicago, Illinois December 24, 2008. REUTERS/Frank Polich

American Airlines jets taxi to and from gates at O'Hare International airport in Chicago, Illinois December 24, 2008.

Credit: Reuters/Frank Polich

ATLANTA (Reuters) - Online travel agency Expedia Inc is making users take extra steps to get American Airlines listings after the U.S. airline stopped selling tickets through rival Orbitz Worldwide Inc earlier this week.

American's ticket prices are no longer displayed in Expedia's initial search results. Consumers must click through to a separate Expedia page to get detailed information on flights and airfares.

The unit of AMR Corp is also no longer one of the first carriers to be displayed on Expedia when consumers make flight queries.

"This has been done in light of both American Airlines' recent decision to prevent Orbitz from selling its inventory and a possible disruption in Expedia's ability to sell American Airlines tickets when our contract with American Airlines expires," Expedia said in a statement.

American, which has cited a need to cut distribution costs, removed its listings and other features from Orbitz two days ago. It contends the model used by online travel agencies prevents it from offering the lowest possible fares.

In a statement, American Airlines called Expedia's move "unwarranted" and said it would look into options to correct the situation.

"While tickets for air travel on American remain available for purchase on Expedia, its favoritism toward other airlines' airfares may lead consumers into believing that they have fewer choices, even in situations where American's fares are lower ... than other airlines that are listed first," American spokesman Ryan Mikolasik said.

Scott Kessler, a Standard & Poor's equities analyst, said the Expedia move could bring unintended consequences for American, which pulled its content from Orbitz soon after a Circuit Court judge in Illinois denied an injunction request seeking to keep the carrier from doing so.

"The pendulum may have swung with Expedia getting involved here," Kessler said. American was "not anticipating that this could unify the online travel agencies in their efforts to not just provide choice to consumers but to run successful businesses."

Orbitz said on Tuesday that it generated more than $800 million in sales for American in the year ended September 30. It also said revenue from American products booked on Orbitz accounted for about 5 percent of company net revenue of $575.1 million for the first nine months of 2010.

"Now, substantially more revenue is at risk for American Airlines than the $800 million in annualized sales Orbitz was delivering," Kevin Mitchell, chairman of the Business Travel Coalition advocacy group, said in a statement on Thursday after the Expedia change was disclosed.

Shares of Expedia fell 1.3 percent to $26.28 in afternoon trading on Thursday, while AMR shares were down 3.0 percent to $7.71. Orbitz was down 4 percent at $5.83.

(Reporting by Karen Jacobs; Editing by Derek Caney and Gerald E. McCormick)