LOS ANGELES (Reuters) - Online travel agents could feel the pinch from airline consolidation, as deals combining the largest U.S. carriers would shift the balance of power in the ticket-selling business.
"I understand why the airlines are consolidating and why they think it will be the best thing for that business," Jeffery Boyd, chief executive of Priceline.com (PCLN.O: Quote, Profile, Research, Stock Buzz), said at the Reuters Travel and Leisure Summit in Los Angeles on Monday.
"There is a potential negative for any distribution system .... If you have consolidation, that's not good for distributors in general."
Steve Barnhart, CEO of Orbitz Worldwide Inc (OWW.N: Quote, Profile, Research, Stock Buzz), echoed these comments. "I don't see that there's an upside case to us from that type of supplier consolidation," he said at the Reuters Summit. "But there doesn't have to be a downside."
Delta Air Lines Inc is reported to be in merger talks with Northwest Airlines Corp, which industry watchers say could trigger a deal between UAL Corp's United Airlines and Continental Airlines Inc.
That would create two massive U.S. airlines with more control over their sales channels and translate into less choice for consumers and tougher conditions for online travel agents.
In recent years, airlines have attempted to increase the number of bookings on their own Web sites.
PRICELINE'S POSITIONING
Priceline, which competes with Orbitz and Expedia Inc, created a niche with its "name your own price" auction model of discounting airfares and hotel rates, but now also offers straightforward online booking services. Continued...
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