FRAMINGHAM (07/07/2000) - Orbitz, the online ticketing venture being set up by the nation's five largest airlines, this week named Jeffrey Katz -- who once headed the Sabre computerized reservations system -- to be its president, CEO and chairman. Until now, the startup company -- originally known informally as T2 -- had been run on an interim basis by executives from a consulting firm.
Katz, 45, also has experience running an airline to go along with his knowledge of the reservations business: for the last three years, he has been CEO of Switzerland-based Swissair. But one of his first duties will be to steer Orbitz through federal red tape in the form of two separate investigations that are exploring possible antitrust issues surrounding the ticketing venture.
Two months ago, the U.S. Department of Justice launched an antitrust-related probe into Orbitz, which is jointly funded by American Airlines Inc., Continental Airlines Inc., Delta Air Lines Inc., Northwest Airlines Inc. and United Air Lines Inc. The Senate Commerce Committee also is investigating the planned ticketing Web site and is expected to hold a hearing on the matter later this month.
Alex Zoghlin, the venture's chief technology officer, and other Orbitz executives have insisted that Orbitz will be an independent company that isn't beholden to its airline founders. Zoghlin this week said he expects the Commerce Committee's hearing to take place July 20, although committee officials said a firm date hasn't been scheduled yet.
Katz wasn't available for comment on his plans for Orbitz or on the government investigations. Chicago-based Orbitz is scheduled to open for business later this year as a competitor to online travel agencies Expedia.com and Travelocity.com, the latter of which is owned by the Sabre Inc. operation that Katz was involved in before joining Swissair.
Katz spent 17 years at American Airlines, which was the parent company of Sabre until that unit was spun off as an independent entity in January. As president of Sabre's reservations division, he helped the company develop an Internet presence that ultimately grew into Travelocity.
At Swissair, meanwhile, Katz oversaw the ushering in of a wireless phone service that allows the airline's customers to check in and get seat assignments without waiting at a ticket counter.
Philip Wolf, president of online travel research firm PhoCusWright Inc. in Sherman, Connecticut, said Katz's hiring puts to bed concerns that Orbitz didn't have a strong enough business model to attract a qualified CEO.
Katz's grounding in both the airline and travel distribution sides of the travel business is a plus for Orbitz, Wolf said. But his Sabre experience "is old," Wolf added. "What's happened the last two years (in the reservations business) is more profound than what happened the previous five years."
Fiona Swerdlow, an analyst at Jupiter Communications Inc. in New York, said Katz's airline experience will aid him in handling the companies that have invested in Orbitz and make up its board of directors. "It's one of those things where you almost have to be an airline CEO to speak their language," she said.
Nonetheless, Wolf said Orbitz will be "in trouble no matter who they hire" if Katz has to spend an inordinate amount of time shuttling back and forth between the different airlines or convincing Washington that the ticketing venture doesn't constitute a cartel. Orbitz "has to compete with some credible, established players (in Travelocity and Expedia)," Wolf said. "That's enough to deal with in itself."