The Senate Commerce Committee has announced that it plans to hold antitrust hearings on June 22 concerning a looming online venture by the nation's largest airlines.
The online ticketing venture dubbed T2 by those in the travel industry is scheduled to open for business this summer as a collaborative effort among Delta Air Lines Inc., Continental Airlines Inc., Northwest Airlines Inc., United Air Lines Inc. and American Airlines, with at least 23 other smaller, non-equity partners.
But the American Society of Travel Agents (ASTA) and the Association of Retail Travel Agents have filed separate complaints charging that T2 will offer special low rates that are available only through its Web site, which they said would freeze out third-party distributors and wipe out competition in the travel marketplace.
"It is actually the opposite of innovation," said Paul Ruden, senior vice president of legal affairs at ASTA. Ruden, who plans to testify at the Senate's hearing, said his group has asked the Federal Trade Commission and the Justice Department to investigate T2's plans. ASTA also amended its complaint to include a similar effort being launched by major European air carriers, he added.
"The development of these single-source, airline-controlled Web sites is making a mockery of the competition goals of the Airline Deregulation Act," said Joe Galloway, ASTA's president and CEO.
T2's only response was a press release issued yesterday, in response to the filing that the Association of Retail Travel Agents made with the Senate committee.
"Our Web site will increase industry competition and give online customers an additional place to search for and buy travel (services) on the Internet," T2 spokesman Carl Ruthstein said in the release. The statement added that T2 would provide access to all publicly available travel information "in a completely unbiased manner, something which consumers have demanded. We are unambiguously on the consumer's side."
Lorraine Sileo, an online travel analyst at PhoCusWright Inc. in Connecticut, said airlines already distribute low fares to many third-party vendors in an effort to fill their planes. "You're certainly not going to abandon a distribution channel that's working for you, especially for an unproven channel like (the T2 Web site)," she said.
Sileo added that traditional travel agencies are experiencing "overall frustration" because of encroachment by Internet ventures that sell directly to consumers, thereby skipping the travel agent.
Executives at Travelocity.com and Expedia.com, the two largest online travel agencies, have said in recent months that T2 shouldn't affect their businesses unless it creates a new class of lower fares. Travelocity CEO Terry Jones is among those who are expected to testify at the June 22 hearing, said a spokeswoman for the Senate Commerce Committee.
Sam Whitehorn, senior Democratic Counsel to the Commerce Committee, said the issue at hand is whether T2 should be allowed to publish fares on its site that are available nowhere else. "I can tell you the inclination is that it smells fishy," he said.