Nevadans watching Orbitz closely: Bryan on panel

Tuesday, April 10, 2001 | 11:14 a.m.

Nevada interests, keenly interested in anything affecting the state's dominant tourism industry, will closely watch Orbitz as its business plan unfolds.

Orbitz already has a high-profile Nevadan in a key position -- former U.S. Sen. Richard Bryan, who recently joined the Las Vegas law practice of Lionel, Sawyer & Collins. Bryan last week was named to a consumer advisory board for the new airline ticket-selling company Orbitz.

Bryan, who is being paid $47,000 a year to serve on the advisory board, will join board chairman Con Hitchcock, travel writer Valarie D'Elia, Internet entrepreneur Esther Dyson and "Internet for Dummies" author John Levine on the board. Another board member is being selected through an Internet questionnaire process.

"Our focus will be to provide input to the Orbitz board of directors," Bryan said. "I think it's important to clarify that this is not the Orbitz board of directors, but a group that is going to advise the decision-makers on consumer issues."

Bryan said the Orbitz system will display flights of its five founding members as well as more than 30 other participating air carriers. Bryan said flights would be displayed by price without bias.

But some travel industry professionals are concerned that Orbitz's access to rapidly changing price information will give the owners of the company a competitive advantage.

"Orbitz is all about anti-competition," said Tom Breitling, president of Travelscape.com, Las Vegas, which is owned by Expedia, a Microsoft Corp. spinoff company.

"We welcome competition, but we want it to be on a level playing field," Breitling said.

He said he is confident that Travelscape will operate fare-searching technology that will be superior to what Orbitz will offer. He said his company's Expert Search and Pricing (ESP) technology will give Travelscape an edge in Internet fare-booking, but the founding airlines' ability to match or beat all Internet sales prices from smaller airlines is what is making some experts nervous.

"Our ESP system provides 400 available combinations per domestic search," Breitling said. "It's not just about flights, but it's published and negotiated fares for flights plus what can be applied to vacation packages."

Breitling said he was somewhat surprised that Bryan had accepted the Orbitz post, considering his track record as a consumer advocate. Bryan explained that his expertise as a consumer advocate is what led Orbitz to hire him and the other advisory board members. And, he said he expects the Orbitz decision-makers to listen to some of the anticompetitive concerns that are being discussed.

"Orbitz is trying to reach out and get frank and honest feedback," Bryan said. "And I don't think any of us (advisory board members) are going to want to serve on a board where our views are ignored."

Another Las Vegas company that would compete with Orbitz -- Lowestfare.com, owned by Stratosphere hotel-casino owner Carl Icahn -- prefers to let a trade association hurl the insults at Orbitz.

Lowestfare works with the Washington, D.C.-based Interactive Travel Service Association, which represents several Internet travel companies and recently helped commission a study by Massachusetts Institute of Technology economics professor Jerry Hausman on the potential impact of Orbitz.

The study, also supported by the American Society of Travel Agents and Southwest Airlines, concludes that consumers would pay higher airfares with Orbitz as a competitor.

"Professor Hausman's study is right on the mark," said Antonella Pianalto, executive director of ITSA. "If the federal government doesn't take action on Orbitz before the June launch, competition will be seriously damaged and consumers will end up paying much higher prices for airline tickets and other travel services."

Hausman also said Orbitz is "likely to chill price competition and reduce innovation and harm low-fare airlines like Southwest, Frontier, Spirit, American Trans Air, Vanguard, AirTran, Sun Country and Jet Blue, which are producing enormous consumer benefits through low fares and price discipline."

Southwest serves the most customers at McCarran International Airport in Las Vegas and all the other airlines Hausman named except Spirit and Jet Blue have flights to and from Las Vegas.

Another company that could be affected by Orbitz's operations is National Airlines. A spokesman for the airline said there are too many unanswered questions about Orbitz to make a comment on its potential impact on the Las Vegas-based carrier.

Another Nevadan watching Orbitz closely is Attorney General Frankie Sue Del Papa, who is among 21 attorneys general that addressed a letter to the Department of Transportation expressing "serious antitrust concerns" about Orbitz.

She said her colleagues are concerned about a company representing about 85 percent of the airline industry having so much impact on ticket pricing.

Bryan said much of the criticism leveled at Orbitz comes from companies that fear the company as a strong competitor.