Orbitz Sued by Southwest Airlines

The controversy continues for travel mega-site Orbitz. Southwest Airlines sued the airline-backed travel giant Thursday for providing “false and misleading” information to its customers regarding Southwest flight schedules, rates and fares.

Southwest also alleged that Orbitz is using Southwest’s proprietary scheduling information without Southwest’s permission.

“When consumers log on to the Orbitz interactive Web site, the opening or ‘home’ page states that the Web site is ‘supported and endorsed by the major U.S. airlines,'” the complaint said. “To the contrary, Southwest (a major U.S. airline) does not support or endorse the Orbitz Web site and does not want to be associated with the Orbitz Web site.”

The lawsuit, filed in U.S. District Court in the Central District of California, alleges that Southwest’s trademark is being infringed and, in addition to seeking damages, asks for a preliminary and permanent injunction against Orbitz to stop the site from using its trademark.

Fair Play?

In addition to the trademark infringement allegation, the suit contests Orbitz’ claims to guarantee its customers the lowest available fares.

“Orbitz fails to include in its Web site many of Southwest’s lowest fares,” the complaint said, “which are oftentimes lower than fares found on the Orbitz Web site.”

According to published industry reports, Orbitz’ general counsel sent a letter to Southwest stating that Orbitz has already changed its use of the Southwest trademark and that the fare information Orbitz uses comes from the same database used by travel agents.

Not The First

Orbitz is controlled by a combination of five of the largest airlines, which together share 85 percent of the total U.S. air market. In January, 20 U.S. states filed a letter with the U.S. Department of Transportation (DOT) voicing their concerns that Orbitz would threaten competition in the travel sector.

Additionally, the American Society of Travel Agents (ATSA) filed a complaint in February with the U.S. Department of Justice (DOJ), stating that the new online travel company would result in unfair competition to both online and offline travel firms.

However, the DOT said in April that “it did not have evidence that would justify stopping the company from beginning operations.”

Competition Conundrum

The third claim of the Southwest lawsuit filed against Orbitz on Thursday also alleges unfair competition.

“Most observers believe that the airline industry needs to be more competitive,” said Southwest vice president and general counsel Jim Parker. “Orbitz is a step in the wrong direction.”

Southwest Airlines and the ATSA backed a study released in March by a Massachusetts Institute of Technology (MIT) economics professor, predicting that Orbitz will become a “market power ringmaster” that will force U.S. consumers to pay US$183 million more annually for airfare.

The DOT is requiring Orbitz to report within six months of its launch and to disclose any deviations from the plans and procedures examined by the DOT.

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