Airline industry wary of merger between Expedia and Orbitz

Maryland travelers may appreciate the implications of a merger between online travel businesses Expedia and Orbitz. Expedia has agreed to pay in excess of $1 billion to acquire its competitor, which is expected to strengthen Expedia’s ability to negotiate lower pricing with airlines and hotels. Both Expedia and Priceline, the company’s biggest competitor, have been working to dominate the online market as the Internet has become one of the most common methods used for booking travel services.

According to industry experts, this larger share of the market will allow Expedia to enjoy a stronger position in the chain of distribution, making it possible to compete for better terms with travel service providers. Those representing officials in the airline sector indicate concern due to the effects on competition and customer activities. Officials within the hotel sector express concerns about the impact on consumer choices. These industries are worried that the deal could increase pricing for consumers, but Expedia counters that consumers will benefit due to competition from newcomers to the online travel sector and due to competition from actual hotels and airlines.

From an antitrust perspective, hotel and airline companies hope that regulators will carefully review the business merger. However, antitrust experts believe that the deal will receive government approval. The online market does not create a barrier for newcomers. Increasing fees and commissions remain a concern of the airline industry, but there is some strength in the fact that online travel agencies cannot provide listings without the availability of flights.

A company dealing with unfair competition concerns may need advice from a lawyer who is familiar with antitrust regulations as remedies are sought. In some cases, an excessive share of a market can result in penalties for a business that has grown through mergers and acquisitions. Those on both sides of such issues may rely on legal assistance in filing or responding to complaints.

Source: Reuters, “U.S. airlines, hotel industry wary of Expedia-Orbitz merger”, Jeffrey Dastin, Feb. 13, 2015