Orbitz

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Orbitz is a leading online travel company that enables travelers to search for and purchase a broad array of travel products, including airline tickets, lodging, rental cars, cruises and vacation packages. Since launching its website to the general public in 2001, Orbitz has become the third largest online travel site based on gross travel bookings. On Orbitz, consumers can search more than 455 airlines, tens of thousands of lodging properties worldwide and 22 car rental companies. Orbitz was acquired by Cendant's Travel Distribution Services division in November 2004, and is part of the Consumer Travel Americas group. Source: Orbitz, March 2005

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Background info

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Orbitz, Inc. is an Internet travel company headquartered in Chicago. Orbitz, along with all other Cendant travel businesses, was sold to a subsidiary of the Blackstone Group, in a deal worth over $4.6 billion to form a new company called Travelport.

Orbitz constituted the airline industry's response to the rise of online travel agencies such as Expedia and Travelocity, as well as the continued increase in GDS fees, and trailed its major competitors by several years. Continental Airlines, Delta Air Lines, Northwest Airlines, and United Airlines, subsequently joined by American Airlines, invested a combined $145 million to start the project in November 1999. It was code-named T2 — some claimed, meaning "Travelocity Terminator" – but adopted the brand name Orbitz when it commenced corporate operations as DUNC, LLC (the initials of its first four founding airlines) in February 2000. 1 The company began Beta testing early the next year, and Orbitz.com officially launched in June 2001

Anti Trust concerns

Even before the site began operating, the company faced intense antitrust scrutiny – after all, five of the six oligopolist "major" airlines, controlling 80 percent of the US air travel market, were collaborating. Several consumer organizations, as well as Orbitz's primary competitors at the time (Expedia, Sabre, Travelocity, Galileo) spent a significant amount of money lobbying the United States Department of Transportation to block the project from the outset, and some 23 state attorneys general also voiced concerns thanks to local competitors complaining. When the DOT permitted the company to move ahead in April 2001, the competitive lobbying effort was switched to the Antitrust Division of the Department of Justice and the U.S. House Committee on Energy and Commerce.

Among the concerns raised were these:

The Interactive Travel Services Association (ITSA), an organization of Internet travel agencies and GDSes - all Orbitz competitors - issued a report in December 2001 arguing that Orbitz was stifling its members.

Partly in response to consumer advocate complaints, Orbitz announced in May 2002 it would make its fares available to customers via its call center for those consumers that did not have computer or internet access.

In July 2003, the Department of Justice ruled that Orbitz was not a cartel and did not pose a threat to competition. Orbitz's rapid growth had not impeded its online competitors' businesses which had continued to grow apace, and no evidence was found of price fixing. Additionally, changes in the marketplace had eroded both the advantages of the Most Favored Nation clause and the webfares that Orbitz had due to its low supplier cost. Orbitz continued its success in the market based upon its unique technology platform

IPO, sale ,and future prospects

In August 2003, Orbitz filed to do an initial public offering (IPO). Businessweek, commenting on the proposed IPO, noted that Orbitz lost $5.3 million in the first half of 2003 on revenue of $107 million; that airlines would control the board of directors of Orbitz even after the IPO; and that much of Orbitz's business model was structured to benefit the airlines at the cost of (future) shareholders. 2 In November, Orbitz filed paperwork to sell shares at between $22 and $24 each. 3. The company went public on December 18, 2003 at a price per share of $26. 45 After the IPO, the airlines held 70% of the outstanding stock and over 90% of the voting power. 6 Because Orbitz had such a strong brand and consumer acceptance, most shareholders saw the carrier ownership as very positive for its long term sustainability.citation needed

On September 29, 2004, Orbitz was acquired for $1.25 billion by New York-based Cendant Corporation. Cendant paid $27.50 per share. 7

Given Cendant's spate of acquisitions in Europe, there has been some speculation about Orbitz being exported to Europe as a brand or the continued use of acquired Cendant brands like ebookers and Octopus Travel. Currently, there is a large project underway to migrate all Cendant brands onto a common technology platform, with ebookers being migrated to the new platform first, followed by CheapTickets.

In June 2006, The Blackstone Group, a private equity firm, entered into a definitive agreement with Cendant Corp to acquire Travelport, its travel distribution services business for about $4.3B in cash, a significant reduction in value to the original acquisition prices of the individual companies. Travelport includes the Orbitz travel reservation website used by consumers, the Galileo computer reservations system used by airlines and thousands of travel agents, Gulliver’s Travels and Associates wholesale travel business, and numerous other travel related software brands and solutions.

Technologies

Orbitz runs on a Red Hat Linux based platform and was an early adopter of Sun's Jini platform in a clustered Java environment. 34 Both JBoss and BEA WebLogic are used as application servers within their environment along with various other proprietary and open source software. 5 Orbitz licenses ITA Software's Lisp-powered QPX software to power their Orbitz and ebookers are developing a common technology platform, which would enable the same platform to service multiple travel brands in multiple languages in different markets and currecies as well.