But what is clear, disadvantage: Sabre, most definitely.
As for whether it benefits Orbitz more than Expedia, here are my thoughts... there is probably good news for both players.
The proposed change in CRS rules effectively lets airlines selectively place fares on various distribution partners. By that I mean that airlines can selectively add fares to certain reservation systems and/or marketplaces to sell, WITHOUT having to put them across all the other ones.
For suppliers (airlines), that eventually means that some distribution networks will be favored for certain types of fares more than others. Which distribution networks will they choose?
The ones with the most customers buying on them or the ones that they own? I think the answer is "both", for certain types of fares.
I expect the distribution channels to be segmented, over the long run. American might choose Sabre for its special fares. United might choose Expedia. Or Orbitz. Delta might choose Hotwire for its special deals.
It will be up to the airlines to decide where they want to place these special fares, and above all else, they will do it based on the likelihood of them selling through. That, in turn, depends upon scale.
IACI has much greater scale than any other online player, and more ways of packaging the sale up to make it attractive. Orbitz is contractually forbidden to engage in opaque pricing, as they explain in their filings. (Do they highlight that point on the roadshow? I wonder.)
Now, the issue gets more interesting from a customer's standpoint, and for that, I think it favors IACI. Why? Well, if fares become more segmented and "opaque", it benefits those sales channels with the most "opaque" ways to sell. IACI has Hotwire, Expedia (with vacation packages), and more ways to sell "opaque" product than anyone out there.
Lack of clarity is actually good for Expedia, because its promise as a brand is simplicity for consumers. Contrary to popular belief, Expedia benefits with *more* searching around at alternatives, not less. The evidence certainly shows today that Expedia is growing during a time of rapidly increasing searching across sites.
This makes IACI a compelling purchase channel for consumers in the world of more-confusing fare-search.
Again, you forgot to say thank you to Yahoo for providing IACI a venue for free promotion. Your scale at this point is actually a disadvantage as the airlines and others in the travel business will throw business to any distribution network but Expedia because of their threatening King Kong presence and tactics. Scale is seen to become soon your DISADVANTAGE. And then you will not have scale. Markets do not remain static. Airlines can easily parcel around special fares to exclude Expedia in the future. If they read your arrogant, condescending, humiliating comments about Orbitz, it will be payback time soon. Alliances have already occured among the many competitors to Expedia. Together, they will begin to further squeeze your margins and profits. On IACI's balance sheet, Expedia profits are already miniscule - $0.05(5 cents). You talk big, but 3rd Q results in a few days will not even meet expectations by IACI's own admission. Yeah, we know, you say those are non cash items that pull it down. Still, that is the BOTTOM LINE and nobody can decipher their accounting to determine how it got that way. I suspect Expedia is not earning as much as you say, but who cares? 2004 will continue to show IACI with a triple digit P/E UNLESS IACI drops down to approach its intrinsic value of $7.28.
Thanks. I agree that Sabre and the other CRS' would be in big trouble. I also agree that EXPE has clear scale advantages. But what if the airlines are willing to sacrifice the loss of near-term bookings from Expedia to gain some of their lost negotiating power back over the long-term? The airlines have a clear incentive to place the majority of their fares with Orbitz for two reasons- 1) The Big 5 are part-owners of Orbitz and 2) Orbitz charges much lower booking fees relative to the other online distributors and travel agents. If the majority of the fares are placed on Orbitz, customers will eventually take notice and Orbitz will gain traffic at Expedia's expense. Lower traffic for Expedia = less leverage = a positive development for the airlines. The ruling would also force Expedia to lower their booking fees to at least the level of Orbitz.
What do you think the chances of this proposal being passed? Airlines will benefit, but it will be at the expense of the CRS' and is the nail in the coffin for travel agents. You could also argue it is an anti-competitive ruling given the airline's ownership in Orbitz.