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United Wins First Round in Expedia Dispute Over Fares

Dennis Schaal
United Wins First Round in Expedia Dispute Over Fares

A federal judge took into account a nearly decade-old tiff between American Airlines and Expedia in siding with United Airlines in its current contract dispute with the online travel agency.

Judge P. Kevin Castel of the Southern District of New York rejected an Expedia motion to grant a preliminary injunction against United, which sought to withhold publicly available airfares from Expedia after their contract expires on September 30.

Expedia had argued that it would suffer irreparable harm if United ceased providing fares after that date because Expedia’s reputation would suffer as it would be unable to service customers who may have already booked flights for October 1 and later.

Citing a declaration by Expedia.com Vice President and General Manager John Morrey, Judge Castel wrote: “Expedia’s own Senior Vice President stated that when Expedia lost fare and availability information for American Airlines, it (i) lost monetary damages, and (ii) had growth in bookings decline for a limited time before growth resumed. This does not suggest an injury that would not be remedied by a monetary award.”

The judge stated that while third parties such as customers, banks, employers and loyalty programs might be harmed by United’s intended actions, “These injuries to third parties do not demonstrate that Expedia itself will suffer irreparable harm.”

United issued a statement in response to the judge’s ruling.

“We welcome the ruling from the judge in favor of United which will minimize the risk of disrupting our customers’ travel plans and ensure we can effectively serve customers who need to make changes to their itineraries purchased through Expedia.

“United’s commitment to customer service includes providing our customers with a variety of ways to shop for and book flights. For travelers who like to comparison shop, we’re happy for them to use a meta search site like Kayak or online travel agencies to see for themselves that United routinely offers the best value for business and leisure travelers alike. In fact, more than 70 million United tickets were purchased last year through meta search sites, OTAs and travel agencies.”

Expedia Group spokeswoman Sarah Waffle Gavin said the online travel agency was disappointed the judge’s ruling in not issuing an injunction, but added “we are glad to see that the court recognizes that United’s threatened actions would breach our contract.”

As United and Expedia maneuver over a potential new contract, there was another interesting angle in the judge’s ruling, which came down Friday.

The question of who owns the customer when a booking occurs on Expedia — United or the online travel agency — is apparently a thorny issue in their negotiations.

The judge wrote that United complained “that Expedia has not transmitted customer contact information to United in an industry-standard manner as required by the Agreement.”

The airline said that 16 percent of 200 randomly chosen passenger name records sent to United were not transmitted “in an industry-standard manner as required by the agreement.”

Expedia, according to the judge, said the issue had been resolved in August.

Expedia had filed its complaint seeking a preliminary injunction against United in early February.

United has clearly won the initial battle as each party seeks leverage in negotiating a new distribution agreement.

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