The American Airlines Group Inc (AAL) & Orbitz Worldwide, Inc. (OWW) War: Who is the Loser?

The talks over pricing between American Airlines Group Inc (NASDAQ:AAL) and Orbitz Worldwide, Inc. (NYSE:OWW) came to a halt, which resulted in American Airlines Group Inc (NASDAQ:AAL) withdrawing its flights from the websites operated by Orbitz Worldwide, Inc. (NYSE:OWW). The flight reservation monopoly game is nothing new, a lot of travel websites have tried to strong arm major airlines to shell out higher fees for booking done through their portals, but now it seems the tide is reversing. Daniel Kurnos, Senior Analyst at Benchmark Company, and Mike Miller, President of Miller Air Group, discussed on CNBC earlier today about the games that are being played between travel websites and airline companies.

american airlines

“They can’t drive everything back to their own website, but what they are really faced with is akin to McDonald’s making a $1 hamburger and somebody reselling it for $10. The producer of the ticket American Airlines Group Inc (NASDAQ:AAL) knows their cost, they sell them on their own website […],” Miller said.

Miller mentioned that American Airlines Group Inc (NASDAQ:AAL) is a much stronger company now than it was two years ago hence it can play the aggressor here when firms like Orbitz Worldwide, Inc. (NYSE:OWW) try to overcharge.

According to Kurnos, American Airlines Group Inc (NASDAQ:AAL) along with U.S. Air makes up for 7% of Orbitz Worldwide, Inc. (NYSE:OWW) revenues, so even though Orbitz Worldwide, Inc. (NYSE:OWW) might lose in revenues, it’s actually American Airlines Group Inc (NASDAQ:AAL) that will also suffer because it will lose a lucrative distribution platform. Kurnos believes that firms like Orbitz Worldwide, Inc. (NYSE:OWW) play a pivotal role when customers are planning and booking their trips.

“Basically it costs American Airlines Group Inc (NASDAQ:AAL) $1 or $2 basically that’s the industry benchmark for an airline to sell its own ticket, that’s the IT cost, the delivery cost, legal costs and the resellers the middlemen, the Orbitz Worldwide, Inc. (NYSE:OWW), the Expedia are charging $6, $8, $10 a ticket. Some even more for an international ticket [...],” Miller added.

Disclosure: None

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