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

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits In The World

10 Worst Airlines in the World

The 10 Biggest Tax Havens in the World to Stash Your Money

The 15 Most Murderous Countries in the World

10 Largest Colleges in the World: Bigger Isn’t Always Better

Comedians in Cars Getting Coffee: The 6 Comedians Seinfeld Needs to Interview

Easy Money: The 10 Most Successful Investors in the World Today

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!