Orbitz - The Online Bogeyman

The launch of Orbitz is drawing near. And the travel industry, both offline and on the Web, would have us believe that the approaching footsteps it hears are those of a monster, a Godzilla coming to stomp Tokyo into submission.

But is it really a monster? It seems to me that only a fraction of the fear being expressed about Orbitz has much basis in reality or fact.

Is it going to be big? You bet. With five major airlines on board, Orbitz is not going to run into any funding problems. But it isn't going to spell the end of other online travel companies. Unless they allow it to.

The fear factor might have gotten a big boost recently, when a Goldman Sachs analyst's report deemed Orbitz "an increased competitive threat" to Web travel businesses.

Fueling the Fear

Fear is also what lies behind the repeated attempts by any number of groups to block Orbitz on grounds that it would be, well, unfair.

However, Orbitz has been given a clean bill of health from government regulators, which is good, since there is no evidence that Orbitz has monopolized any aspect of selling travel on the Web.

After all, by definition, there can be no evidence of monopoly right now. Orbitz has yet to sell a single ticket.

Monopoly Is Not a Game

That all could change, of course. And if there's evidence a year from now that Orbitz is muscling others out of the market, then an investigation can and should be undertaken.

In fact, the Justice Department is obviously taking a wait-and-see approach to Orbitz. That's because it will be much easier to tell whether Orbitz abuses its expected monopoly power after it has been in business a while.

At that point, a monopoly issue will be much more problematic to reverse. Just look at Microsoft (Nasdaq: MSFT). Remember them? Yes, that pesky antitrust ruling is still awaiting final disposition. Software companies looking for a chance to compete against what they say is still a monopoly have yet to see any significant relief.

Still, any hopes that the government will stop Orbitz should be shelved, as should the fears that the site will monopolize customers and airfares unilaterally. That can only happen if the rest of the Web's surging travel business allows it to.

Guarding Turf

Make no mistake, people will be clicking onto Orbitz once it goes live. People might be heading over there just to see what five airlines and US$100 million can produce these days.

The concern, of course, is that Orbitz will have the resources to essentially buy customers with lower fares, at least at the beginning. However, that strategy should have had a bunch of holes shot into it by this point in e-commerce history. Yes, it might work short term, but the long-range prospects for success by that route are sketchy.

Existing travel sites, several of which already have millions of regular users and many fans among them, can try to make sure that what people see at Orbitz pales in comparison to what the travel biz already offers.

All About Amenities

Just as people in the real world don't shop for airfare from one travel agent, and hotel reservations or cruise bookings from another, and then head across the street to reserve a rental car, online shoppers crave a place to get it all done.

Yes, Orbitz is making a stab at being a one-stop shop as well, offering links to cruises and car rentals. But timing is an issue here: Orbitz is getting a very, very late start and habits are difficult to break without a lot of motivation.

In the end, this war will be won on the customer service front. By listening to what customers want and supplying it, the travel sites will fight off the Orbitz challenge by bringing to life not their fears, but the hopes of e-businesses everywhere that online success is about a lot more than price.

What do you think? Let's talk about it.