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ITSA Alert
Congress Objects To Airline Funding Of Orbitz;
ITSA Applauds Action To Block Use
Of Taxpayer Dollars To Prop Up Joint Venture
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Washington, DC � April 2003 � In passing legislation that will provide financial assistance to the ailing airline industry, Congress has objected to the airlines� use of taxpayer dollars to continue funding Orbitz -- and in effect has put Orbitz on notice that Congress is scrutinizing its business activities to ensure taxpayers are not footing the bill for this collusive and controversial joint venture.

�The Interactive Travel Services Association (ITSA) applauds this important Congressional action,� said ITSA�s Executive Director, Antonella Pianalto. �ITSA supports targeted emergency financial assistance for U.S. airlines. However, it is inappropriate for the government to indirectly subsidize a venture that competes with private, unsubsidized companies; is under active investigation by Department of Justice and state antitrust authorities; and remains a source of ongoing concern at the Department of Transportation. This latest action demonstrates that Congress shares ITSA�s concern that not one penny of taxpayer assistance should be funneled to this venture.�

Title IV (Airline-Related Assistance) of the April 12 Conference Report includes the following language:

  • �Air carriers may use these funds for such purposes as each air carrier determines appropriate; however, the Conferees intend that direct assistance to air carriers made available under this heading should be expended, to the greatest extent possible, to address aviation security and should not be used to support non-security related business entities, ventures, or activities including, but not limited to, ticket agent ventures.�
Recent filings with the Securities and Exchange Commission confirm that Orbitz continues to lose millions of dollars, despite influxes of cash provided by its airline owners. American, Continental, Delta, Northwest and United, which combine to control over seventy percent of the U.S. passenger market, own, control the board of directors, and have at regular intervals funded Orbitz.

�While these airlines are cutting salaries, pensions, employees, and service, they have been writing large checks to cover Orbitz� losses,� added Pianalto.

According to Northwest Airlines� 2002 10K filing, Northwest �recognized $3 million of losses, which represents its share of Orbitz losses.� With Northwest Airlines owning 15.6% of the company, Orbitz� total losses for its airline owners in 2002 would appear to approach $20 million.

�Congress is seeking to become partners with the airlines in addressing aviation security, not to become partners in Orbitz,� concluded Pianalto.

The Interactive Travel Service Association (ITSA), the trade association for the online travel services industry, believes that FAIR access to FARE information and competition is good for consumers and good for the industry.

If you would like more information please contact Antonella Pianalto, Executive Director of ITSA, at 202-628-7770 or visit our web site at interactivetravel.org.
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