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Orbitz: Airlines
built 645 days ago
Orbitz is controlled by a combination of five of the largest airlines, which together share 85 percent of the total U.S. air market. In January, 20 U.S. states filed a letter with the U.S. Department of Transportation (DOT) voicing their concerns that Orbitz would threaten competition in the travel sector.
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As long as airlines compete on fares, which – as any browser of the Web can attest – they do, Orbitz will be good for consumers. The savings from increased efficiency will be reflected in lower fares.
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The next month, Orbitz landed Jeffrey Katz, former CEO of Swissair AG, who left the airline to head the Internet start-up. Katz, an American native, would then commute from Los Angeles to Chicago in true airline exec fashion. Katz had once been an executive for the SABRE computer reservation system, owner of the Travelocity online ticket site.
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Orbitz earns most of its revenue from commissions. About 70% of its revenues are from Airline ticket sales. Moreover, with an Alexa ranking of 620, Orbitz is ... preferred strongly as an effective advertising option for sponsored search. Their total click through percent of sponsored ads is 72.1%, compared to 59-62% achieved by Expedia and Travelocity (according to comScore reports). The advertising rate for Orbitz ranges between $20 - $65 CPM. In 2006 Orbitz earned revenues of $800 million with an EBITDA of $141 million.
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Orbitz is part of Travelport, which Blackstone bought in August for $4.3 billion from the former Cendant. It was first taken public by its five U.S. airline owners in 2003, raising $316.7 million. Then in 2004, Cendant, which is now Avis Budget, bought the company for $1.25 billion.
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By some measures Orbitz (www.orbitz.com) has been an astonishing success: 3. 7 million unique users visited the site in its first month, and Orbitz had booked more than $100 million in travel by mid-July. By other measures - including long hold times for customer service, early outages, complaints from smaller airlines - Orbitz isn't living up to its promises.
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