Can these two giant global travel companies work out their differences? Surely consumers would prefer to keep searching for United fares on Expedia.
United Airlines is within its rights to cut off Expedia from selling tickets for flights after October due to a contractural dispute, the carrier said Friday in a federal court filing, a reply to what it called a “meritless” lawsuit filed by the online travel agency earlier this month.
In a complaint filed Feb. 4 in federal court in New York, Expedia acknowledged its contract with United ends Sept. 30, but said it may sell whatever tickets it wants until then, even for flights that depart late this year or early in 2020. United said is contractually permitted to stop Expedia from selling post-September flights if it wants, so it can have an “orderly wind-down” of the business relationship.
“Limiting ticketing authority to flights that depart during the duration of the parties’ contract is a common-sense solution to an obvious and impeding problem, and a solution that is entirely permissible and appropriate under the parties’ contract,” United said in its reply.
An Expedia spokeswoman could not immediately be reached for comment despite multiple attempts. In its complaint, Expedia said, “While United may ultimately choose to enter into a new commercial agreement with Expedia when the term of the current agreement ends, it has no right to breach the existing agreement and to unilaterally inflict harm on Expedia and its customers as a negotiating tactic.”
At one point, United had threatened to turn off Expedia’s access as soon as this month, but both companies said Feb. 8 that United would hold off as the litigation played out.
What’s at Issue
Neither United nor Expedia has said much in public court documents about what’s behind the contract dispute, though Expedia said in its complaint United expressed dissatisfaction with the “economic terms” of the agreement in 2017.
It is possible this will be a temporarily blip as the sides work out their differences. Or it could be a long-term problem, with United’s fares disappearing from Expedia for the foreseeable future.
Regardless, United said, it is not practical for Expedia to sell tickets for post-contract travel. Some flights will need to be changed or canceled, United said, but Expedia will not be able to do so beginning in October. Customers will be confused, and could take out their anger on the airline and Expedia.
In its reply, United argued this is part of Expedia’s strategy. The company, United alleged, may want to sell as many tickets as possible before the contract ends, so it can have more leverage on a new agreement.
“Recognizing that United now intends to walk away from Expedia upon the Sept. 30, 2019 expiration of their contractual relationship, Expedia has resorted to litigation to maximize the number of Expedia customers holding United tickets for flights after the expiration of the parties’ contract,” United said in its reply. “The reason is simple: Expedia hopes that the frustration, disruption, and expense that would otherwise result to these customers will force United to continue working with it after the contract expires.”
United said it had been open to a new deal, but accused Expedia of being an unwilling participant.
“Expedia refused to negotiate,” the filing said, “even as Expedia customers began in greater numbers to book flights set to depart after their contract expired—and even though Expedia, with ample opportunity to protect its customers, now claims it will be irreparably harmed by not being able to service these same customers.”
In the complaint, Expedia said otherwise, telling the court it had pursued a comprehensive negotiation on a new agreement.
The following is United’s answer to the Expedia complaint:
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Tags: airline innovation, expedia, ota, united airlines
Photo credit: United Airlines says it has the right to prohibit Expedia from selling tickets after Oct. 1 when a contract between the two companies expires. Pictured are United planes at Newark Liberty International Airport in this photo from 2016. Tom Heinze / Skift