Travel Agents Charge Collusion By Airline-Owned Ticket Seller
by Amanda Bronstad
Like those cheap online airfares? Travel agents don’t.
Angered by Delta Air Lines Inc.’s decision to stop paying travel agents commissions a move that was followed by other major carriers six agencies have targeted the airline industry’s online ticket operation in an anti-trust suit.
The suit, filed on April 26 in Los Angeles Superior Court by Maxwell Blecher of Blecher & Collins in L.A., claims that the airlines are squeezing agents out of the market by offering their best deals on Orbitz LLC, an online ticket seller owned by five major airlines.
His clients, which include Encino-based Travel Galore, claim in court documents that Orbitz eventually could be the only avenue through which consumers buy airline tickets.
Blecher said that while the commission issue had been tangential to concerns about Orbitz, it was the “straw that broke the camel’s back” and precipitated the lawsuit. The plaintiffs four California agencies and one in Ohio are asking for certification as a class. If granted, the suit could potentially include more than 18,000 travel agents.
The travel agencies claim that the airlines have been giving their lowest fares only to Orbitz, which is owned jointly by UAL Corp. (parent of United Airlines), AMR Corp. (American Airlines), Delta, Northwest Airlines Corp. and Continental Airlines Inc. In addition, the Airline Reporting Corp., which governs transactions between travel agents and airlines, has raised annual fees for travel agents during the past two years. The major airlines own the majority of ARC stock, the suit said.
Officials of Chicago-based Orbitz did not respond to requests for comment.
Paul Hastings Janofsky & Walker LLP made the second acquisition in its 52-year history when it combined operations with Hong Kong-based Koo and Partners April 30.
The acquisition adds 250 attorneys to Paul Hastings’ 840 worldwide total and significantly expands its presence in Asia. The firm has 30 attorneys in Tokyo.
Much of the firm’s work in Asia now comes from its U.S. financial services clients, primarily in the acquisition and securitization of non-performing loan portfolios, said Robert Miller, chairman of the Los Angeles office and vice-chairman of the firm’s corporate department.
The firm’s Pacific Rim practice has grown in L.A. under corporate partner Kaoruhiko Suzuki, who heads the Asia Pacific practice group from L.A. and Tokyo. International business made up 20 percent of Paul Hastings’ $455.5 million in 2001 revenues, Miller said. The firm also has a London office.
Koo and Partners was founded in 1993 and will operate for three years under the name “Koo and Partners, in association with Paul Hastings.”
A bankruptcy filing hasn’t stemmed the flow of dollars out of PG & E; Corp.
The San Francisco utility company’s total bill last year to outside attorneys was $34 million, according to the San Francisco Chronicle. The highest paid firm was San Francisco-based Howard Rice Nemerovski Canady Falk & Rabkin PC, which received $8.3 million.
L.A.’s Latham & Watkins received $5 million in fees last year from PG & E;, according to the paper.
Martha Jordan, managing partner of Latham & Watkins’ L.A. office, declined to discuss specific fees paid by any clients but said $5 million would be a “sizeable client.”
She said Latham & Watkins played a supporting role in PG & E;’s bankruptcy last year.
“We represent them in a number of litigation matters that were filed and public record long before the bankruptcy,” Jordan said. “Because of that, we had a secondary role in the bankruptcy, but it’s a very limited role.”
Staff reporter Amanda Bronstad can be reached at (323) 549-5225 ext. 225, or at