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Thank
you, Mr. Chairman, for calling this hearing.
As a former Subcommittee chair, I spent a great deal of time examining
e-commerce issues, particularly those that affected consumers and the long-term
development of e-commerce. Many
of these issues continue to loom large, particularly because this segment of the
economy is flourishing.
In
point of fact, the online travel industry – the subject of this hearing -- has
grown by leaps and bounds in a short amount of time. As one of the largest
e-commerce success stories, it highlights the great possibilities of the
Internet and e-commerce.
The
Internet practically has turned every consumer into his or her own travel agent,
with travel sites offering various business models to meet consumer demand and
interest. From the bidding
mechanisms of Priceline.com, to web auctions, to the new independent sites like
Expedia and Travelocity, and to the supplier-owned site of Orbitz, we are seeing
some refreshing developments. These
results are being duplicated throughout the entire travel industry, including
the lodging industry. And this
wonderful innovation doesn’t stop with how the travel services are offered; it
extends to what is being offered as well.
Online travel companies are developing some of the most creative consumer
services imaginable as they compete for consumer loyalty.
Of
course, this portrait is not completely rosy.
As consumers continue to use the Internet for travel purposes and
transparency continues to improve, some business approaches will fail.
And some traditional services, such as the old role of the travel agent,
may no be longer necessary. It used
to be that, when people traveled, they called their local travel agent and
booked the best plan for their needs. Such
a function may be no longer viable, forcing the travel agent of yesterday to
adapt to a new role. I believe this
is exactly what travel agents are preparing to do.
It’s
the simple fact of a dynamic economy that technology advances eliminate
old-style jobs for new jobs all the time. We
no longer have Blacksmiths, candle makers, or block ice delivery. We should recognize the benefits of such a dynamic and not
try merely to protect jobs or failed business models supplanted by new
technologies. On the other
hand, there may be legitimate concern if certain technological advances are
coupled with creative relationships that simply mask old-time trickery, funny
business, or collusion that harms the competitive marketplace – and consumers.
Supplier-owned
distribution systems in the online world have generated some heated debate about
competitiveness. These sites, which
go beyond just the travel industry, raise some interesting questions.
It certainly is quite unusual to see the biggest industry players --
longtime fierce competitors in the off-line world -- come together in one happy
family to jointly sell services or products online.
Orbitz
and Travelweb hold out many potentially positive benefits for their owners, such
as lowing the operating costs, creating a new avenue for unloading excess supply
of travel services or products, creating new relationships with end-consumers,
and promoting efficiency – all of potential benefit as well for
bargain-shopping consumers. Yet
there is legitimate concern when the controllers of supply also play a major
role in distribution. There is a
question whether the creation of these sites by the suppliers was done or is
operating with intent to block new entrants from getting their foot in the door.
This remains the crux of this debate. This
hearing can be helpful in sorting out what is actually going on.
I
should add that members of this Committee certainly wouldn’t allow the
development of detrimental dominance of the online travel industry, by Orbitz
and Travelweb or any other service. Our
interest is to assure that the benefits of a dynamic marketplace are fostered,
not stifled.
Thank
you again, Mr. Chairman; I look forward to the testimony and yield back the
remainder of my time.
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