In response to a lawsuit Expedia filed this month, defendant United Airlines confirmed that its ticketing agreement with the online travel giant expires Sept. 30 and that the airline "intends to walk away from Expedia" at that time.
As such, United alerted Expedia this month that it would suspend the sale of its tickets through the online travel agency for flights departing after Sept. 30., so mutual customers aren't left hanging. "This was necessary to prevent Expedia from continuing to sell tickets to United travelers for which it would have no ability to meet its contractual service obligations (and from improperly charging United fees for doing so)," United stated in its answer, dated Feb. 22.
While Expedia claimed United is jockeying for "leverage" in contract discussions, United's answer before the court positions the airline as serious about leaving Expedia and doing its best to prepare for a post-contract world: "United is planning for the end of its relationship with Expedia," the airline stated.
This month, United alerted Expedia by letter that it planned to cut Expedia's access to post-September inventory as their contract expires. That gave rise to Expedia's suit, in which the OTA alleges the airline's withdrawal of content would breach their contract. Expedia called United's plan to pull content "a brazen attempt to force Expedia to renegotiate the agreement's economic terms, with which United is unsatisfied."
A letter to the judge this month from Expedia counsel stated that United had agreed, for now, "to defer taking the action described in the United Letter," pending the resolution of some motions.
United stressed that it has not violated its contract, calling the OTA's lawsuit "meritless" and "a transparent attempt to force United to do business with Expedia after their contract expires."
Expedia's initial complaint stated that United's alleged breach "will severely and irreparably harm" the OTA and its customers, as Expedia will not be able to facilitate United reservations and will lose the "ability to provide customer service to the many customers who have already booked post-September 2019 flights and also to those customers who will seek to change a pre-September 2019 flight reservation to a post-September 2019 flight."
Yet, United in its answer, dated Feb. 22, countered: "There is no dispute that Expedia is contractually obligated to service those who book United flights through Expedia through the end of the contract. This includes, for example, helping customers change flights and reserve seats. It is likewise undisputed that Expedia will not be able to perform these functions once its contract with United expires on Sept. 30, 2019. After that, United’s relationship with Expedia will be over. Hundreds of thousands of people who used Expedia to book United flights for dates after their contract’s expiration will accordingly be left with tickets that they cannot change. As Expedia admits, these customers will be subject to 'unexpected delays, logistical burdens, and potential increased costs.'"
Given this backdrop, United stated its plan to cut Expedia's access for post-September flights is in customers' interest and its own and will "ensure an orderly winding down of its relationship with Expedia."
According to United, the cutoff is necessary "to ensure that Expedia does not issue hundreds of thousands of tickets for flights that depart after its agreement with United expires—leaving all of those customers without even basic forms of service from Expedia. Limiting ticketing authority to flights that depart during the duration of the parties' contract is a commonsense solution to an obvious and impeding problem and a solution that is entirely permissible and appropriate under the parties' contract. There is no reason why Expedia should be allowed to continue issuing tickets for which it cannot meet its contractual obligation of providing customer service."
United stated that "has been focused on this problem for months" and has "tried to negotiate a new contract that would take effect after their contract expired so that United travelers who booked through Expedia would not be stuck in a no man's land after Sept. 30, 2019. But Expedia refused to negotiate, 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."
United concluded, "The reason why Expedia refused to negotiate a successor contract is straightforward: by leaving hundreds of thousands of flyers who booked United tickets through Expedia without customer service, Expedia intended to create a situation so untenable for United that United would be forced to extend the contract on terms United does not want."