Sabre joins ticketing battle with American Airlines

Sabre Holdings told American Airlines that it plans to oust the carrier from its GDS in early August, accelerating the expiration of its contract by one month. In the interim, Sabre will bias displays of American flights in the US and all other parts of the world except Canada and the EU, where laws prohibit biasing.

Sabre also revoked American’s “significant discounts” on its segment fees. In a statement, American characterized the move as “punitive.”

The travel company announced its plan after American revoked Orbitz’s ticketing authority last month (ATW Daily News, Dec. 23). In addition, Expedia stopped selling AA’s tickets after its contract with the carrier expired last week and the companies could not reach agreement on new terms.

The dispute has its origins in American’s merchandising strategy, which entails direct XML connections between the carrier and all its distribution outlets, including on- and offline travel agencies. American also wants to connect with GDSs in the same manner and cut the Edifact connection that most carriers currently use. It has said that only outlets that connect via XML will be able to sell its ancillary products and services.

Sabre Travel Network Senior VP-Marketing Chris Kroeger said American’s strategy will make it more difficult for travelers and travel sellers to compare air fares. He noted there are “significant cost implications” in implementing new connections.

“There are integration costs and operational and workflow disruptions,” he said. In addition, a “whole variety of complexity” that GDSs were designed to simplify, such as codesharing and interlining would need to be addressed.

The cost issue—in terms of both who will pay development costs and how significant they would be—has been batted about among the parties for months.

Jim Young, executive director of Open AXIS, a group formed to promote XML as the preferred electronic messaging structure for connectivity to airline systems, said the cost issue has been overblown by GDS companies. He pointed out that once an XML connection is developed to the Open AXIS standard, it can be used over and over to accept new data streams.

In its statement, American said it “has met all its obligations and continues to work in good faith with Sabre.” It called Sabre’s actions “anti-consumer, anti-competitive and harmful to its subscribing agents.”

“Sabre’s actions are discriminatory and patently inconsistent with both its contractual obligations and its professed goal of ensuring full transparency for the benefit of consumers and travel agents. In contrast, the actions only serve to protect Sabre’s market position and attempt to force airlines and travel agencies to rely exclusively on its legacy systems that only lead to higher fares and fewer choices for consumers,” the statement said.

Travelport, which is involved in litigation with American over the Orbitz issue, has no comment. It owns 48% of Orbitz, and the online agency is its largest customer for GDS services.

Amadeus said it is “aware and considering the recent developments in terms of our customers and our company. As a general policy, Amadeus does not comment or speculate on the business matters between other companies.”

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American Airlines was granted a temporary restraining order to prevent Sabre from biasing the carrier’s displays in the Sabre GDS.

American also filed a lawsuit against Sabre in Texas state court in Tarrant County alleging that Sabre’s recent actions “violates agreements between American and Sabre and harms American, the travel agent community, and the traveling public.”

The TRO will be in effect until the court considers American’s request for longer-term relief.

American said it intends to “vigorously pursue its litigation against Sabre, including seeking damages for other violations of our agreements.”

Sabre began biasing American’s displays on Jan. 5, pushing them farther down the page, and gave the carrier notice that it would terminate its contract a month earlier than anticipated. It also revoked segment fee discounts that American had been receiving in exchange for a long-term commitment to the Sabre system. American said the move would more than double its fees.

Sabre’s moves were in response to American’s direct-connect strategy, which mandates that only distributors that connect via the carrier’s XML technology will be allowed to sell its ancillary product and services, according to Chris Kroeger, senior vice president of marketing for Sabre Travel Network.

In a statement, Sabre said it “is confident that our actions are well within our contractual rights, and we will aggressively defend against American Airlines’ baseless claims to the contrary. We are confident that the court will affirm Sabre’s contractual right to protect our customers’ interests and support airlines that value transparent and efficient comparison shopping.”

In its lawsuit, in which Travelport also is named as a defendant, American also said it “believes the PR campaign against its direct-connection strategy and system during this period was coordinated by the GDSs, who intend to protect their high booking fees by preserving an antiquated, costly legacy distribution system.”

Collusion by the GDS companies would be a far more serious charge than breach of contract.

In recent weeks, the contretemps has become progressively more heated. In December, American revoked Orbitz’s ticketing authority over the direct-connect issue. Travelport, Orbitz’s largest shareholder, sued American for breach of contract. Orbitz is Travelport’s largest GDS customer. Expedia allowed its contract with the airline to expire on Dec. 31 and removed American’s fares and schedules.

In a deposition, Cory Garner, American’s director of distribution strategy, said Sabre had claimed in an e-mail in June that “American was obligated to provide it access to the Boarding and Flexibility Package fare basis code, which includes the reduced change fee fare rule, combined with the other two optional services – priority boarding and free standby rights – for distribution to its travel agency subscribers through its GDS.”

The package is one of the “ancillary products” that the American wants to distribute only via a direct XML connection with the distributor.

Garner said American responded with an explanation that the package was not a component of an air fare – it was sold as an add-on service – and so was not subject to American’s Participating Carrier Agreement with Sabre, which called for the airline to provide its “full content” to the GDS.

Amadeus has so far stayed out of the fray and is not a party to any of the legal actions.

But it weighed in last week, telling travel agencies that it is “committed to working with all carriers to ensure that the Amadeus GDS contains the most comprehensive content possible for our subscribers.  We believe direct and productive dialogue is the best way forward to achieve this objective.”

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