This case marks one of the latest developments in what is becoming a wave of antitrust suits against global distribution system (GDS) in the airline sector. The airlines are claiming that the fees they have to pay to third-party distributors are too high. And the specter of price control makes antitrust litigation a natural field of battle.
According to the complaint, Sabre currently charges travel agents penalties for bookings made outside its network. Now, Sabre is threatening to exclude US Airways from what it offers to travel agents if the airline doesn’t book through the Sabre GDS.
US Airways claims it would not able to survive without Sabre, as the revenue it would lose without access to the GDS would be too severe. US Airways books more than 35 per cent of its revenue through Sabre and its affiliated travel agents, the airline says.
US Airways President Scott Kirby tells Reuters, ‘Sabre has had a monopoly for years and has used that monopoly as leverage over us.’ He adds that ‘the only way Sabre is going to change their behaviour is through an antitrust lawsuit.’
Meanwhile, Sabre sees the suit as an attempt to constrain competition.
Nancy St. Pierre, a Sabre spokesperson, says of the lawsuit, ‘It is yet another misguided attempt by an airline to use the courts to undermine a market-driven distribution model that has brought competition to the airline industry by providing consumers and the third parties that serve them with the ability to quickly and conveniently comparison shop for services across hundreds of airlines around the world.’
In January, American Airlines sued Sabre on similar grounds, saying that it could lose ‘countless sales’ if Sabre were permitted to give preference to other airlines in flight listings. The Associated Press reports that American called Sabre’s moves anticompetitive and anticonsumer by slanting information viewed by travel agents before they book flights. Currently, the action is on hold until June 1 as they try to reach an agreement.
Last week, American sued online travel agency Orbitz Worldwide and GDS Travelport over ‘anticompetitive business practices,’ for trying to control the distribution of airline tickets. At the same time, most of American’s revenue comes from tickets sold by travel agents who obtain information from all GDS providers.
St. Pierre says that Sabre will defend its position aggressively: the GDS will ‘pursue [its] own legal rights, and take appropriate action to protect consumers’ right to a transparent marketplace.’
Douglas Quinby, senior director of research at PhoCusWright, a market research and travel industry authority, notes that Sabre continues to play an integral part in the global ticket distributino.
‘Not having the ability to distribute tickets through Sabre, which is the leading GDS in the US, would be detrimental to the airline,’ adds Quinby. ‘The GDS provide incentive payments to agencies, which increase when agreed volume targets are reached.’
And this, quite frankly, is the heart of the matter. Through this suit, the extent of Sabre’s alleged control should become evident, a situation the rest of the airline industry is likely to watch closely.
Yet, the clarity on GDS strength over price determination may not come out in the courts at all. American and Sabre withdrew their complaints earlier this year, for example.
‘Forcing a lawsuit brings a lot of dirty laundry out into the open, something neither party wants,’ says Quinby. ‘But in this case, it is still likely that this dispute will ultimately be resolved around a negotiating table.’