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Sabre joins ticketing battle with American Airlines
American Airlines 737-800. Photo: By Rob Finlayson.
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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© 2012 Penton Media, Inc.
Discuss this news 16
ALL that Travelport and Sabre
By RJALL that Travelport and Sabre can hope is that NO OTHER
Airline like Delta or UAL takes the plunge and tells them to "Can it" !! American might be in this fight alone right NOW but who's to say that an attack on ONE isn't an attack on ALL????
This is BIG news! It is said
By UMESHThis is BIG news! It is said that Sabre originated from AA and therefore, its letting the parent go this way is surprising.
When you play with fire,
By AnonymousWhen you play with fire, sometimes you get burned.
AA has been playing with fire.
If all the GDS will join forces, AA will come crawling back on their knees - or go out of business.
I hope this will be a big lesson learned.
AA is going to have to
By PaulAA is going to have to rethink this. Travel agents use the major GDS for millions perhaps billions of Dollars worth of Business Travel every year. Southwest had to join the major GDS to compete. Leaving will only hurt business. Kudos to Sabre for cutting them off before they were ready to leave. It is time for someone to step in and tell the airlines enough already as they get away with whatever they want without any repercussions. I only hope that Apollo - Worldspan and Amadeus follow suit. I am not sure how AA think they will survive in the Business Travel world without a Global Distributions System. American Express, Carlson and other major agencies are not going to change their business model to suit AA and other airlines will only gain strength through American's actions. If you can book Delta, United or even Southwest in a GDS why would you go elsewhere just to book AA..? The only market that will survive for AA in this move will be DFW.
Bite the hand that feed you,
By AnonymousBite the hand that feed you, ... AA gave birth to Sabre, interesting about history, the government accused AA of monopoly way back in the 80's, AA spun Sabre off, to it's own very successful company, and now Sabre is trying to have a monopoly in the market place itself, who says capitalism doesn't need regulation? ...
A historian , who works for AA and at one time worked for Sabre, ... that should entitle me to the historical facts.
Jetman ...
I suspect American wants to
By AnonymousI suspect American wants to implement a new individual price discrimination scheme whereby fares are offered higher for those individuals with more inelastic demand. To do this, the website identifies you by your mileage number and matches it with your past flying history. If you regularly fly a segment, your fare offered will be higher so as to extract more consumer surplus from you; however, others with more elastic demand will be offered a discount to fill the seats. In order to implement this scheme, the potential customer must be identified by loyalty number before fare prices are offered. The regular customer must be prevented from going onto the Orbitz site and accessing the discounted fare.
Most people may not
By AnonymousMost people may not understand the fees that consumers pay for airlines using GDS - fees that are well hidden from the public. I believe that American is on the right track to provide more transparency in the system - what's wrong with more transparency? Or it just the start of the demise of the role of GDS spurred on by the internet revolution: first music, then newspapers, book publishing, now airline tickets ....
Are you kidding me? There is
By IQAre you kidding me? There is very little brand loyalty in the airline industry: they are commodities: they all lose luggage the same way, all have the same cramped seats and all have antiquated 70's management teams!! It is about the brand....and AA and Delta and United all have terrible brand images so consumers will not go directly to their web sites the way consumers go to much stronger travel brands e.g. Marriott, SWA etc. Consumers looking for commidities go to Walmart, and in the travel business that means going to priceline, orbitz, expedia, opodo, kayak etc.
Hopper and Crandall spun off
By IQHopper and Crandall spun off Sabre because they saw the business opportunity and returned millions if not billions back to AMR and their shareholders. They did their jobs well, the same does not necessarily hold true for current airline execs. For the record, the GDS industry is an oligopoly, not a monoply.
For the record, all the
By IQFor the record, all the internet web sites are connected to one or more GDS. The GDS still provide all the distribution technology for the airlines whether it is a direct connection, e.g. AA.com (back door), or agency connection e.g. Travelocity (front door). Go to AA.com and then go to one of the online sites and you will get the same price.
i think AA and Spirit should
By Jewi Arpii think AA and Spirit should get together. Arpey should get a couple hours of CEO 101 AIRLINES, from Benny! I mean look, 600 planes and 2 worlds of DEBT that no man alive will ever pay off in 1000 years. Whereas 32 planes ALL CASH!!!
Do you honestly belive AA
By spookieDo you honestly belive AA will pass on the savings of not using the GDS onto the consumer? You must be very naive...................
i agree with what spookie
By Anonymousi agree with what spookie says .but does the consumer continue using AA in this case or does others benefit from this ???
I dont think AA will turn
By kayI dont think AA will turn down on Sabre because it will cost AA a huge amount of $ and time to retrain all of its staffs to adapt new GDS system other than Sabre, since Sabre has been the primary system AA had been used ever since.
It'll cost AA a huge amount
By kayIt'll cost AA a huge amount of $ and time to retrain all of its staff to adapt with new GDS system since Sabre has been a primary source to AA ever since. So I don't think they'll dare to turn down on Sabre.
Try to think of it this way
By AnonymousTry to think of it this way (for the computer literate):
The GSD System is to XML as Microsoft is to Open Source
Yes everyone uses it and we all pay the $billions to use it.
American's question: Is it a good value? Wouldn't we all be
better off with XML. GSD providers: No you're messing with
my profits!
As we all know money talks.
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