News from Travel Technology Update: American Airlines (AA) and Travelport asked the federal court that is hearing the carrier’s antitrust lawsuit to stay the case so they can “focus their efforts on mediation and potential resolution of this case.”
News from Travel Technology Update: American Airlines (AA) and Travelport asked the federal court that is hearing the carrier’s antitrust lawsuit to stay the case so they can “focus their efforts on mediation and potential resolution of this case.”
The joint motion for the stay came one week after Judge Terry Means of the US District Court, Northern District of Texas, dismissed Travelport’s counterclaim against AA, saying it lacked standing in the case.
In the joint motion, the companies also asked for an extension of deadlines in the case—Sept. 14 for discovery and Sept. 26 for expert disclosure—because they “believe that their time and resources are better spent in mediation and discussing resolution.”
The move set off a sparring match that pitted AA and Travelport against Sabre, another defendant in AA’s antitrust lawsuit.
Sabre vehemently opposed the stay, saying in its response that AA had initiated the actions and had brought substantively identical claims against Sabre in both the federal court and a Tarrant Country, Texas, state court. “And while American may now want to avoid the cost of prosecuting both claims in different courts at the same time, granting the requested stay would severely prejudice Sabre by (1) prolonging Sabre’s ability to put an end to this litigation entirely, and (2) eliminating Sabre’s ability to have its own claims against American resolved by the Court.”
AA and Travelport replied that Sabre is “the one party not meaningfully participating in any of the discovery” for which they are seeking a delay. They said Sabre has focused its resources on the Tarrant County case and has not asked a single question of an AA witness in the federal action.
In addition, they said, Sabre is refusing to have any of its witnesses sit for deposition in this case if they have already been deposed in the Tarrant County case.
Sabre also accused AA of seeking the stay in order to “exert leverage over Sabre in the parties’ commercial negotiations.”
AA and Travelport replied that “to the contrary, it is Sabre’s opposition to a brief stay that appears motivated to pressure American by requiring American to engage in significant discovery with Travelport and Orbitz (while Sabre continues to sit on the sidelines).”
AA and Travelport said they have already met once before a mediator and “believe that a second mediation could materially advance settlement.” The earliest mediation they could schedule is Dec. 12 and 13; and they have asked to be informed if earlier dates become available.
AA and Travelport said they would notify the court “whether further settlement talks appear to be fruitful,” or whether the stay should be ended.
AA and Orbitz have been separately pursuing a settlement, according to the motion.
Sabre and AA entered into mediation earlier this year but did not resolve their differences.
In another development, the court unsealed Aug. 6 documents in which motions by the defendants to dismiss the case were denied.
The documents shed further light on AA’s allegations.
The judge said that in its revised complaint, AA made a “plausible” case for conspiracy-to-monopolize by the defendants in alleging a plan to “punish and retaliate” against the carrier for its direct connect initiative.
“According to American, the GDSs benefit directly from the GDS model because it allows them to enjoy monopoly power, while travel agencies such as Orbitz benefit indirectly from the model because they share in the booking fees that the GDSs charge to airlines,” the court said.
“These allegations, taken as true, support a reasonable inference that GDSs and travel agencies alike share an interest in preserving the status quo of the GDS model and defeating efforts such as AA Direct Connect that challenge the long-term viability of the GDS model.”
AA also alleged that Sabre, Orbitz, and Amadeus engaged in “regular communication with each other about the threat that American’s activities posed to the GDS model, how each of the GDSs would approach negotiations with American (and other airlines) and how they would neutralize the threat that AA Direct Connect posed to the GDS model and its monopoly profits.”
Amadeus, which has the smallest GDS market share in the US, is not a defendant in the case.
AA also alleged that a senior Sabre executive at Sabre and a member of Travelport’s board of directors discussed their strategies for negotiating with AA.
“Numerous” travel agencies also were involved in the conspiracy, American alleged, and they “recognized that their communications crossed the line of legitimate competition on the merits.”
One agency expressed concerns about discussing AA’s Direct Connect initiative in writing, AA said, and “suggested using a code name.”
In a statement issued after the documents were unsealed, Sabre said, “There was no decision on the merits of the claims. The judge did not say American’s claims were valid, only that American had made allegations sufficient to meet the minimal pleading requirements of federal court. American makes a number of unsupported allegations which Sabre denies and maintains that it has not violated any laws.”
AA said, “The court’s order confirms that American has adequately pleaded numerous antitrust claims against the defendants, including monopolization and conspiracy claims. We would prefer to resolve our dispute with the defendants amicably, but any such resolutions need to end anticompetitive practices and to account for the harm done to American.”
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