Distribution battle flares as American, Sabre sue each other

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The battle over how travel is distributed in the US got bloodier on 1 June as American Airlines and global distribution system (GDS) Sabre filed antitrust lawsuits against each another seeking damages.

American's suit against Sabre - an amendment to the airline's ongoing litigation against GDS Travelport - and Sabre's fresh antitrust claim against American were filed on the same day that an agreed litigation 'cease fire' between Sabre and American ended.

"Our preference was to extend the current legal 'stand down. However it is apparent based on American's actions that Sabre has no choice but to pursue legal remedies," said Sabre Travel Network senior vice president Chris Kroeger, adding however, that Sabre "will continue to pursue through negotiations a distribution agreement with American that meets the needs of all constituents" in parallel with the litigation.

Sabre's suit alleges that American "is engaging in anticompetitive conduct to maintain its monopoly position over air transportation out of its hubs and between many US and Caribbean cities, and to gain a monopoly position in air booking services for travel between those cities".

It also claims that American "is unlawfully forcing travel agencies, travel management companies and corporations to take its 'direct connect' product in order to access the airline's full fare information, which constitutes illegal 'tying'" and that the carrier is "attempting to eliminate the GDSs".

Several billion dollars are paid annually by airlines to GDSs. Noting that Sabre and Travelport together control over 90% of bookings made by US-based travel agencies, American is making no apologies for pushing its 'direct connect' model that would allow travel agents to bypass GDSs and access inventory directly from the carrier.

"The illegal actions of Sabre and Travelport have harmed consumers and travel agents alike in a number of ways, including suppressing innovation that would enable travel agents to better serve their customers," said American.

Its suit also alleges that GDS actions have hurt airline passengers by forcing airlines to seek to charge higher fares to recoup "the high, supracompetitive GDS fees".

The battle lines between American and the GDSs were drawn at the end of 2010, when American removed its inventory from Orbitz, which is 48% owned by Travelport, after failing to reach a pact that would have increased the amount of American tickets processed through a direct connection with the online travel agency.

American's decision to drop Orbitz set off a dizzying chain of events that saw rival online travel agency Expedia, a Sabre user, cease offering American's fares on its site when its contract expired in December.

Then Sabre opted to disfavour the carrier's fare offerings from its GDS listings and eliminate booking fee discounts. The Sabre blow prompted American to file a lawsuit against the firm, but the two parties later agreed to the truce that formally ended yesterday.

American and Expedia, meanwhile, in April reached a pact whereby the online travel site resumed displaying the carrier's fares, and agreed to access American's inventory via the carrier's direct connect link by using GDS aggregation technology.

But that same month American sued Travelport and Orbitz for alleged anti-competitive practices.

Adding to the confusion the Illinois circuit court that originally permitted American to remove its inventory from Orbitz at the end of last year conceded yesterday that it erred in its ruling, and entered an injunction against the carrier requiring it to reinstate Orbitz's ability to display and ticket its flights.

American says it intends to honour its existing contractual obligations with Sabre and Travelport throughout the litigation proceedings.

Separately, US Airways recently filed suit against Sabre, alleging anti-competitive and anti-consumer practices. And the US Department of Justice is investigating the "possibility of anti-competitive practices in the global distributions system industries".