US Airways and American Sue Reservation Systems on Monopoly Claims

I’ve been following the fighting between American and the global distribution systems (GDSs) fairly closely here, but I’ve yet to comment on the latest development. First, American decided to sue Travelport, but the big news is that now other airlines have decided to jump in. US Airways is suing Sabre, and this comes after the airline had just signed a long term renewal agreement with that GDS. What gives? The backstory is better than a soap opera.

US Airways Claims Sabre Monopoly

If you need full background on this saga, I’d suggest starting with this post on why American wants to go around the GDSs. In short, to reach a huge chunk of customers (primarily corporate travelers), the airlines have to sign participation deals with each of the three GDS companies in the US. The airlines are now saying that the GDSs are holding them hostage because the GDSs are the gatekeepers to this large group of travelers and there’s no way around them and their monopolies. It’s a compelling argument. Let’s look at the US Airways suit more in-depth.

Recently, US Airways signed a multi-year deal for Sabre to sell its flights to all its travel partners. It was clear that US Airways was unhappy about this from the beginning. It responded to Sabre’s press release on the deal with a terse statement that it “disclaims any characterizations by Sabre of US Airways’ views of Sabre, Travelocity, or US Airways’ relationships with those companies.” What did it object to? Probably that “US Airways recognizes the value of the Sabre global distribution system and our innovative leadership in helping airlines market and sell their products.”

Now we know that a lawsuit was in the works. The story is a fairly simple one, and it shows an airline that had no choice but to sign with Sabre even though it clearly was unhappy with the terms of the deal.

Why do I say US Airways had no choice? Well, an incredible 35 percent of US Airways’ revenue comes in via Sabre. While some of this could be replaced since it comes in from online travel agents that have plenty of alternates, the biggest and most important chunk comes in from corporate travel agents that use Sabre as their sole booking source. Corporate travel is the lifeblood of most airlines since it’s full of frequent, high dollar customers. But much of corporate is done through corporate agencies and 85 percent of those agencies are locked in to a single GDS.

As we know by now, booking through these reservation systems can be expensive, and so airlines like American have been proactive about trying to pitch a “direct connect” solution that would bypass the GDS and save a boatload of money. Beyond saving money, it would allow the airlines to sell more than just a seat with things like premium seats, priority check-in, etc. But that’s just the tip of the iceberg. Not being dependent upon the GDSs would allow airlines to get more creative in how they sell in general.

So why can’t they kick the GDS habit? Because Sabre and the other GDSs have travel agents locked in. This is one of those goofy industries where the airlines pay booking fees to the GDS and the GDS then provides kickbacks to the travel agents to keep them onboard. In other words, the GDSs pay their customers to use them. Where else does that happen? With this type of relationship, it’s hard to get the travel agents to stop using GDSs and the GDSs use tactics to make it even harder.

Some GDS relationships require travel agency exclusivity, but even those that don’t still threaten to take away the kickbacks if the agencies start using other sources. The result is that no agency in its right mind would walk away when money is flowing in the door.

So why don’t the airlines just start paying the travel agents some of that money directly? They’ve tried. Back in 2005, for example, America West tried to offer agents a commission if they booked on the America West website. Sabre flipped out and increased rates twice in three months for those bookings that came through Sabre. America West couldn’t get all agents on Sabre to switch overnight, so the ones that remained on Sabre became so expensive that the airline had to back down.

Since Sabre holds such a large chunk of US Airways’ revenue, it’s impossible for US Airways to walk away. Because of that, Sabre can effectively demand anything it wants. And it does. US Airways had this to say about its most recent negotiations with Sabre in the suit:

Sabre’s monopoly power was witnessed most recently in its efforts to force US Airways to enter into a new contract with Sabre that contains numerous oppressive and
anticompetitive terms designed by Sabre to harm competition and entrench Sabre’s dominance. US Airways had no choice but to sign the agreement, which it did under protest, or face a complete shut off from Sabre’s network.

So what were these terms? We don’t know all the details, but there are some that are pretty clear. The biggest issue is that Sabre requires “full content” provisions in its agreement. In other words, any fares offered by US Airways in any distribution channel must also be provided to Sabre. You probably remember that there were a lot more web fares in the early days of online booking, but ever since this full content provision has been thrown in there, those have effectively disappeared. US Airways, along with every other big US airline, has no way to offer discounted or special rates on its website anymore, because Sabre and the other GDSs won’t sign an agreement without that provision.

In the latest negotiation, US Airways offered to pay a higher booking fee in exchange for the elimination of the full content provision, but Sabre declined. This full content provision is like a noose. It not only prevents the airlines from offering different fares on its website, but it even prevents the airlines from doing things that the GDSs can’t handle.

For example, when US Airways launched its Choice Seats program which allowed customers to pay a fee to sit in a better seat, Sabre couldn’t handle the functionality. Because it couldn’t handle the functionality, it tried to block US Airways from selling Choice Seats through any channel because of this “full content” provision.

As you can see, US Airways and the other airlines are stuck. So now it’s time to head to court to get the feds to agree with them that this is monopolistic behavior. Back in 2004, the feds had originally deregulated the GDS industry and that’s when this problem started. US Airways and American cite several examples of bad things that the feds warned were possible at the time. Now that they’re proving to be true, the GDSs are finally getting challenged. It’s now up to the courts to decide if this is unfair or not.

As you can imagine, the GDSs deny everything. They say this is a smokescreen that is really an effort limit customer choice and are trying to portray themselves as the heroes of the customer. I personally just don’t see it. Take a look for yourself.

If you want to see the US Airways case, it’s in the Southern District of New York as case 11 CV 2725. Update: Here’s a copy of the US Airways complaint. American’s filing can be found here.

47 Responses to US Airways and American Sue Reservation Systems on Monopoly Claims

  1. Bob K. says:

    Great article Cranky, but you, uh, might want to fix the headline there. Took me a few minutes to figure out that “Sure” really meant “Sue”.

  2. I’m waiting for the endgame on this one. But its pretty crazy that the airlines want to offer the ability to buy all the addons up front, in as clear a manner as possible, and Sabre can’t.

    Sabre just seems to want to be a dinosaur drag the whole damn industry down… In the words of the commentator from Airplane! “I say, Let em die.”

  3. Ace_dc says:

    Ha, memory in this industry is such shortlived. When airlines owned the GDS’ (American/Sabre, Delta/Worldspan, United/Apollo, etc.) there was never any issues like this for obvious reasons. But this was when the business model was set and travel agents were using the technology. However, when airlines sold the GDS for cash, they obviously didn’t have enought foresight to see that this would potentially be a problem when the GDS was forced to make it on its own.

    Frankly, I see this “sour grapes” approach by airlines in several areas. Mainly by the US airlines that tried to grab easy cash by divesting support services. You can’t blame the GDS for wanting to survive, or using leverage to secure good contracts. 34% does hardly a monopoly make. What about all those routes where US has 100% marketshare and charges $999 a ticket with a 2 week advance? Market dynamics. You play in the sandbox you landed in.

    @Nicolas- we can say the same about the airlines, no? How many bailouts do we give the individual airlines before we say enough? I think no more than a shallow dig will reveal plenty of instances where airlines were the drag. If you recall AC wanted to “unbundle” their product. They decided to work hand in hand with the GDS to support this on their platforms.

    I am just sick of hearing how my tax money is going to support the legal system where these airlines go to pout. 4th graders have learned to play better together. Why does this have to go legal? Here come the “That’s why Southwest is so great!!!!” posts…

    • Well, last I checked the airlines didn’t get bailouts. The last outright money they got from the feds was after September 11 as compensation for being grounded and forced out of business for several days. E.g. the business continuity equivalent of eminent domain. Sure they got some loan guarantees, but AFAIK they paid for that..

      Besides, I hate the term bailout. For most of the financial industry it was a loan of last resort, and the tax payers have made money off most of the loans individually, and are in sight of making money off of it as a whole..

      Oh, and the airlines did pay taxes back when they made money.. Sure they didn’t use the bankruptcy court then, but others did and didn’t pay the taxes for it then. This is part of living in a society, we pay for things we don’t use, so that if per chance we need to use them, they’re there.

      • DAB says:

        The bankruptcy law itself in the US is so heavily skewed towards keeping airlines specifically as a going concern that use of the law itself constitutes a bailout for the company (management…). Other industries do not receive the protection or leeway that the airlines get.

    • Oh, and the Airlines are innovating! So you can’t say the same about them.

      Sabre? I don’t see that they are, or they wouldn’t be trying to milk this revenue cow for all its worth.

    • CF says:

      Yes, the airlines started the reservation systems and sold them, but remember, until 2004 the GDS industry was regulated. So since the time Sabre was spun off from AMR in 2000, a lot of things have changed.

      You ask why it has to go legal – it’s because the airlines don’t see any other way out of it at this point. They have no ability to shift business away from the GDSs, and every effort has been thwarted. So they see this as an option of last resort, I assume.

      • Ace_dc says:

        Cranky, there is ALWAYS another option. Particularly with technology, it is expected that someone will ultimately develop another system if there is a market for it. If airlines truely were so “locked” into the GDS, I am sure they could spend some of their capital looking at a way around it.

        Using the fact that GDS was regulated during the selloff is a bit of a pass for airlines. Deregulation doesn’t happen overnight. And it happened with the airlines’ blessing if you recall. The “deregulation” word is thrown around a lot in this industry as an excuse for bad things. Mularkey. Good companies innovate and survive. Bad companies complain and sue.

        The fact is, airlines (as I have seen it) just don’t think ahead with their investments. Reactive, not proactive. This causes exactly this sort of issue. I would suspect if you could develop a slick travel agent iPad “app” for those corporate agents, they would change in a heartbeat. Many paths to the same goal.

        • CF says:

          The issue is not that there isn’t another technological solution. That’s quite clear, and that’s the whole reason for this suit in the first place. The problem is that even though there is a better, cheaper solution that airlines could utilize, the GDSs have control of the customer by locking them in via payments and agreements, so that prevents adoption of a new solution. Your assumption that travel agents would flock to some iPad app is simply not true. That doesn’t happen, and it’s why airlines like Southwest have found themselves needing to play in the GDSs.

          If you read any of these suits or the government’s deregulation ruling, you will see that much of what is happening today was seen as a potential undesirable hazard of deregulation. Now that it’s happening, the government needs to decide if it’s going to act or not.

          • Ace_dc says:

            So I am a major business owner (airline), and I have a single channel of distribution (GDS). Because I own this distribution, I do everything in my power to lock up the travel agencies (this includes exclusivity clauses for other GDS suppliers).

            I start to lose money, I look for cash. The GDS distribution chain is worth millions if I sell it. I decide this is a good thing.

            When I sell, I try to prevent myself from getting locked into a bad deal, but find that the valuation of the GDS (and the cash I get out of selling) is tied into this model. Then “deregulation” comes along and I have a convenient excuse for blaming things on someone else.

            From my perspective, the airlines already cashed out on this. They made the choice that the cash in selling the GDS was worth more than the potential of being locked into this distribution model without leverage.

            How do you call on the government to act? This isn’t France, or China. We have a free market where companies are free to mess up. The airlines did. Plain and simple. And they are paying for it. Now, either they find an alternative or they pay. Or they become a “leisure airline” as you say.

            Sorry, I live in DC and am fed up with all the entitlement talk. We are running $5B deficits EACH WEEK because we can’t keep our wallet in our pants. Life is hard, cut back. If you can’t pay the GDS, find something else. Its not like Sabre tricked the travel agents to get the 35%. They have a smart model and use it to their advantage.

            Doesn’t Delta do that whenever a new airline comes to their markets? They dump 400% more capacity to “save market share”, right? Now you think they GDS is to blame in this mess?

          • Ace_dc says:

            Oops. I meant PER DAY. $5B per day.

  4. Why hasn’t some company started a web base airlines reservation system that all airlines would sign up for and move away from Apollo/Sabre/Wspan?

    With web base they could sell things the way they want like on their own websites, and not have to follow the GDS platform/formats that haven’t changed much since they were first designed.

    • Evan says:

      There are solutions outside of GDS, but there’s a business model problem here. Airlines pay GDS to distribute, GDS pay agencies for the business. Everyone wins.

      Airlines now say they want to go straight to agencies and pay less.

      Do agencies want this? Not necessarily. Because the status quo works reasonably well and they’re afraid the money flow will dry up (a valid concern since airlines want to pay less). Additionally, we’ve got a technology issue where agencies are tapped into GDS for everything and they can’t exactly switch to another solution en mass. There are hundreds of thousands of point of sale agencies. This means the GDS has leverage…at least for now.

      So, put that together, and we’ve got ourselves a problem. Whenever the flow of money is changing in a big, entrenched, industry with many layers of players — this is what we get.

  5. Dan says:

    Sounds like my consumer choice really got limited when the GDS went with those “full content” provisions. The GDS’s shouldn’t be forcing me to buy more expensive tickets, but that’s the end result when the airlines can’t offer discounted web-only fares because of their lower distribution costs.

  6. Sanjeev M says:

    Where does Southwest fit in this? I know they do some corporate SWABIZ stuff on some GDS (which one?) but the regular stuff is only on southwest.com.

    • CF says:

      Southwest has never played by the rules because until recently, they never distributed at all through GDSs. So why start? Because it knows that to get the corporate customer, it has to play with the reservation systems that they all use for booking. It only plays in a limited way right now, but that’s probably hurting its ability to take these bookings.

  7. Shane says:

    This is a lot like iTunes and iPhones where apple is now demanding a larger commission on iTunes purchases as well as purchases from within apps. It’s kind of a chicken and egg question with both Apple and GDS: do people purchase the product because it is on the platform or do people go to the platform to get the product.

    • gtrjay says:

      Good call. However, some bands/artists can and have pulled out or refused to have music on Itunes. Bands such as AC/DC, Kid Rock, Eminemn, Metallica and more all feel buying the entire CD/Album is what they want and they feel their music is best as a whole and not as ‘singles’. I can see both sides, but in the end the marketplace will decide or people will steal for free online.

    • CF says:

      Apple certainly made that market initially, but does anyone know how those contracts are structured? I mean, does Apple have a provision saying that if you want to sell via iTunes, you can’t sell it for less anywhere else? And would it cause irreparable harm to the band if it pulled out of iTunes?

      • gtrjay says:

        it depends on the label (major vs. indie) and the artist. Metallica and GNR will have more clout then say a smaller band that has sold much yet.

  8. gtrjay says:

    Cranky! This was a great read and really helped to shed some light on the airlines side of things. How about a cranky jackass award for Sabre and the GDS in general? They seem very worthy of it!

    • CF says:

      It’s such a murky situation that I hate to bestow the Cranky Jackass award yet. We’ll see how this all unfolds, but I try to be pretty selective for that award now. Gotta try to ad some prestige. ;)

  9. CF says:

    For those who want to read the US Airways complaint (it’s definitely worth it), I’ve posted it up on my site. It’s a 51 page PDF:
    http://crankyflier.com/files/RedactedUSSabreComplaint.pdf

  10. AlexT says:

    @Dan, Consumer choice was definitely not limited by “full content” provisions. Consumer choice was simplified by full content. Now if you go online, call the airline or call a travel agency you get transparent pricing. the 35% of consumers that purchase through Sabre aren’t getting cheated by the airline trying to sell their product through discount channels. The other 3 major GDS constitute another 55% of distribution. Full content provisions are protecting those consumers and travel agencies from being unfairly abused by ailrines. The airlines are the entities that are seeking to monopolize the distribution channels for products so they can make more money off your ticket purchase. It’s the american way. If the airlines don’t like using GDS to distribute their tickets, then they should just stop using them. Southwest did.

    • CF says:

      You could certainly make the argument that consumer choice was limited in the sense that if Sabre isn’t able to sell the product in certain ways, then the airlines were prevented from doing that as well. So it does limit things.

      Also, where does it say that airline tickets should be sold for the same price regardless of the channel? I mean, is there a rule that says a Snickers bar always has to be 99 cents? If you buy it for 99 cents and then find out that it was available for 79 cents down the street, are you outraged?

      Also, the whole point of the suit is that the airlines can’t just walk away from the GDSs because they would lose up to a third of their business overnight. That’s just not sustainable.

  11. NM says:

    Don’t be naive, you aren’t paying more because of the GDS full content agreement, the airlines aren’t making as much as they want to that’s what this is about! They use their “concern for the consumers” to get the public onboard with what they want to do and it works everytime. They have never passed a penny of any savings on to the customer before and they won’t now. What they want is to be able to charge you for lots of additonal items but are being inhibited from doing it so they’re going legal to get what they want.
    They never think ahead….GDS-their idea and they’ve been whining for years since they sold it that they have to pay. Orbitz-their idea too and now that they’ve sold it they’re complaining about it too. Wants some cheese with that whine….oh oops, you don’t serve food anymore people have to pay for it!

    • Ryan says:

      You actually sound like you’re the one whining. A little bitter about airlines trying to make some money? Do you have any proof that airlines don’t pass on any savings to the customer? Otherwise you’re just making an assumption that airlines are only caring about this issue because they are trying to save a couple dollars per booking.

      It appears they are more concerned with their limited ability to display fares and other options. As a customer, having more choices is better, whether you agree with those choices or not. You can complain about all the extras airlines charge for, but you aren’t forced to buy them. So I don’t think your argument changes really supports anything being discussed by Cranky.

    • NM its laughable that you’re complaining about airlines not passing on a penny of savings in a business that is barely profitable. Airlines aren’t making money hand over fist. Period.

    • CF says:

      Airlines are not public utilities. They are businesses that are supposed to make a profit. So if this is something that will help them make a greater profit, then that’s a good thing.

      Technology has changed dramatically in the last two decades, and the GDSs have not kept up. The airlines wouldn’t be complaining if there weren’t better, cheaper technologies available. But there is, so that’s why they complain. And it’s completely rational.

      • Ace_dc says:

        Cranky, you are starting to sound like an airline shill. GDS companies have (probably) invested millions into changing their technology. They deal with LOTS of airlines, each of which is using a 30-year old self-developed reservation system. Then the airline decides to get cute and sell seats. This costs the GDS $2 million to implement, and the airline doesn’t compensate them for the costs. So the airline gets to increase profits, but not add any benefit to the GDS to wipe out the $2 million. Oh, and 5 other airlines are looking to do the same thing, but none of the development is the same, so it will cost the GDC another $10 m.

        Nothing is ever as simple as it seems in a press release…

        • CF says:

          Nothing make me more angry than the use of the word shill, because it simply dismisses any argument regardless of its validity. It’s the easy way out of a substantive discussion. I don’t know about you, but I’ve read through both lawsuits. Nothing is coming from the “press release” as you seem to think.

          The airlines would be more than happy to save the GDSs the cost of investing in this technology. They could go around and use other technology that already supports what they want. But the GDSs don’t permit that to happen, so they end up being the decision-makers. If they’re going to control the marketplace for their corporate travel clients, then they need to keep up with the times. There is absolutely no reason that a distribution partner should determine how a supplier sells its product.

          • Ace_dc says:

            I read this blog and see enough posts to consider the word “shill” when it fits… This was an incredibly onesided post and all your comments have continued to be quite defensive.

            This is a free market. The GDS are part of companies that need to earn money too. Here are my responses:

            Airlines would absolutely not invest in the $2M (a made up number, who knows the real amount). Ask them. If you can post one quote from an airline exec who offers this publically, I would love to see that. It simply won’t happen. I have lived through the same in this industry and have the scars to prove it. They want to REPLACE the GDS with their direct path.

            Airlines would love to end around of course. Why wouldn’t the GDS defend their business. And they have a contract! The airline signed it! I would love to see you post a quote from an airline exec like this “we can say with certainty that our airline has never turned down the opportunity to work with GDS on integrating the technology”. I would venture the airline saw this as an opportunity to open the contract.

            I think the GDS customer is the agency not the airline. Therefore, the GDS is absolutely protecting their customer. Do you think corporate customers want to pay for a better seat? Some probably. But the solid customers are buying Y fares or are elite and get those anyway. They want creative ticketing on multi-airline itineraries or access to see open inventory to decide which flight is best for an upgrade. This doesn’t happen with direct connection.

            I have to believe that if AmEx Travel told the GDS they want this access, they would get it. It seems unclear that the agencies are really feeling the pressure. It appears centered only on the airline side. That says that the approach of the GDS is not witholding service. Market supply and demand. If they demand, the GDS would provide.

            If you want to see distribution control selling, look at the grocery store. There are other examples everywhere. In some markets, distributors are very strong. People live with it. I don’t hear Nabisco complaining. You adapt your model to fit and move on.

            In the end, the issue I have is spending our tax dollars on a case as frivolous as this one. Let the market figure it out. If corporate travel wanted to pay for better seats, they would book on the website anyway.

          • CF says:

            Why would the airlines want to invest millions into the GDSs to do something that can already be done via other current technology? There’s no reason to do it. Of course the airlines want to replace the GDSs with the direct path – that’s the whole point.

            There’s nothing wrong with the GDSs defending their business, but if they do it ways that are illegal, then there’s a problem. I am not an antitrust lawyer, but I’m sure there are dozens of lawyers researching how this will play out as I write this. This is hardly a frivolous suit if there is in fact a real monopoly here. The suit argues that the three GDS companies work together instead of as competitors. If that’s proven to be true, then it stands to reason that a monopoly is in effect.

            We don’t disagree about who the customer is here, but I can’t agree that the GDS is protecting the customer. The GDS is protecting itself.

            The information that flows through a direct connect is the same thing that a travel agent sees today via the GDS. If you don’t believe it, give Farelogix a call and they’ll give you a demo. Interlining capability is certainly there as well. It’s not as robust yet, but that’s just a matter of time.

            In the end, the whole point is that the market can’t figure it out. Airlines have tried several times to use alternate methods and they’re stifled each time. In deregulation, it was warned that strong antitrust enforcement would be necessary. This is now being put to the test, and it should be. If someone thinks that the airlines have a monopoly in certain ways, then they should have the right to sue as well. That’s the whole point of the system.

    • Dan says:

      Well, if the airlines can offer a lower price directly from their website, they would. And that means I as a general consumer can get a cheaper price. And if they jack the prices up through the GDS distributed fares and it happens to help make the airlines money, then so be it. It’s not my fault that corporate travel departments are married to those things, and I shouldn’t have to pay for it.

  12. Sylvia says:

    I find this to be a very one-sided picture of the issue. True, the GDS’s have a lot of power, but as an agent, first, I can tell you that GDS’s hardly pay agents a kickback – basically, the “kickback” as yoy call it, is the fact tht we don’t need to pay the GDS’s to book airlines, which to begin with, is absurd, considering we are slaves under these airlines in any case.

    Secondly, with all due respect, none, but none of the on-line websites offer the back-end that we see in the GDS’s – that is, how many seats are left at each fare and how to structure complex reservations. This is not something any of these on-line companies like Farelogix can do or are doing. so where does this leave the passenger? It leaves him with higher fares that the airlines impose and itineraries that cost fortunes when put together by the on-line systems. NOt Good for the passenger!
    With regards to what you say about “air extras” – first, Sabre does offer this option on the GDS – as a matter of fact, at this point Sabre is the only company offering it – but the other GDS’s would like very much to be able to offer this option – they can’t seem to get the information from the airlines as these airlines are busy “ripping off” clients daily with changes at least weekly to all their fees and “extras” which shouldn’t even be extras, since they are in a service industry! For my part, and as far as I’m concerned, US Air ways, American and all the others complaining should learn how to run their business in a professional manner before suing the GDS’s!

    • CF says:

      Are you an agent or an agency owner? If you’re an agent, you might not be aware of payments that your agency receives from the GDSs. Also, I don’t believe every agency gets payments, so if you’re a smaller one, then it’s possible you don’t get anything. But for the larger and strategically important agencies, there are payments.

      I think you might be confusing a couple of these solutions. You’re definitely right in saying that most of the online sites do not show full availability and pricing. But Farelogix is something completely different. Farelogix has simply created a pipe that can deliver all sorts of information to anyone. At Cranky Concierge, we use Sabre for bookings, and I can tell you that what Farelogix showed me looked in no way different than what I could get out of Sabre. The information is there. It’s just a matter of how it’s aggregated and how it connects to other systems that matters now.

      Sabre has air extras, but it’s very clunky and does not put that information in the booking path; something that’s particularly painful for online travel agents.

      You sound incredibly unhappy in your job as a travel agent. Hopefully you can find something you enjoy doing better one of these days.

      • Sylvia says:

        I am an agency owner, and believe me, I use both Apollo and Sabre and I know what kind of “kickbacks’ agencies get as I am part of a very large umbrella group.
        And actually, I’m not unhappy at all as a travel agent – I am very unhappy with the airlines and the way they do business – more for the passengers, whom the airlines hold hostage, than for my business, which is not based on airline revenue. But since I see I have so many clients coming back to have us do their airfares, crying “help” – beleive me, I know and see what is going on – and the very worst of the carriers are the American carriers!

        • CF says:

          If you’re using both Apollo and Sabre, you’re definitely in the minority. I wonder if you don’t get kickbacks because you split your business between the two? It would interesting to find out.

    • Dan says:

      Sylvia,

      When I was in grad school, I did some analysis of the government’s 2007 market fare data. Although you raise some good points, the customers who need that service are by far the exception to the rule.

      Off the top of my head, from the data, about 50% of the tickets sold were for single-segment roundtrip tickets. That is, the passengers made no connection. About 48% more made an online (no change of carrier, except for the express/major affiliates) roundtrip with a single connection. That means about 2% of the passengers had multiple connections or had a change of carrier.

      Granted, this data is domestic only, and international stuff can be a bit more complicated. But quite honestly, I think it’s pretty clear that by far the vast majority of domestic trips booked are your basic roundtrips with non-stop or one connection. They simply don’t need the complexity of the service that you can provide, and therein lies the rub. Those that need help with complex routings are more than happy to pay you a service fee.

  13. Jim says:

    In my opinion, the simple fact that Southwest Airlines exists is proof that the allegations of monopolistic behavior on the part of the GDS are nonsense. The airlines are free to dump the GDS and sell tickets however they want. Just because the airline has become dependent on the GDS doesn’t mean that there is a monopoly. I looked through AA’s complaint (the link to the US complaint doesn’t work, btw), and it just sounds like they are whining and trying to get sympathy for the position they have gotten themselves into.

    • CF says:

      Southwest built an airline without targeting the large corporate travel business that uses the GDS. For a leisure airline, it’s relatively easy to avoid the GDSs. But now, Southwest has realized that it wants to compete for those travelers, and that’s why it’s starting to participate in the GDSs. There’s no other way to reach those travelers.

  14. Jeff says:

    The GDS’s are no different than what American Express does with it corporate credit card. As soon as the GDS’s go away and don’t give the kick back to the corporate travel department, the corporate travel departments are going to start negotiating directly and getting discounts off of the full fare ticket.

  15. Ace_dc says:

    Took your advice and read the US Airways filing. I must say that I am not surprised by anything in it. It is (as all these are) deliberately skewed to the Plaintiff, but that is understandable. I come back to the same question. If it is so bad, why doesn’t US just quit signing the contracts? Sure, short term pain in doing so. But in the end, wouldn’t customers adjust? If it truely is, as the claim states, US Airways’ product that is creating GDS revenue, I am sure someone would jump to help them out. It just seems evident to me that we are still seeing only the top and not the bottom. Picking sides in this is dangerous. For me, I like knowing that I have my union (GDS) standing up against The Man (airline) to keep me informed on my choices…

    • CF says:

      “If it is so bad, why doesn’t US just quit signing the contracts?”

      Because you can’t walk away from 35% of your revenue. This industry runs on razor thin margins as it is, so if 35% of your revenue disappears, then you’re in trouble. If 10% of your revenue disappears you’re in trouble. If US Airways had a huge war chest and could withstand such a revenue hit over time, then yes, it could just not sign the contract and things would change eventually. But it doesn’t have that luxury (and neither does any airline).

      “Picking sides in this is dangerous.”

      That’s why people come here. This isn’t a news site – it’s an opinion blog. So it’s my job to take sides with the one that I think is right.

  16. malbarda says:

    I work for a really big corporation and we use one of those well known corporate travel agencies. Nice people when you speak with them on the phone, but as a globe trotter I tend to know more then they do about connections and alternatives.

    Lately, as a result of ever higher and higher prices, we have started to book direct with airlines through their own websites. We start by using Kayak to check options, and then book stuff direct using the corporate credit card.

    That way, I have found that I can save up to $ 1,500 on business class fares compared to what the big, corporate travel booking agency offers.

    So my message is: you don’t need those guys anymore. Even if you are working in a big corporaton, with today’s technology, there are alternatives which will save you money.

    BTW, said corporate travel agency also charges $ 20 per phone call to create any kind of itinerary. If you do it through their website this fee is waived.

    • CF says:

      Well, keep us in mind at Cranky Concierge. If you’re buying biz class, our new pricing structure waives our fees . . .

  17. I think this type of lawsuit is silly. In any business we are subject to other more powerful businesses and corporations and fall subject to their standards.

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