Travel Agents at Core of Sabre - U.S. Airways Antitrust Case

gavelSabre slammed U.S. Airways and the International Air Transport Association (IATA) in a legal counterclaim in an anti-trust case launched in April 2011 by U.S. Airways in the Southern District court in New York. 

Sabre charged a conspiracy on how U.S. Airways treats Sabre and other global distribution systems (GDS) and said the move threatened the GDS’s ability to serve travel agents and the traveling public.

Sabre denied U.S. Airways' original complaint and countered that the airlines do not like the efficient comparison shopping and lower air travel prices that Sabre believes GDSs bring to the market. 

Sabre alleges that U.S. Air sought to "eliminate the transparency that GDSs offer” by entering into an " illegal conspiracy and boycott."

"U.S. Airways and its co-conspirator airlines conspired on the terms on which they would deal with Sabre and other GDSs. Most prominently, they agreed to withhold content from, or to provide it only on certain terms to, Sabre and other GDSs,” Sabre argued in its 57-page countersuit. 

“They have entered into agreements on the technological means by which they will deal with Sabre and other GDSs, including abandoning the current system of public, non-discriminatory fare filings in favor of discriminatory fares available only to certain travelers,” Sabre said.

"They have also agreed on the price terms they will pursue from the GDSs and have coordinated their negotiation strategies,” Sabre said. “These agreements are horizontal agreements to boycott Sabre and other GDSs in whole or in part and to agree on the terms on which otherwise competing buyers will purchase distribution services from the GDSs. These horizontal agreements are per se violation of the antitrust laws,” Sabre argued.

Sabre also expanded its charges, claiming that U.S. Airways and alleged co-conspirators affected the conspiracy through a variety of meetings under the guise of several different organizations, including other airlines, third party groups such as Farelogix, the Star Alliance -of which US Air is a member - and IATA

IATA’s “New Distribution Capability” (“NDC”) initiative  - already a source of industry-wide controversy -was also cited by Sabre. “Although NDC is ostensibly a technical standard, in fact NDC is an agreement among the airlines to withhold content by not publicly filing their content."

Moreover, Sabre said, “IATA has insisted that NDC does not need to be backward compatible with existing distribution standards, meaning that GDSs will not be able to aggregate content that will come through NDC with content that will come from other sources.”

Sabre’s court filing also raised complex issues of airlines' use of personal consumer information – an issue impacting travel agents and all sectors of the distribution system. 

“Through NDC, the airlines agreed that they would obtain sensitive, highly personal information from travelers, including age, marital status, national origin, place of residence, and shopping and purchase history. Only after getting this information would an airline decide what offers to make to the travelers,” Sabre argued.

"This information makes it easier for airlines to increase ticket prices by price discriminating against specific travelers based on the personal characteristics of that traveler. Achieving these goals could only be accomplished by agreeing on the terms by which the airlines would deal with GDSs,” Sabre argued.

Sabre charged: “the conspiracy eliminates the transparency and price competition in air travel that GDSs create. When the airlines conspire to withhold content from the GDSs, they eliminate much of the competition between themselves in providing air travel as well.

In a statement issued by Sabre last week, the GDS said, “It is very disappointing to learn that U.S. Airways did not negotiate with us in good faith in 2011, and instead intended all along to sue us as soon as they signed the agreement. Given its strategy, it appears that U.S. Airways never had any intention of living up to its agreement.”  

U.S. Airways originally argued that its lawsuit  - the suit followed the execution of a new distribution agreement between Sabre and US Airways in February 2011 – was justified. 

“During negotiations with Sabre, U.S. Airways made it clear to Sabre that it sought a new contract without exclusionary restrictions that protect Sabre from competition. However, Sabre threatened to shut off access to U.S. Airways if the new agreement did not include these anticompetitive restrictions. According to the complaint, U.S. Airways was forced to acquiesce to Sabre’s 'my way or the highway' demands as a part of any new deal,” U.S. Air said.

The U.S. Air complaint also alleged that Sabre has been “aggressive in suppressing the ability of travel agents to book tickets directly with airlines using so-called ‘direct connections.’”

U.S. Airways said it believes that “Sabre, a dominant distributor of airline fares and content to travel agents in the United States, has engaged in a series of actions that have resulted in: Higher distribution costs for US Airways and as a result, higher costs for consumers; Reduced innovation, which limits the ability of U.S. Airways to generate revenue from new products and services; and Limited choices for travel agencies to access U.S. Airways content.”

Sabre requested relief by the court and said it has lost bookings and has been harmed in competing for travel agent business generally. The withheld content and other actions taken by U.S. Airways and its co- conspirators have damaged Sabre’s reputation as a reliable provider of content, Sabre said.

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