Understanding the American Airlines – Travelport Antitrust Suit

Following a decision by a Texas federal judge to dismiss all but one count of American Airlines’ (AA) antitrust case against Travelport, AA, Travelport and co-defendant Orbitz all released statements claiming victory. What happened?

Orbitz Applauds Dismissal of AA Lawsuit

AA Also Claims Victory in Antitrust Decision

Travelport Wins In AA Antitrust Case

The antitrust lawsuit, originally filed by AA against Travelport and Orbitz in April 2011, alleged that Travelport “effectively controls the distribution of fares and other content to a large number of travel agencies and their corporate customers, has engaged in anticompetitive conduct to protect its market position from new competition by alternative technologies that are both less expensive and more capable,” AA reported in a statement at the time.

Later, AA amended the lawsuit to include Sabre Holdings Corp., claiming that the companies combined “control over 90 percent of bookings made by U.S. based travel agencies and dominate an essential link to travel agents and many consumers,” AA said in another statement.

On November 21, the court dismissed the following claims made by AA in the lawsuit:

(1)    That Travelport monopolizes distribution to travel agencies
(2)    That Travelport entered into a conspiracy with Trave agencies to monopolize distribution
(3)    That Travelport’s agreements with airlines and travel agencies unlawfully restrain trade
(4)    That Travelport’s actions are illegal under Texas state law

This decision seems like good news for Travelport and Orbitz; however, the court also allowed AA to continue its claims that:

(1)    Sabre has monopolized the market for airline booking services to travel agents
(2)    Sabre and Travelport have each monopolized airline booking services to their respective subscribers

Furthermore, the court permitted American to raise additional antitrust claims alleging that “Sabre unlawfully organized a group boycott against American, and that Sabre and Travelport illegally conspired with each other to prevent competition from American’s direct connect technology,” said AA.

Some have seen the antitrust lawsuit as part of a proxy battle between airline-championed direct connect technology and GDSes. In a statement urging the court to dismiss the antitrust suit, Travelport said, “This is not a genuine antitrust action brought by consumers suffering from excessive or artificial price increases. It is an opportunistic lawsuit brought by a large and powerful company seeking to enhance its already substantial commercial bargaining leverage.”

In a webinar conducted by the American Society of Travel Agents (ASTA), travel industry attorney Mark Pestronk, Esquire, referred to litigation as “negotiation by other means” and predicted that the outcome of the antitrust case would be one factor shaping an eventual compromise between airlines, GDSes and agencies.

While the court decision represents an important victory for Travelport and Orbitz, other parts of the suit seemed poised to proceed and the deeper issues driving it aren’t going away anytime soon. AA has until December 5 to amend its lawsuit.

Keep visiting www.travelagentcentral.com for future updates on this developing story.

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