American Airlines holds ground in Sabre spat

By Reuters
Posted Jan. 5 at 5:23 p.m.

American Airlines sparred with third-party ticket sellers on Wednesday in an ongoing battle over distribution costs and methods as one key provider of airfare data vowed to stop offering the airline’s flight information.

Privately held Sabre Holdings Corp operates a global distribution system that provides information on airfares to travel agencies like Travelocity. The company said it would end its distribution deal with American in August — a month before the end of its contract.

The company said it would discontinue price discounts on American Airlines tickets that have stimulated sales. The airline is also at odds with Chicago-based online travel agency Orbitz Worldwide and last month stopped selling tickets on Orbitz.

American is trying to get travel agents to adopt a “direct connection” technology that would let customers shop based on various ancillary services rather than fares, which is the primary basis for the typical online travel agency comparison.

“For a number of months, American Airlines has taken actions in an attempt to impose a costly, unproven and unnecessary system on agencies and corporations,” Sabre said in a statement.

“We believe these actions are harmful to our agency and corporate customers, as well as consumers, making it harder and more costly to comparison shop,” the company said.

American fired back, saying Sabre’s moves were “punitive actions” that come even though the carrier has met its obligations to the distribution service.

“Sabre’s actions are discriminatory and patently inconsistent with both its contractual obligations and its professed goal of ensuring full transparency for the benefit of consumer and travel agents,” American said in a statement.

Online travel agency Expedia Inc (EXPE.O) also has dropped American Airlines tickets from its listings, charging that the airline’s new commercial strategy is “anti-consumer” and “anti-choice.”

The actions set the stage for what could be a protracted dispute between airlines and third-party distributors. American Airlines, a unit of AMR Corp, is leading the charge because several of its key distribution contracts expire in 2011.

“It is kind of an inflection point for the industry as a whole,” said Morningstar analyst Warren Miller. “American Airlines is obviously trying to take a more aggressive stance with respect to how they distribute their inventory of seats and how they get those in front of the eyes of consumers.”

American says the publishing methods and pricing currently used by many travel agencies are outdated and do not reflect the increased reliance by airlines on sales of ancillary services like bag checks, meals and priority seating.

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  1. bwana01 Jan. 5 at 5:49 pm

    Airline credibility … non-existent! Big airlines haven’t had any credibility since they started squeezing customers for every dollar they could get. As long as airlines continue their “pay more for less service” philosophy, they’ll remain at the bottom of the credibility heap. The sad truth is that they don’t care. American Airlines says “its new system lowers its costs and lets it display its increasingly complex airfare and travel products to consumers.” Do I believe this? Not for a single moment! The only thing that interests American Airlines is what effects bottom line. In case you haven’t guessed, AA and the Ferengi both pray to the Divine Nagus.

  2. Savvy Traveler Jan. 6 at 11:30 pm

    You know why airlines are “squeezing” consumers? Because you’re paying the same for that LA-New York flight now that you paid twenty years ago. In inflation-adjusted terms airfares have experienced massive deflation over the years. So yes, now you have to pay to check that bag. Big deal. Would you rather be paying $1,000 base fare to fly transcon with a free checked bag?

    Airlines are in this mess because they’ve been charging less than their cost for years. That can’t continue.