US Airways confronts Sabre with antitrust lawsuit

Monday, 25 April 2011 00:04 - - {{hitsCtrl.values.hits}}

Reuters) - US Airways Group took a swing at a top third-party seller of airline tickets last week, claiming in a lawsuit that Sabre Holdings Corp. shuts out competition and drives up prices.

The lawsuit alleges Sabre, which operates a global distribution system GDS.L, has suppressed the ability of travel agents to book tickets directly with airlines, and forced US Airways to accept its terms in an agreement the two signed in February.

Sabre is a third-party distributor of air fare information to travel agents. Over 35 percent of US Airways’ revenue is booked through Sabre and Sabre affiliated travel agents, the airline said.

“Sabre has had a monopoly for years and has used that monopoly as leverage over us,” US Airways President Scott Kirby told Reuters.

“The only way Sabre is going to change their behaviour is through an antitrust lawsuit,” he said.

A Sabre spokesperson said the company was reviewing the lawsuit but did not have an immediate comment on the case. Sabre and its peers, Travelport and Amadeus, control the GDSs in the United States.

Penny-pinching airlines, clawing their way out of an economic downturn that drained travel demand lately have been targeting distribution costs — a relatively low-ranking line cost for major airlines, whose top two expenses are fuel and labour.

Some like AMR Corp’s American Airlines, favour cheaper, in-house booking options. American last week filed a lawsuit claiming Orbitz Worldwide (OWW.N) and airfare data provider Travelport made American’s fares appear higher to consumers than they were.

American shunned Orbitz last year after the agency refused to use American’s “direct connect” technology, which allows customers to shop for airline tickets with more information than just fares. Airlines like American now derive an increasing portion of their revenue from fees for travel perks and services like bag checks and meals. But a shift to new technology could disrupt the lucrative business model now favoured by travel agencies like Orbitz and Expedia Inc. and the companies that provide the data they publish.

“US Airways suit against Sabre is the latest event in the recent battles between airlines and online travel agencies,” said Morningstar analyst Warren Miller.

Miller said the merits of the case are debatable and that third-party ticket sellers add value for consumers. But he said he expects to see more legal conflicts between travel companies and ticket sellers.

The suit is US Airways, Inc., vs. Sabre Holdings Corporation; Sabre Inc; Sabre Travel International Limited No. 11 CV 2725 in United States District Court for the Southern District of New York.