American Airlines has won decisive court victories over the GDSs in its battle to impose direct-connect bookings, and the recent settlement of its suit against Orbitz means the carrier has now settled all the legal actions that were part of its campaign.
In addition to collecting payments from two GDSs, it has also reduced the segment fees it pays one of them by millions of dollars.
American and Orbitz said last week that they had reached an agreement to “settle all litigation” between them. That was the last of three lawsuits American had waged as the airline industry’s self-appointed point man for direct connect.
Last month, American settled its antitrust suit with Travelport. Under terms of that settlement, American will be able to use its XML-based direct-connect interface to offer its ancillary products and services on the desktops of Travelport’s agent subscribers.
But new details about the agreement emerged when the settlement was filed with the bankruptcy court that is overseeing American’s Chapter 11 reorganization, and while the filing available to the public has been redacted to hide the specifics, it hints broadly at the extent of American’s victory.
The settlement requires Travelport to make a series of unspecified payments to American over the next several years. In that way, it is similar to the agreement it reached with Sabre in December as part of the settlement of the antitrust suit American had brought against Sabre.
Under the terms of that agreement, Sabre will pay American an unspecified amount. The actual dollar figure, however, is probably $280 million, which is the amount AMR Corp., American’s parent company, listed in its Q4 earnings report as deriving from the settlement of a commercial dispute.
The Travelport settlement calls for the GDS to pay American an unspecified amount in a series of annual payments over the next several years. In addition, American will pay Travelport millions less in segment fees than it had been paying.
According to papers filed with the court, American is retroactively paying lower segment fees to Travelport for transactions dating back to January, when an earlier agreement between the two companies expired.
According to court papers, this retroactive reduction of booking fees will save American “the approximately $7 million in booking fees that it has paid to Travelport since Jan. 15, 2013, as well as the fees it would have to pay going forward.”
Airlines pay the GDSs segment fees for bookings made through the GDSs. Those fees and their impact on airlines’ bottom lines are a key reason for the recent litigation.
The airlines have long contended that the GDSs have too much market power and that they take the segment fees the airlines pay them — which the airlines assert are inflated — and pass part of them on to travel agents as an incentive to get them to book through a specific GDS. The airlines say that gives the GDSs a disproportionate power in the marketplace, leaving the carriers no choice but to work through them.
The GDSs have sought to position themselves as open marketplaces that offer consumers transparency and the ability to comparison shop among airlines.
One other legal case has yet to be resolved: the antitrust lawsuit that US Airways filed against Sabre in April 2012.
In January, Sabre filed a counterclaim against US Airways, accusing it of engaging in a conspiracy with other airlines to control the content provided to GDSs.
Follow Kate Rice on Twitter @krtravelweekly.