AA and Sabre settle, but GDS wars continue

By Mark Pestronk

Note: After this column was published in Travel Weekly's print edition, American and Travelport settled and issued a joint press release stating that the agreement will enable the airline "to create a solution that can display all of our product options to travel agents in a transparent, customer-friendly way." There was no hint of what financial concessions Travelport offered, but my guess is that, as with the Sabre settlement, those concessions will adversely affect agency incentives. What follows is the original column published in Travel Weekly on March 11.

Mark PestronkQ: Now that Sabre and American have settled their differences and dismissed their suits against each other, have the rest of the airline-GDS antitrust suits also settled? Now that American and US Airways are merging, what is going to happen to US Airways' suit against Sabre in federal court in Manhattan? What about American's suit against Travelport?

A:
US Airways' suit against Sabre in Manhattan is continuing, even though it has no merit. Since US Airways will be absorbing American, the suit will not necessarily be affected.

Likewise, American is still suing Travelport in Dallas, with no settlement in sight, even though it contains the same allegations as those that the carrier made against Sabre.

Since the GDS vendors are all probably going to end up providing concessions to the airlines along the lines of whatever Sabre offered American as part of their recent settlement, I had been wondering about the point of continuing all this expensive litigation. It was as if these cases had become zombie lawsuits that should have been killed off months ago.

However, in mid-January, the New York case returned from the dead when Sabre filed a counterclaim against US Airways alleging that the major U.S. airlines are engaging in conspiracies in violation of the antitrust laws. The most interesting conspiracy allegedly involves IATA and its so-called "New Distribution Capability" (NDC). According to Sabre, IATA's NDC purports to be a technical standard but is in fact just "an agreement among the airlines to withhold content by not publicly filing their content."

Withholding content would, of course, harm the GDSs because agencies would be forced to use direct connections or other non-GDS sources to obtain the content for their clients.

The GDSs are enemies of IATA, whose director general has called the GDSs "leeches." According to Sabre, IATA mistakenly believed that anti-GDS conspiracies in violation of antitrust laws would go unchallenged.

In October 2012, the IATA airlines voted to adopt Resolution 787. In it, each airline agreed that if it distributed "enhanced content," it would distribute that content allegedly only in a response to specific traveler requests. Conversely, according to Sabre, the airlines were agreeing to refrain from filing the enhanced content publicly for distribution through the GDSs.

Resolution 787 is publicly available at www.iata.org/whatwedo/stb/Documents/resolution-787.pdf. It does not exactly say what Sabre says it does, but I have no doubt it means what Sabre says it means.

US Airways has not yet filed its answer to Sabre's counterclaim, but it is hard to see how it could deny that it is part of the conspiracy to harm the GDSs. If Resolution 787 is intended as roadmap to bypass the "leeches," then it is an illegal group boycott by the major airlines and IATA.

What the IATA resolution shows is the airlines' contempt for travel agencies and the traveling public. Rather than incentivize agencies to bypass the GDS, the airlines conspire to make it more expensive for agencies to obtain enhanced content, and more difficult for agency clients to access and price ancillary services.

I have been wondering whether there was anything to the NDC other than vaporware. I now have the answer.

Mark Pestronk is a Washington-based lawyer specializing in travel law. To submit a question for Legal Briefs, email him at mark@pestronk.com. 

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