Mark Pestronk
Q: I understand that earlier this month, Lufthansa and three subsidiary carriers filed suit against Sabre in Texas state court. Lufthansa wants the court to rule that its ticket surcharge does not violate its contracts with Sabre. Why did Lufthansa wait almost a year after announcing the fee and more than six months after implementing it? What do those contracts prohibit, and what do they allow?
A: Lufthansa's nine-page petition states that on or about March 1, Sabre sent Lufthansa a written notice of the alleged breach "despite ongoing discussions between the parties." Sabre's notice probably contained a threat to terminate the contracts in 30 days unless Lufthansa cured the alleged breach.
Given Sabre's notice, Lufthansa probably decided that the best defense was a good offense. As the 30-day deadline gets closer, Lufthansa may ask for a temporary restraining order to stop Sabre from expelling Lufthansa and its subsidiaries from the GDS.
Lufthansa does not quote or attach Sabre's letter containing the notice. It does not attach the agreements in question either, as all carrier-GDS agreements are secret.
Given the absence of relevant documents, we have to make a few educated guesses about what these agreements prohibit.
Lufthansa states, "Sabre gave written notice that it believes Lufthansa Group is in breach of the parties' contracts regarding the distribution-cost charge. Lufthansa Group disagrees, as it has complied with the contracts by imposing the fee on tickets booked through all other GDSs, not just Sabre. Nevertheless, Sabre now claims that two distribution channels of Lufthansa Group -- its direct connection and its agent.com Internet portal -- should be considered GDSs and thus be subject to the fee, even though both channels are expressly excluded from being considered GDSs under the contracts. Sabre also claims that Lufthansa Group is imposing an improper charge on Sabre subscribers, even though the charge is paid by passengers, not subscribers."
From this, we can deduce that the contracts prohibit the carrier from charging passengers a fee for Sabre bookings unless it charges the same fee for all other GDS bookings. Conversely, the contracts appear not to prohibit a passenger surcharge for all GDS bookings, but do appear to prohibit some sort of improper charge on travel agencies.
Later, Lufthansa states, "The agreements provide that Lufthansa Group can use technology provided by non-GDS third parties to implement its direct connect. Currently, Farelogix and Travelfusion serve as two of Lufthansa Group's third-party direct-connect technology providers. The agreements also authorize Lufthansa Group to offer access through its own Internet sites. These direct connect and Internet channels are expressly permitted under the agreements."
So we can further deduce that the contracts allow direct connections, but that Sabre claims that the Farelogix and Travelfusion systems and the agent portal are not direct connections but rather GDSs by another name.
If the contracts at issue are typical Sabre pacts, which they probably are, and Travelport and Amadeus have followed Sabre's lead (as they usually do), then the travel agent industry is truly at risk. Any day now, other carriers could copy Lufthansa by charging more for tickets bought through the GDS than they do for those bought on their websites or any other booking channels that are direct connections.