AA, Sabre State Antitrust Case Opens - Business Travel News

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AA, Sabre State Antitrust Case Opens

October 25, 2012 - 03:35 PM ET

By Jay Campbell

Fort Worth, Texas - With proceedings underway here in the state antitrust case between American Airlines and Sabre Holdings, attorneys for both sides in opening remarks Wednesday reiterated and added detail to their respective arguments, The Beat reported.

An AA legal representative said Sabre abused its power when attacking the carrier's business in response to AA's push of its Direct Connect program (which does not rely on a global distribution system to connect the airline to travel agencies). Sabre argued that AA's monopoly claims fall apart when one examines just how good a deal the carrier got from the GDS firm, which AA's parent company spun off a dozen years ago.

The agreement they signed in 2006, it turns out, called for AA to pay "$2.73 on average for each domestic point of sale flight segment booked through Sabre's GDS and $6.84 on average for each international point of sale flight segment," according to an AA court filing. The fees were lower than what any other major airline paid Sabre and lower than what AA paid Sabre's rival GDSs, according to opening statements delivered at a Tarrant County court here by Sabre outside counsel Chris Lind.

The 2006 agreement, like other airline-GDS agreements at the time, resulted in reduced incentive payments by GDSs to travel agencies and upward pressure on fees paid to TMCs by their corporate clients. Sabre processes $2.5 billion of AA's annual corporate travel revenue, said AA outside counsel Paul Yetter.

Meanwhile, Yetter argued Wednesday that efforts by Sabre to negatively bias AA's listings in shopping displays went on longer than was previously reported—starting in 2010, when Orbitz and Travelport first found themselves at odds with AA over the carrier's direct program, and continuing beyond the early 2011 order by this court for Sabre to stop as well as a February 2011 Department of Transportation warning to distributors about display bias.

Sabre had announced to agencies its biasing move on Jan. 5, 2011. Sabre attorneys said the actions were temporary. Even still, Sabre calculated that its biasing efforts by March 2011 had cost American $153 million in year-to-date revenue losses, Yetter claimed.

AA in the state suit is seeking damages of nearly $1 billion from Sabre, a figure representing cost of the biasing actions and lost distribution expense savings resulting from contract provisions that AA claimed restricted progress of its Direct Connect program.

But Sabre argued that AA's Direct Connect program has made little progress due to a lack of support from corporate travel agencies, including American Express, BCD Travel, Carlson Wagonlit Travel and Expedia, Lind said.

—With reporting by Jay Boehmer

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