Sabre Holdings today said one reason the rate of bookings shifting away from it has slowed in recent months is that corporate travelers and managers have regained confidence in the ubiquity of the Sabre global distribution system. Sabre in 2003 acquired a large portion of the airline industry's Web-only content in exchange for discounts off the fees it charges the carriers, a factor its new president and CEO said has cut the rate of bookings shifting away from Sabre to 3 percent to 4 percent, from 5 percent.
"We've been attempting to get to levels of granularity that will tell us more, but the first intuition is that, as we've had all those fares from the relationships we've struck in our system, it encourages more people to book through Sabre," said president and CEO Sam Gilliland, speaking to analysts after Sabre announced a $14 million net loss for the fourth quarter of 2003. "For example, in corporate travel, you'd imagine that over some period of time, given all the consternation that occurred out there with the corporations that wanted access to all fares but weren't getting them, that they now have access to all of them, and their employees don't need to go around the system. That's one aspect, I believe, of what we're seeing out there, but again we're still studying and analyzing the numbers."
Gilliland agreed with one analyst who posited that the rate of channel shift at 3 percent to 4 percent "would continue to moderate" if corporate travel picks up in 2004. Gilliland added that the "rhetoric" on direct connections has "dropped dramatically."
Known as the DCA Three-Year Option, the discount-for-content program no longer will be offered to additional airlines after Sabre signs "a few" additional foreign flag carriers, Gilliland said. By year-end, Sabre expects that about half of its global bookings will be covered under the DCA program. Gilliland said DCA will not be offered to Asian airlines.
Since Sabre took a cut in revenues from participating airlines, Gilliland cited "downward pressure" on agency incentive payments. He said Sabre soon would announce a structured incentive scheme for smaller agencies and praised competitors Galileo and Worldspan for being "fairly disciplined" about slowing the industrywide rate of incentive growth. No mention was made of Sabre's plan for larger agency subscribers or corporate accounts to which it pays incentives.
Gilliland clarified an earlier statement by a Sabre spokesperson that implied its 2004 airline pricing would rise 2.3 percent for non-DCA participants
(BTN, Jan. 19), saying the figure is actually 4 percent.