Sabre Lowering Agency Incentives

Sabre Holdings today during its first-quarter earnings call said that, in light of new full-content deals with airlines, agency incentives are moving downward.

"We've been talking about incentive moderation for a couple of years," said executive vice president and Sabre Travel Network group president Tom Klein, who added that Sabre has yet to roll out "a specific program for agents around the new construct of GDS contracts."

One analyst during the call noted that GDS rival Cendant said agency incentives are rising, to which Sabre chairman and CEO Sam Gilliland replied, "I am surprised to hear Galileo say their incentives are going north."

Klein said that Sabre has signed a "large portion of the world's airlines," representing more than 275 carriers, including signings with such major U.S. carriers as AirTran, Delta, Northwest, United and US Airways. Still mum on specifics of the full-content arrangements, Sabre's Klein said they are trying to provide a "balanced distribution model that works for everyone," including airlines, agencies and corporate customers.

While the GDS has yet to sign deals with Continental or American—both of whom have railed against Sabre's content-sharing pact with Amadeus—Gilliland said, "We don't view any of the carriers as dragging their feet," adding that it will be months before the non-signed carriers' current contracts expire. Confident that airline deals will come to fruition, Gilliland said of the Amadeus deal, "I would actually be surprised if the terms within that agreement were ever triggered."

The company reported first-quarter revenue of $700 million, which Sabre said was up 20 percent year over year. However, net earnings fell from the same period last year.