Sabre Holdings said in its 2003 annual report, released Friday, that deregulation of global distribution system firms by the U.S. Department of Transportation
(BTNonline, Jan. 5) will enable it to "vary incentives by the identity of the airline." The possibility that subscribers can earn more from Sabre on bookings with some carriers than on others is likely to revive talk about travel dealerships. While Sabre seeks to lower its overall incentive costs, many travel management companies continue to rely on GDS incentives for profitability. Such inducements can be well more than $1 per booking for large corporate and agency subscribers.
Sabre's incentive costs rose by $63 million in 2003, according to the annual report. Sabre last year said the incentives represent its largest cost line, at an estimated $400 million for 2003, and expected the increase to moderate to about $50 million in 2004
(BTN, Oct. 27). The company attributed $33 million of 2003's $63 million increase to "increases in the average incentive per booking driven by competitive pressure on renewals and conversions," $20 million partly to low comparisons from 2001 and $10 million to increased Travelocity payments.
For smaller and midsize U.S. agencies, Sabre last week announced a structured payment system, known as Assured Vantage, which it said allows participating subscribers to earn incentives without the risks of a volume booking commitment. In return for committing a percentage of its bookings to Sabre, a participating agency can earn $1.05 per booking for more than 50,001 annual bookings; 85 cents per booking for 25,001 to 50,000; 65 cents apiece for 10,001 to 25,000 and 45 cents for 1 to 10,000 annual bookings.
Part of the pressure on Sabre to lower incentive costs comes from its DCA 3-Year Pricing Option, which provides airlines fee discounts in return for fuller access to content. After signing more than 30 airlines, Sabre said it stopped marketing the program to new carriers early last month.