CO, NW Offer Buyers Tracking Of Flight Delays, Mishandled Bags

Following a heated battle that for weeks kept the industry caught in the crossfire, American Airlines and Sabre this month reached accord on a new content agreement. The deal—reached Sept. 1, the same day new distribution economics entered the corporate travel industry—places Sabre among American Airlines' preferred distribution channels, while giving Sabre American's full content. The GDS now has entered into new content arrangements with all six domestic legacy carriers.

By bringing Sabre into its roster of preferred channels, American has waived its $3.50 per-segment fee to Sabre subscribers who elect to use its Efficient Access Solution. The move therefore makes Sabre's opt-in program more palatable to agency customers, as they now have content and fee assurances from the nation's largest carrier.

The corporate travel community for weeks had urged American and Sabre to come to terms during an ongoing butting of the heads between the two travel giants. Sabre tentatively had put in place a program to offset American's intended $3.50 fee on bookings coming through all Sabre channels. Sabre's program—now moot—also gave incentives to agencies to shift share away from American and toward carriers with which Sabre had struck new distribution terms.

American, too, mobilized to shift share away from Sabre by upping marketing efforts with Galileo and Worldspan, with which American signed new content deals.

Meanwhile, following the expiration of a content deal between Delta and Amadeus late last month, Delta on Sept. 1 joined the fold in charging $3.50 for bookings that go through nonpreferred channels. The carrier said it "has been unable to come to mutually acceptable terms" with Amadeus. Delta also has yet to come to new content terms with Worldspan—its dominant GDS—but is not penalizing the distributor's subscribers, as the existing content agreement with Worldspan does not expire until Dec. 6, according to Delta.

Delta is the last of the major carriers to announce that it would charge such a fee on flights booked through nonpreferred channels, joining American, Continental, Northwest, United and US Airways in implementing the fee.

Other carriers only protect subscribers from the $3.50 charge if they elect to opt in to premium content programs offered by such GDSs as Galileo, Sabre and Worldspan. Delta, however, is making no distinction between tiered programs offered by Galileo and Sabre—the two GDSs with which the carrier has signed new content deals—giving all users of the GDS systems immunity from the $3.50 fee.

Delta's move is one in a string of hits to Amadeus. Following last-ditch efforts in a U.S. district court last month to halt American Airlines and Northwest from imposing the $3.50 on its subscribers, Amadeus said it would fully absorb the fees for its clients who book those two carriers. "Also, at this time, Amadeus does not anticipate any impact to agency incentives related to this interim relief measure," the GDS recently said in a statement, leading sources to believe the GDS will remain the only one not to create an opt-in program.

Amadeus has lagged behind the other GDSs in structuring new carrier contracts, but last month said it signed a "long-term" content agreement with US Airways, representing its first distribution pact with a major U.S. carrier since GDS deregulation. Amadeus last month said it is in ongoing discussions with "all of the major carriers in North America regarding content distribution" and that the GDS has secured several extensions. While Northwest said it remains in discussions with the GDS to come to new content terms, the parties "remain far apart on coming to an agreement."

Amadeus on Aug. 10 filed a request for arbitration and injunctive relief against American and Northwest and their plan to impose the fee for bookings made through nonpreferred channels, including Amadeus. Amadeus said the fees violate its contracts with the carriers by treating its subscribers "less favorably than other GDS customers." A judge ruled against the global distribution system's action against American, and the GDS then suspended its suit against Northwest.

During court proceedings, however, AA representatives argued that Amadeus was offered similar economics it had agreed to with other GDSs, which are protected from such fees. The carrier also argued that since Amadeus had not fallen in line with other GDSs in offering an opt-in program or offering "its subscribers a competitively priced booking option," that the GDS has "refused to compete."

"Throughout their negotiations, American has offered Amadeus a variety of options consistent with the changing marketplace and on par with its competitors, each with a larger domestic presence," David Cush, American Airlines senior vice president of global sales, noted in testimony.

Amadeus throughout the court proceedings held steadfast to its view that being subject to the $3.50 fee would cause irreparable damage to its U.S. business. Although the GDS holds the most marketshare worldwide, as noted throughout court documents, it holds only about 8 percent of the U.S. market—a figure the GDS suspects will dwindle after the Sept. 1 start date for the new distribution landscape.

"Because the vast majority of travel agents use the services of only one GDS, the threatened imposition of surcharges will operate to drive those agencies to other GDSs for all of their bookings, thereby causing Amadeus to lose all of its U.S. business for such agents, not merely its revenue from U.S.-originating bookings on American and Northwest," Amadeus noted in court documents, highlighting what it said is the irreparable harm of the fees.