April 24, 2011
by Zvi Bar
US Airways (LCC) filed a federal civil lawsuit in the Southern District of New York against Sabre Holdings Corp. to halt anticompetitive and anticonsumer practices, and seeking to recover monetary damages. US Airways noted that the Antitrust Division of the United States Department of Justice and the United States Department of Transportation previously recognized that Sabre exercises significant market power over some airlines.
US Airways complains that Sabre's distribution of airline fares and content to travel agents shows a pattern of exclusionary conduct that prevents others from competing with what they allege is monopoly pricing power and a technologically-obsolete business model. US Airways contends that Sabre makes exclusionary and anticompetitive requirements that affect travel agents, other Global Distribution Systems ("GDSs") and US Airways, among other airlines, and that Sabre's actions hurt consumers through higher prices, reduced innovation and fewer choices.
Sabre is a large American GDS and US Airways revealed that over 35% of corporate revenue is booked through Sabre and Sabre's affiliated travel agents. Saber is also the parent company of Travelocity and is owned by private-equity companies Silver Lake and TPG. The complaint claims Sabre imposes economic penalties on travel agents for bookings not made using Sabre and that Sabre can threaten that it will remove an airline's flights from its offerings, resulting in an unlikelihood that travel agents would book that airline. US Airways alleges that it must comply with monopolistic Sabre practices because it cannot survive if it were to lose that business.
Sabre and US Airways actually executed a new distribution agreement in February of this year and Us Airways now claim's it was forced to succumb to Sabre's "my way or the highway" demands (such deals are more common to roadhouse deals than airway deals). The complaint also alleges that Sabre aggressively suppresses travel agents from booking tickets directly with airlines using "direct connections."
