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October 24, 2012

Sabre and American face off in anti-trust suit

Describing secret memos outlining "Project 99" and e-mails referring to "Distribution Dreamworld," lawyers for American Airlines and Sabre Holdings attacked one another during opening arguments of an antitrust trial Wednesday in state district court.

American is accusing Southlake-based Sabre of violating Texas antitrust laws, saying Sabre organized an industry boycott to make it more difficult for corporate travel agents to book tickets on American in early 2011.

"They declared war, without us even knowing it," said American attorney Paul Yetter, pointing to e-mails from Sabre executives about "Project 99," that he said show Sabre wanted to harm American.

At issue are fees American and other airlines pay the big travel reservation systems to display flights and make bookings. American wants more of its travel partners, such as travel agencies and websites, to connect directly to American's reservation system through a service called Direct Connect, which would save the airline booking fees.

The dispute started in late 2010 when American pulled its fares off Orbitz, one of the largest travel websites, because it would not use Direct Connect. Expedia, another big travel site, then dropped American's flight information.

Sabre joined the fracas in January 2011, making it harder to find American's fares in its system, raising booking fees and announcing that it would not renew American's contract when it expired. A temporary injunction was issued in American's favor, and the two sides reached an agreement that keeps American's fares in Sabre's system until 14 days after the trial is completed.

American said it lost $153 million in revenue during January and February 2011 when the Sabre system made it harder for travel agents to find its fares. The carrier is seeking almost $1 billion in damages from lost bookings, and potential losses of bookings that could have been made through American's own system.

The carrier said $2.5 billion in revenue from corporate travel annually is booked through Sabre.

Sabre attorney Chris Lind said American was complaining about contract terms that it originally wrote when the carrier owned Sabre in the 1990s. American's parent, AMR Corp., spun off Sabre in 2000.

Lind said the carrier's Direct Connect hasn't been adopted by corporate travel agencies because it doesn't benefit anyone but American, referring to e-mails about "Distribution Dreamworld" in which American executives envision a world where travel agents pay American for the privilege of selling American's tickets. He said 48 percent of American's tickets are sold through its website, AA.com, and do not go through Sabre.

"We're asking you to look at the whole pie or the whole picture," Lind said. "It is not true that a customer has to go through Sabre to buy an airline ticket."

Lind said American received a $500 million discount to use the Sabre system and that it pays 55 percent less in booking fees than its competitors.

-Andrea Ahles


Read more here: http://www.star-telegram.com/2012/10/24/4361428/american-airlines-sabre-face-off.html#storylink=cpy

 

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