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Sabre files anti-trust countersuit against US Airways

Sabre Holdings filed an anti-trust countersuit against US Airways on Friday in federal court in New York.

The Southlake-based company says that US Airways did not negotiate with Sabre in good faith in 2011 and had intended to sue as soon as they had signed its new contract with the travel distribution firm.

The lawsuit says:

"US Airways acted maliciously and in bad faith, deliberately intending to invalidate the core terms of the agreement that it voluntarily signed so as to deprive Sabre of the benefits of the contract, rather than performing that contract in good faith. By doing so, US Airways has called into question its intent to abide by its contractual commitment to provide its content to Sabre throughout the contract term, a commitment that is of great value to Sabre. Part of the value that Sabre derived from the agreement was a cooperative three-year relationship that assured its travel agent subscribers that US Airways content would be available to them if they contracted with Sabre."

It continues:

"US Airways and its co-conspirators airlines engaged in a purposefully anticompetitive scheme targeted at Sabre and other GDSs.[global distribution systems] Instead of individually negotiating terms with GDSs as they would in a competitive market, the conspirators have agreed to fix the terms on which they will deal with GDSs, including as to content and price. Sabre competes with other GDSs and distribution channels to provide travel agents with the ability to search for and book air travel and ancillary services. The conspiracy described herein has, and, unless restrained, will continue to, impair Sabre’s ability to compete for travel agent business."

At issue are the fees US Airways and other airlines pay the big travel reservation systems, called global distribution systems, to display flights and make bookings. US Airways says that about $3.5 billion , or 35 percent, of its ticket revenue is booked through Sabre.

US Airways filed its anti-trust suit against Sabre in April 2011, two months after the two parties had reached a new distribution agreement.

American Airlines filed a similar anti-trust suit against Sabre in Texas in 2011. That case was settled out of court in October and it appears that as part of the settlement, American received a $280 million payment from Sabre.

-Andrea Ahles

American, Sabre reach settlement in anti-trust trial

American Airlines and Southlake-based Sabre Holdings announced Wednesday morning that they have reached a settlement in its anti-trust trial.

The two companies said they have renewed their current distribution agreement for multiple years and American has agreed to negotiate with Sabre for additional technology services.

At issue were the 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.

As part of the settlement, Sabre will pay American an unspecified monetary payment while American will continue to market its Direct Connect software to travel agents.

The terms of the settlement were not disclosed and need to be approved by the court.

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 was seeking almost $1 billion in damages from lost bookings, and potential losses of bookings that could have been made through American's own system.

-Andrea Ahles

 

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

 

Judge recuses himself in anti-trust suit between American and Sabre

A Texas judge has ruled that a state trial judge must recuse himself from hearing the anti-trust suit between American Airlines and Sabre Holdings.

Judge Don Cosby, who presides over the 67th District court, is on the board of directors at the Lena Pope Home, a Fort Worth charity that provides family counseling for at-risk children.

In its motion asking for Cosby's recusal, Sabre said American has made a "substantial financial contribution" to the Lena Pope Home since the lawsuit was filed. American had argued in another court document that the charity receives "broad support from people and businesses throughout this county," adding that Sabre and its lawyers have made "repeated contributions" to the Lena Pope Home and its school.

Opening arguments in the trial were supposed to begin on Wednesday. The Monday recusal will likely push back the start of the trial as a new trial judge will be assigned to the case.

"In making his ruling, the presiding judge stressed that the ruling was not based on any evidence of actual impropriety," American said in a statement. "American wishes to acknowledge the hard work and sacrifice of Judge Cosby and his staff, and we look forward to starting trial on schedule with the new trial judge to be appointed promptly by the presiding judge."

At issue are the 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 own reservations system, which would save the airline booking fees.

Sabre and American have been involved in several lawsuits since January 2011 when Sabre temporarily made it more difficult for travel agents to find American's fares in its distribution system. The two companies then attempted to negotiate a new contract agreement through the spring but then renewed legal action against each other this summer.

The two firms have a temporary agreement in place that keeps American's fares in Sabre's travel reservation system through the end of the litigation. American has accused Sabre of anti-trust violations and that Sabre organized an industry boycott of American.

UPDATE: The trial will continue as scheduled with Judge David Cleveland presiding.

Keep reading for full statements from American and Sabre on the judge recusal.

-Andrea Ahles

AMERICAN STATEMENT

"On Monday, the presiding judge of the Eighth Administrative Judicial Region in Texas state court granted a motion filed by Sabre to recuse Judge Donald Cosby, the current trial judge, who had presided over American’s state court case against Sabre since it was filed in 2011. According to the presiding judge, the ruling was to avoid any appearance of impropriety in light of donations by American to a Fort Worth charity for which Judge Cosby is a director.

"The evidence at the hearing reflected that Sabre and its counsel are supporters of the same charity, as well. In making his ruling, the presiding judge stressed that the ruling was not based on any evidence of actual impropriety. American wishes to acknowledge the hard work and sacrifice of Judge Cosby and his staff, and we look forward to starting trial on schedule with the new trial judge to be appointed promptly by the presiding judge."

SABRE STATEMENT

"The only donation Sabre has made since American Airlines’ filed its lawsuit in 2011 was a donation of less than $15 to match an employee’s donation to the Lena Pope Home as part of our Give Together program. Through this effort, Sabre encourages employees to give to organizations they support by offering matching donations. Over the past five years, Sabre and its employees located in the Dallas/Fort Worth area have volunteered at or contributed more than $5 million to nearly 530 different organizations in the local area. All other Sabre-related donations to the Lena Pope Home occurred prior to 2003."

American, Sabre anti-trust trial moved to October

A Texas district judge has moved the anti-trust trial between American Airlines and Sabre Holdings to October.

Southlake-based Sabre said that the trial, which was supposed to occur this summer, is now set to begin on Oct. 3.

"AA's claims are without merit. We continue to believe that our shared stakeholders would be better served by negotiations, rather than litigation, between the companies. To that end, we hope that AA will end this wasteful process. However, since AA continues its litigious course, we will continue to mount a vigorous defense," said Sabre spokesman Nancy St. Pierre.

At issue are the 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 own reservations system, which would save the airline booking fees.

"We respect the court's decision and look forward to pursuing our legal rights and seeking compensation for the harm done to our company as a result of Sabre's antitrust law violations. American's current distribution agreement with Sabre will remain in effect until 14 days after the conclusion of the Texas antitrust trial," the Fort Worth-based carrier said in a statement.

-Andrea Ahles

A sweet sixteen for Travelocity and its roaming gnome

With pointy red gnome hats, a cruise giveaway and plenty of balloons, Travelocity turned sweet 16 last month.

But it hasn't been all cupcakes and champagne for the Southlake-based travel website.

Once considered a trailblazer, Travelocity has struggled for the past few years to keep up with competitors such as Expedia or Priceline.

"We weren't moving as fast as we needed to," CEO Carl Sparks said about newer, nimbler competitors. "We're 16 and so sometimes we think of ourselves as one of the elderly companies in the space because we were around since its inception. ... Yet 16 is quite young for a multibillion-dollar company."

Since Sparks took the top job a year ago, he and his executive team have refocused the company on hotel products, build-your-own-vacation packages and mobile devices. In February, the company launched its first iPad app, which allows users to book airline tickets, hotels and rental cars from their tablets and offers hotel deals exclusive to its mobile apps.

While industry analysts say Travelocity is still playing catch-up, they are encouraged by Sparks' initiatives and the disciplined approach he has brought to the company.

"He is refining the team and they are working on platform solutions now," Atmos Group analyst Henry Harteveldt said. "There is a lot they can do, and they have matured into a compelling company."

To read the full story that was published in Sunday's Star-Telegram, click here.

And if you want to know a little more about the roaming gnome's social media voice, Elaine Kubik, click here.

-Andrea Ahles

Read more here: http://www.star-telegram.com/2012/03/31/3849461/travelocity-works-to-get-its-magic.html#storylink=cpy

Sabre CEO: High fuel prices will mean less choice for consumers and more expensive airfares

Sabre Holdings chief executive Sam Gilliland is at the nation's capital this morning, testifying to Congressional committee about the importance of a national energy policy.

Gilliland, who heads the Southlake-based travel technology firm, said that once the country is in oil spike there is not a lot that can be done to lower prices in the short term.

"The travel industry’s significant contributions to the U.S. economy can only be fully realized if travel remains affordable and within the budgets of families and businesses of all sizes and backgrounds. This is where the high cost of energy rears its head.

"Access to stable and affordable energy supplies is critical to the health of the travel and tourism industry and to the millions of people it serves. High energy prices increase industry-wide operating costs and reduce revenues and jobs, and productivity of U.S. business and government suffers as a result.

"Volatile fuel prices tend to hit airlines hardest, because fuel makes up such a high percentage of their costs. According to Airlines For America, every $1 per gallon increase in the price of jet fuel costs U.S. airlines $17.5 billion. If we do not solve this problem, continued fuel price escalation will result in more and more capacity coming out of the sky – which means less choice for consumers and more expensive airfares," Gilliland said, speaking to the House committee on natural resources.

-Andrea Ahles

Southwest renews contract with Sabre

Southwest Airlines announced on Thursday that it has renewed its multi-year reservations system contract with Southlake-based Sabre Holdings.

Sabre said it is assisting Southwest with its technology integration of AirTran Airways which the carrier purchased last May.

"It's important to us that our customers have a seamless shopping, booking and travel experience during our acquisition of AirTran," said Southwest chief technology officer Bob Young.

-Andrea Ahles

 

American: The airline exec incubator in the `80s

Good read from the Associated Press on how in the late 1980s, in the relatively early days of the deregulated airline industry, how American Airlines became the training and proving ground for bright young executives.

From an office at the end of a Dallas runway in the 1980s, the modern airline business was born.

There in cubicles with thin, gray carpet and shared computers, young graduates of the top business schools were tasked with making sense of deregulation — a new era when the government no longer dictated routes or prices.

Under American Airlines' then CEO Robert L. Crandall, they issued the first frequent flier miles, developed the hub system and found a way to fill empty seats with deeply discounted fares. Standards were high. Perfection was demanded. Those who excelled were quickly promoted, regardless of how young or new to the company they were. At the time, being a financial analyst on the second floor of American's headquarters was unlike any other job in the industry.

Today, four of them are running airlines — including American — themselves.

"It was a magical time," says Virgin America CEO David Cush, 51. "You didn't know where these guys were going to end up, but you knew you were hanging around with a bunch of smart guys."

Now one of those four, Tom Horton, has the task of restructuring American and restoring it to leadership. Three of his "classmates" are running competitors.

- Bob Cox

 

Sabre, Etihad Airways ink $1 billion deal

Sabre Airline Solutions will provide services estimated at $1 billion over 10 years to Etihad Airways, the national carrier of the United Arab Emirates, the carrier said. Etihad will use Sabre's software for its reservations, inventory, marketing, planning, e-commerce, distribution and departure control operations. It said it expects to implement the software by February 2013. Sabre, part of Southlake-based Sabre Holdings, says it provides technology services to more than 300 airlines and 100 airports around the world. Sabre Holdings also operates the Travelocity online travel site.

-- Jim Fuquay