US Airways Files Antitrust Lawsuit Against Sabre
By Shane Nolan
April 24, 2011 - US Airways filed a federal civil
antitrust lawsuit in the Southern District of New York
against Sabre Holdings Corp. to halt anticompetitive and
anticonsumer practices, as well as recover monetary
According to the complaint, Sabre, which is a dominant
distributor of airline fares and content to travel
agents, has engaged in a pattern of exclusionary conduct
to shut out competition, protect its monopoly pricing
power, and maintain its technologically-obsolete
US Airways contends that Sabre has wielded its significant market power and control through exclusionary commitments from travel agents and other Global Distribution Systems (GDSs), as well as through anticompetitive requirements placed on US Airways and other airlines in order to sell their tickets.
Sabre is the largest GDS in the United States and exercises
enormous market power over airlines, including US Airways. Over
35 percent of US Airways' revenue is booked through Sabre and
Sabre affiliated travel agents.
Sabre structures the distribution model so that travel agents,
whether they are a traditional travel agency or one of the large
online travel agencies that many consumers use directly on the
Internet, are typically forced to rely on a single GDS to book
airline tickets on behalf of their customers.
According to the complaint, Sabre imposes significant economic
penalties on travel agents relating to bookings not made using
Sabre. If Sabre excluded US Airways from its offerings to its
travel agents, those agents could no longer book US Airways
tickets through Sabre. US Airways would not be able to survive
the subsequent loss of revenue. Given this disproportionate
market control, US Airways is forced to accept Sabre's
The lawsuit follows after the recent execution of a new
distribution agreement between Sabre and US Airways, which was
reached in late February 2011. During negotiations with Sabre,
US Airways made it clear to Sabre that it sought a new contract
without exclusionary restrictions that protect Sabre from
However, Sabre threatened to shut off access to US Airways if
the new agreement did not include these anticompetitive
restrictions. According to the complaint, US Airways was forced
to acquiesce to Sabre's "my way or the highway" demands as a
part of any new deal.
However, Sabre threatened to shut off access to US Airways if the new agreement did not include these anticompetitive restrictions. According to the complaint, US Airways was forced to acquiesce to Sabre's "my way or the highway" demands as a part of any new deal.
The complaint also alleges that Sabre has been aggressive in suppressing
the ability of travel agents to book tickets directly with airlines
using so-called "direct connections." US Airways pays Sabre so that
Sabre affiliated travel agents can book tickets on US Airways. Across
the board there have been advances in technology and communications, and
a corresponding decline in those costs, yet the cost of doing business
with Sabre remains artificially inflated.
"The airline industry and other technology services providers have become more efficient, yet Sabre's conduct has enabled it to charge inflated prices with outdated technology that was developed before the Internet existed. Lower-cost, more technologically-advanced alternatives and innovative fare products are being shut out by Sabre's actions," said US Airways President Scott Kirby. "US Airways wants to be able to widely distribute its products and services to consumers in a cost-effective and efficient way, but Sabre continues to erect roadblocks to this goal. US Airways and travelers would see enormous benefits if Sabre had to compete on a level playing field," said Kirby.
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