The U.S. Justice Department is investigating possible antitrust violations by companies that distribute airline fare and flight data as they spar with carriers over control of the information.
Sabre Holdings Corp., in Southlake, Texas, and Travelport Ltd., based in Atlanta, the two biggest U.S.-based global distribution systems, said they were asked by the agency for information. Delta Air Lines Inc. (DAL), AMR Corp. (AMR)’s American Airlines and US Airways Group Inc. (LCC) also received requests.
The inquiry escalates tension between airlines, led by American, and the global distribution companies over the handling of price and schedule data used by most consumers to purchase travel.
“This has been going on for many, many years and it’s culminated in a situation where the airlines feel they’re being bullied very harshly,” Richard Clarke, director of Travel Technology Research, said in an interview. “The GDSs feel they have the right to exercise their economic influence the way they have. To go to court now, on the basis of antitrust, is kind of the last straw.”
Gina Talamona, a Justice Department spokeswoman, confirmed the agency is investigating possible anticompetitive practices in the global-distribution industry.
Sabre and Travelport, along with Amadeus IT Group SA in Europe, handle more than 90 percent of worldwide airline data distribution, AMR said in an earlier legal filing. Sabre and Travelport dominate the U.S. market.
Travelport Comment
“Travelport welcomes the GDS industry investigation,” Jill Brenner, a spokeswoman, said in an interview. The company “is confident that it is in complete compliance with the antitrust laws,” she said.
Travelport is “working fully” with the Justice Department, Brenner said.
Sabre, based in Southlake, Texas, also was asked for information and is cooperating, Nancy St. Pierre, a spokeswoman, said in an e-mail. The request, she said, included “no allegations.”
Gina Talamona, a Justice Department spokeswoman, didn’t immediately respond to a request for comment.
Sabre credit default swaps rose 45 basis points to 726, according to data provider CMA, the highest since October 2009. The swaps typically climb as investor confidence worsens.
“American welcomes this investigation by the Department of Justice and intends to cooperate fully,” the Fort Worth, Texas- based carrier said in a statement.
Delta Comment
“Delta intends to cooperate fully with the Department of Justice in this matter,” Trebor Banstetter, a spokesman, said in an e-mail.
American in April sued Travelport and its Orbitz Worldwide Inc. unit for alleged antitrust violations, and is in talks with Sabre to settle a separate suit over distribution of data.
The airline wants to use its own Direct Connect system to provide data directly to both online and traditional travel agents. Such a system would reduce distribution costs and allow American to sell travel packages customized for individual passengers, the airline has said. Those offers may include optional products and services, like early boarding or select seats, that would boost revenue to the carrier.
“We need to raise more money to be successful,” American Chief Executive Officer Gerard Arpey told shareholders on May 18. “More merchandising is part of that, and Direct Connect is a vehicle for it.”
Other Airlines
GDS companies historically have collected fees from the airlines for handling fare and flight data, and have shared a portion with the travel agents who sell the tickets.
US Airways also has sued Sabre for alleged antitrust violations. Todd Lehmacher, a spokesman for the Tempe, Arizona- based airline, declined to comment on the federal investigation. More than 35 percent, or $3.5 billion, of US Airways’ annual revenue is booked through Sabre or Sabre-affiliated travel agents.
Whitney Eichinger, a spokeswoman for Southwest Airlines Co. declined to comment, and Rahsaan Johnson, a spokesman for United Continental Holdings Inc. (UAL), declined to comment.
AMR fell 6 cents to $6.66 at 4:02 p.m. in New York Stock Exchange composite trading. Delta rose 13 cents to $11.51 and US Airways slipped 15 cents to $10.17. Sabre and Travelport are closely held. (source : bloomberg.com)
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