US Airways filed a federal civil antitrust lawsuit in the Southern District of New York against Sabre, the largest Global Distribution System (GDS) in the United States. As detailed in the filing, US Airways seeks to:
- Allow for more competition in airline ticket distribution;
- End Sabre’s monopoly pricing power; and
- Discontinue Sabre’s technologically obsolete business model.
Sabre exercises enormous market power over airlines, including US Airways.
Over 35 percent of all US Airways’ revenue is booked through Sabre and its affiliated travel agents. Travel agents are typically forced to rely on a single GDS to book airline tickets. In fact, according to US Airways’ 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.
Sabre leveraged its anti-competitive power in their most recent negation with US Airways.
During recent negotiations, US Airways asked for a new contract with Sabre without key exclusionary restrictions that protect Sabre from competition. Sabre responded by threatening to shut-off access to US Airways if the new agreement did not include these anti-competitive restrictions.
Sabre’s incentive structure for travel agents further lessens competition in airline ticket distribution.
The complaint alleges that in order to receive the highest financial incentive, Sabre effectively forces Sabre travel agents to work with Sabre, which prevents the travel agents from working more closely and collaboratively with US Airways.
The lack of competition allows Sabre monopoly pricing and disincentivizes it from improving its technology.
The airlines’ cost of doing business with Sabre has remained artificially inflated, while across the board advances in technology have dramatically lowered Sabre’s cost of doing business.
Sabre harms consumers through higher prices, reduced innovation, and fewer choices.
Sabre’s monopoly pricing raises costs for consumers and reduces competition by obstructing or delaying the distribution of innovative fare products. For example, prior to Sabre using its monopoly power to enforce full content agreements, US Airways frequently offered more favorable web only and other promotional fares at discounted levels through select distribution channels. Sabre's full content requirements effectively have eliminated US Airways’ ability to offer these types of fares and resulted in increased ticket prices for consumers.