American Airlines claims that travel agencies, ASTA and the Business Travel Coalition all played a role in a conspiracy by GDS companies to defeat the carrier’s direct-connect strategy. The allegations are contained in American’s revised antitrust complaint.
The claims came to light in documents unsealed last week in which Judge Terry Means of the U.S. District Court, Northern District of Texas, denied motions by the defendants to dismiss the case. The documents were filed Aug. 6.
The judge said that American made a “plausible” case for conspiracy-to-monopolize by the defendants in alleging they had a plan to “punish and retaliate” against the carrier for its direct connect initiative.
If American’s allegations are true, the GDSs and travel agents “alike” have an interest in preserving the current GDS model, the judge said.
AA: Agencies assisted the GDSs
American alleges that Sabre and Travelport, with assistance from large travel agencies such as Orbitz and Expedia, and trade associations such as the Business Travel Coalition and ASTA, orchestrated a conspiracy in which they “agreed with one another not to implement American’s direct connect technology, agreed to bias their displays to disfavor American’s flights, agreed to boycott American flights for their own corporate sales, and agreed to encourage their corporate customers to ‘book away’ from American and shift sales to other airlines.”
American also alleges that Sabre, Orbitz, and Amadeus engaged in “regular communication with each other about the threat that American’s activities posed to the GDS model, how each of the GDSs would approach negotiations with American (and other airlines) and how they would neutralize the threat that AA Direct Connect posed to the GDS model and its monopoly profits.”
Amadeus, which has the smallest GDS market share in the U.S., is not a defendant in the case.
American claims that senior GDS executives were involved in the conspiracy. It says that in November 2010, “a senior executive at Sabre reported to colleagues on a conversation he had with a Travelport representative” and mentioned “a roadmap for AA plan.”
American also alleges that “an Orbitz employee sent an email to employees at Sabre, Expedia, BTC and ASTA asking them to “stand together” with Orbitz against American.
In mid-2010, American says, the GDSs were meeting with travel agencies to “discuss AA” or to “share views and action plan” on AA Direct Connect.
“Numerous” travel agencies also were involved in the conspiracy, American alleges, and they “recognized that their communications crossed the line of legitimate competition on the merits.”
One agency expressed concerns about discussing American’s direct connect initiative in writing, American says, and “suggested using a code name.”
Judge: ‘GDSs benefit directly’
Commenting on American’s complaint, which the carrier revised after some allegations were dismissed several months ago, the court said, “(a)ccording to American, the GDSs benefit directly from the GDS model because it allows them to enjoy monopoly power, while travel agencies such as Orbitz benefit indirectly from the model because they share in the booking fees that the GDSs charge to airlines.”
“These allegations, taken as true, support a reasonable inference that GDSs and travel agencies alike share an interest in preserving the status quo of the GDS model and defeating efforts such as AA Direct Connect that challenge the long-term viability of the GDS model.”
Sabre, AA respond
In a statement issued after the documents were unsealed, Sabre said, “There was no decision on the merits of the claims. The judge did not say American’s claims were valid, only that American had made allegations sufficient to meet the minimal pleading requirements of federal court. American makes a number of unsupported allegations which Sabre denies and maintains that it has not violated any laws.”
American said, “The court’s order confirms that American has adequately pleaded numerous antitrust claims against the defendants, including monopolization and conspiracy claims. We would prefer to resolve our dispute with the defendants amicably, but any such resolutions need to end anticompetitive practices and to account for the harm done to American.”