Photo courtesy: Fule33
The Lufthansa Group’s lawsuit filed last week against Sabre Corp. in a Tarrant County, TX, court does not seek any damages; rather, it aims to “determine and declare” its rights under its 2015 contracts with the GDS company, including the right to apply a surcharge to GDS bookings.
But it is also evident that LHG wants a clear path to distribution of its product through direct connections with travel agencies.
“The legacy GDS distribution model is restrictive to airlines, as it hinders direct marketing and communication between airlines and their customers and does not support dynamically created and customizable product offerings,” the airline’s complaint says.
The direct-connect concept has met with “historical resistance” from Sabre, LHG said, but each of its airlines—Lufthansa, Austrian, Swiss International, and Brussels airlines—“successfully secured from Sabre the right to use direct-connect systems, in the parties’ 2015 Base Participating Carrier Distribution & Services Agreements.”
Both LHG’s direct-connect technology, currently provided by Farelogix and Travelfusion, and its websites are expressly permitted under the agreements, the group said in the complaint.
On Sept. 1, LHG implemented a “Distribution Cost Charge” of €16 for all bookings transacted through the GDSs. Thirty days later, Sabre sent letters to the group in which it claimed that LHG’s agency portal and its direct-connect technology providers, Farelogix and Travelfusion, were GDSs as defined in the agreements. Sabre claimed that the DCC must be applied to bookings made through those channels as well.
LHG responded on Oct. 28, disputing Sabre’s interpretation. It did not hear back until March 1, when Sabre reiterated its claims, saying the surcharge was discriminatory. The Lufthansa Group was “in material breach” of the agreements, Sabre said.
Lufthansa is taking Sabre to court to clarify the issue. In terms of monetary compensation, it is seeking only court costs and attorneys’ fees.
It’s not the first time Sabre has tangled with an airline over direct-connects.
Beginning in 2010, it waged a hard-fought battle with American Airlines over the issue, resulting in lawsuits, countersuits, and an eventual settlement under which Sabre paid American $200 million.
In another still-running lawsuit, US Airways says Sabre imposed “anticompetitive restrictions” on the carrier, “including provisions designed to restrict US Airways’ ability to use lower-cost, more efficient direct connections with travel agents.”