With a just few weeks to go before their full-content agreement expires, American Airlines says Sabre substantially increased some of the fees it charges the airline for bookings in the Sabre global distribution system.
In a Securities and Exchange Commission filing, AMR Corp., American Airlines' parent, states: "Following the expiration of the Stand Down Agreement, on July 8, 2011 Sabre imposed new and substantially higher fees for some American bookings through the Sabre GDS."
The Stand Down Agreement began in January 2011, days after Sabre similarly increased American Airlines' GDS booking fees. Under the expired Stand Down Agreement, Sabre agreed to cease its commercial actions against American Airlines, which in turn agreed not to level surcharges against travel agents for American Airlines' flight bookings in the Sabre GDS. And the two parties set aside their litigation until June 1.
The Stand Down Agreement expired June 1 and with no full-content agreement reached in the interim and negotiations continuing, the retaliatory actions are apparently at play again.
American Airlines, which notes that a failure to reach full-content agreements with Sabre, Travelport or Amadeus by Aug. 31 could have a material impact on the airline's business, said it is challenging Sabre's actions in court.
Sabre declined to confirm or deny that it had upped American Airlines' GDS booking fees for the second time this year.
"We are not going to discuss confidential customer matters," said Nancy St. Pierre, a Sabre spokeswoman. "Our objective in this matter remains clear. Obtain a new distribution agreement with AA that meets the needs of all constituents."
There appears to be considerable angst in the American Airlines camp as it butt heads simultaneously with three powerful GDSs.
In AMR Corp.'s second quarter earnings call this week, Gerard Arpey, chairman and CEO, framed what's up for grabs in the dispute. Arpey said:
Look, there's no secret to the fact that there is enormous revenue at risk here and there are enormous stakes in the outcome of these discussions with the GDSs. And that why, candidly, they have wound up in court, because what we're trying to do is break some of these monopolistic practices.
Arpey added: "And whether or not we are successful remains to be seen. but there's no doubt there's a tremendous amount at stake."
The dispute revolves around American Airlines' direct-connect and merchandising strategy, and, of course, distribution economics.
American Airlines declined to provide further comment on the issues.
The airline has gone to court, charging that Sabre and Travelport, in particular are guilty of anticompetitive practices. US Airways, too, has alleged that Sabre is guilty of antitrust transgressions.
Sabre has sought to dismiss an American Airlines suit, alleging it is using the court system as a negotiating tactic as their talks on a new agreement go down to the wire.