American Airlines may be standing up to the GDSs by itself for now, but other airlines will eventually join the push for lower distribution costs.
That's the view of Michael Linenberg, Deutsche Bank's U.S. airlines analyst, who says: "I do think you are going to see the airlines do what they can to move bookings to the lowest cost distribution channels."
Linenberg joined Herman Leung, Deutsche Bank's Internet and online travel analyst, for a conference call with clients on their "Latest Thoughts on Airines vs. the OTAs (Online Travel Agencies)."
Leung estimates that airlines pay about $10 in GDS costs on a $300 ticket and the GDSs pass along about $5 to the OTAs.
By seeking a direct relationship with the OTAs, American Airlines is striving to eliminate that extra $5 it pays to the GDSs, Leung says.
In the scuffle between American and Orbitz, American was seeking "cost-effective distribution" for some of its lowest-yielding tickets, namely multi-segment tickets that some consumers book to beat the higher cost of nonstop fares, Linenberg says.
Linenberg argues that it is only a matter of time before other airlines, including Delta Air Lines and United Continental, get more aggressive.
"Every carrier is in a slightly different stage of development," Linenberg says, adding that both Delta and United Continental are still preoccupied with sorting through the tech issues of their respective mergers.
That provided American Airlines with an opportunity, Linenberg says, as Delta and United Continental have "bigger fish to fry."
Still, Delta indicated in its earnings conference call Jan. 18 that it has now removed its flights from about a dozen lesser-known online travel agencies, and also has barred distributors from selling its lowest-cost fares when they are paired in itineraries with low-cost fares from other carriers, Linenberg says.
Both Delta and American are tackling distribution-cost issues, albeit from different angles, Linenberg says.
Linenberg noted that Southwest Airlines gets more attractive economics than is the norm in the GDS deal it struck with Travelport. American Airlines and other carriers approached GDSs for similar deals and were "flatly refused," Linenberg says.
Regarding American's battle with Sabre, Leung thinks the two parties are playing a "game of chicken" and both have too much at stake not to come to an agreement.
"I see a resolution happening sooner rather than later given that summer seasonality is coming up ... " Leung says.
Linenberg adds: "It is difficult to fathom American tickets not being sold on Sabre."
So as American continues its faceoff against Sabre, Travelport, Expedia and Orbitz, Linenberg sees a relevant angle in Google's proposed acquisition of ITA Software and thinks he knows why several OTAs are publicly battling the deal while "airlines are silent."
Linenberg argues that a Google-ITA combo, with so much detailed data at their disposal about consumer shopping behavior and airfares, could act like a GDS and deliver high-quality leads to airlines at a lower cost than airlines today pay to the traditional GDSs in fees.
Linenberg added he's unsure whether airlines would use Google-ITA for distribution under this scenario instead of GDSs.
Meanwhile, Leung expects a Department of Justice decision on Google's acquisition of ITA within the next week or so.
Leung's handicapping of the decision is that there is a 80% to 90% chance that DOJ will approve the merger, albeit with conditions.