Orbitz, Expedia and the GDS haves and have notsNewsBy Dennis Schaal | April 5, 2011Share This article was originally published on Orbitz Worldwide and Travelport extended their agreement where Travelport pays Orbitz increased incentives to shun a direct-connect with American Airlines.Travelport began paying Orbitz the souped-up incentive payments Dec. 22, 2010, the day after American Airlines removed its flights from Orbitz websites, and the payments were to run through April 21.However, Orbitz disclosed today that the two parties reached an extension agreement March 29, calling for the increased payments to run through Aug. 31, 2011.Under the agreement, Orbitz receives the increased segment incentives unless American Airlines' flights return to Orbitz Worldwide websites, or Orbitz establishes a direct-connect with American Airlines -- or is likely to create a direct-connect with American Airlines or any airline, for that matter.In this way, Travelport, which controls Orbitz Worldwide, dissuades its largest travel agency customer from engaging in GDS bypass with American Airlines.News of the Orbitz-Travelport extension comes a day after Expedia committed to establishing a direct-connect, albeit with some GDS assistance, with American Airlines within 12 months.So, today Expedia can claim to be comprehensive and offers consumers American Airlines flights and Orbitz goes without.The dichotomy points to what is becoming a realignment among online travel agencies over the direct-connect issue between the GDS haves and the GDS have nots.Expedia and Priceline, which use global distribution services but are not owned or controlled by GDSs, have exercised the freedom to establish -- or at least agreed to establish in Expedia's case -- direct-connects with American Airlines. Consumers can book American Airlines flights on their respective websites. Priceline quietly established a direct-connect with American Airlines late last year, and revealed its existence in January 2011.On the other side of the ledger is Orbitz, controlled by Travelport (the operator of the Galileo, Apollo and Worldspan GDSs), which has been hamstrung -- let's face it -- and doesn't have the maneuvering room to establish a direct-connect with American.Consumers seeking to book American's flights on Orbitz have to navigate elsewhere to do so.And, then there's Travelocity (and sister company lastminute.com), which are owned by GDS vendor Sabre and continue to offer American Airlines flights.However, Sabre has been the ball-carrier for opposition to American Airlines direct-connect and thus Travelocity's access to American Airlines flights could be in jeopardy pending the outcome of negotiations, which could culminate in August 2011.Like Orbitz, Travelocity, from a practical standpoint, doesn't have the freedom to strike a direct-connect deal with American Airlines without parent Sabre's approval.So, being GDS-free -- or being a GDS have not -- in terms of the ownership relationship could be an online travel agency differentiator, at least in the short term.It will absolutely be interesting to see how Sabre reacts to the American Airlines-Expedia agreement.Expedia uses the Sabre GDS in the U.S. and deployed that GDS yesterday to restore American Airlines' flights on Expedia websites.But, Expedia also has signed a memorandum of understanding to establish a direct-connect with American Airlines within 12 months.The ambiguous wording of the Expedia-American announcement states Expedia plans to establish a direct-connect with American Airlines "by using aggregation technology provided by a GDS."In other words, Expedia is going to connect to American Airlines' direct-connect, likely using American Airlines contractor Farelogix, with an assist from a GDS. This could be similar to the way Air Canada has established a "direct-connect" with Travelport using the Farelogix API.But, which GDS will Expedia use to facilitate its direct-connect?Sabre has basically been at war over the years with Farelogix and vehemently opposes direct-connect.On the other hand, Expedia is a big-time customer of Sabre's.Asked to comment on the Expedia-American agreement, Sabre spokeswoman Nancy St. Pierre says direct-connects are unnecessary."GDSs already have aggregation technology -- that’s what we do -- aggregate content in one place," St. Pierre says. "We already aggregate AA’s content, along with hundreds of other airlines. As such, there is no need for a one-off direct connect."St. Pierre interprets the Expedia-American Airlines pact as an affirmation of the GDS value proposition."We are pleased that Expedia continues to recognize the efficiency and value of the global distribution systems and our ability to support their need for efficient access to full content on AA," St. Pierre says."As the world leader in travel innovation, we look forward to continued discussions with all industry constituents -- airlines, agencies and corporations -- to ensure we are best able to meet the evolving needs of airlines looking to grow revenue and differentiate, while enabling efficient comparison shopping and end-to-end travel management for agencies and corporations," St. Pierre adds.It's an open question whether Sabre will reach an accommodation with American Airlines as Sabre views direct-connect as an attack on its core business.Would Expedia have to turn to a different GDS, perhaps Amadeus, to establish the direct-connect with American Airlines?And, if Sabre compromises with American Airlines would Travelport follow Sabre's lead and discard its opposition to direct-connect?These are some of the issues that will play out over the next few months.Meanwhile, there apparently are direct-connects and then there are direct-connects.Priceline established a direct-connect with American but the volume of segments passing through it hasn't really impacted the volumes flowing from Priceline to its GDS supplier, Travelport.American Airlines, stung by the GDS opposition to its direct-connect initiative, undoubtedly is content to start somewhere with Priceline and others, even if the amount of juice flowing through these direct-connects is relatively small.