Distribution Battles: AA And Sabre - I Can Hear The Engines Revving

There are many ways to solve this problem, but a reckless game of chicken is not one of them.
A game of chicken  can have but three outcomes:
1.  The GDS flinches
2.  The Airline flinches
3.  They crash


If the GDS companies flinch, the result is that they give in on the pricing demands of the airlines (or at least significantly bend in that direction).  No one can speculate how deep a discount is being requested by AA, but suffice it to say that it is way deeper than the GDS is willing to go.   Price is not the only issue.  The merchandising of the various "extras" that AA has added to its online platform are also part of the negotiation.  Sabre is arguing for complete transparency of these fees to the consumer, which is not possible as long as they aren't able to support the sale of these products.  AA currently supports the sale of these products to travel agents and corporate travel managers through the Farelogix SPRK platform, but not through the GDS.

If the airline flinches, they might settle for a different business model from the GDS, but definitely not the status quo.  One option could be a higher payment for high value transactions and a lower payment for lower value transactions.   Or a different payment for agency transactions (offline) and another for OTA transactions.

If they crash, AA either goes "dark" in Sabre (they do not renew their participation agreement) or they go back to "grey" (display algorithms push them back many pages in the availability results) and AA likely goes back to court for a more permanent injunction, pending the DOJ investigation into GDS Antitrust.

Meanwhile, depending on the depth of their dependence on AA, agencies and corporations will then have to scramble to implement a direct connect to AA and somehow sort out the impact on their front office, mid office and back office platform infrastructure.

In any one of the three cases, the agencies and the corporations deal with what is left in the wake, either bearing the cost of the concessions on either of outcomes one or two or from the incremental cost and productivity hits of outcome three, where agencies will be required to access a third party system to access AA's flights and fares.

Most of the 14,000+ agencies in the US do not have IT departments that are capable of any level of systems integration, whether directly to Farelogix SPRK or to navigate the eight pages of options given on the Technology Pavillion document posted on the AA direct connect site.  And even the most tech savvy agency owner or manager will have a full time job on their hands just discerning what part of the puzzle each of the 18 companies on the list solve, as they definitely are not apples to apples.  Solutionz is devoting significant time to navigating these options for our agency and corporate consulting clients.
And lest we forget both the corporate and the leisure consumer, it is likely that in the end, the costs of this argument will be passed on to them, if nothing else in the form of their taxes to cover the ongoing DOJ investigations.
These comments are republished, with permission and possibly editing, from Chicke Fitzgerald's Distribution Solutionz blog.