American Airlines (AA) has been slammed for its role in the ongoing airfare distribution row by one of the world’s largest corporate travel groups.
The National Business Travel Association (NBTA) – a group of travel buyers, managers, intermediaries and suppliers, headquartered in the US – said corporations and business travellers faced spiralling travel costs if airlines pursued a strategy that bypasses booking intermediaries.
Online travel agents (OTAs) Expedia and Orbitz have both ditched AA content from their sites as a result of the dispute, while travel technology firm Sabre – which provides travel intermediaries with a system to book air fares – said it planned to terminate its contract with AA one month before it is due to expire, and will make the carrier’s fares harder to find on its booking platform.
Mike McCormick, the NBTA’s executive director and chief operating officer, said Sabre’s decision represented a serious escalation in the growing conflict surrounding airline-mandated direct connects.
In December, Travelport GDS – one of Sabre’s rivals – followed through on a threat to levy a surcharge on all AA bookings made on its booking system, after a court ruled that AA could tear up a contract committing it to provide air fares to Orbitz, of which the tech firm has a 49% stake.
The airline claims it still wants to work with OTAs and technology companies, but remains steadfast in its efforts to drive bookers to its direct connect product.
“Business travel buyers will ultimately foot the bill for marketplace fragmentation caused by airline initiatives that push the travel distribution marketplace in the wrong direction,” said McCormack. “It’s a move away from transparency and competitiveness and toward confusion and higher costs.”
In a statement, the NBTA said airline direct connect proposals would lead to higher ticket prices, because:
1) Bypassing existing distribution systems would result in a significant increase in capital expenditure for business travel buyers. Travel management companies and agencies would need to build new systems to capture these "direct connect" fares on behalf of their business travel clients, resulting in higher costs overall.
2) Businesses that rely on clear and transparent fare information to negotiate for and maintain airline discount programs would find it far more difficult to track volume and enforce travel policies in a fragmented market. This would ultimately result in higher costs for business travel buyers.
McCormack said: “The current system for business travel procurementis marked by transparency, access and competition. Any changes must continue to provide business travel purchasers with the information they need to make informed travel investment decisions. The NBTA calls on all airlines with an interest in the business travel market to ensure their fares are made widely available to buyers through commonly-used distribution channels.”
Meanwhile, AA has accused Sabre of breaching its contractual obligations, branding its decision to terminate their contract early as “punitive”.
A statement from the airline read: “Sabre’s actions are discriminatory and patently inconsistent with both its contractual obligations and its professed goal of ensuring full transparency for the benefit of consumers and travel agents.
“In contrast, the actions only serve to protect Sabre’s market position and attempt to force airlines and travel agencies to rely exclusively on its legacy systems that only lead to higher fares and fewer choices for consumers.”
In spite of the disagreement, Sabre-owned OTA, Travelocity, continues to sell AA fares.