American Airlines row with online retailers deepens

American Airlines row with online retailers deepens

American Airlines’ bitter dispute with online retailers has deepened after its talks with one of its distributors Sabre Holdings collapsed, with the two sides now exchanging lawsuits. Separately, the airline has also lost a court ruling, which has declared that the carriers must sell its tickets on the websites of Orbitz Worldwide.

AA, the third-largest US airline by passenger numbers, pulled its flights from Orbitz in December. Since then, other airlines have captured nearly half of its former Orbitz market share.

“We still saw a strong interest of customers coming to our site, despite the fact American Airlines was never even on it,” said Orbitz spokesman Brian Hoyt.

Shares in Orbtiz soared 49 percent after the ruling was made.
AA and Sabre Holdings have been locked in negotations since January in an effort to resolve a spat that began last year when American tried to change the way it handled ticket sales.

But on Wednesday, AA and Sabre declared that their discussions had collapsed, with both sides issues court claims.

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Meanwhile AA is pursuing a parallel antitrust claim against Travelport, another distribution company, through the federal court, as well as Orbitz.

US Airways is also pursing similar litigation with Sabre.

The battle with online travel sites such as Orbitz, as well as third-party ticket distributors, is based around booking fees. Some airlines, including AA, are pushing for lower fees, to cut costs as fuel prices remain high.

Travel sites get a fee of $8 to $10 for each airline ticket they sell, roughly $3 to $5 from the airline and $5 from global distribution systems.

Carriers object to having to pay the GDS to distribute their tickets to travel agents instead of being able to deal directly with travel agents and consumers to offer fliers additional services.

The Department of Justice confirmed this month that it was investigating whether a handful of GDS had broken antitrust rules.

In a statement, Sabre accused American of “engaging in anticompetitive conduct” to maintain a monopoly over flights between certain US and Caribbean hubs.

American described Sabre’s antitrust claims as a “spurious attempt to distract the public and its subscribers from the serious implications of its own anticompetitive behaviour”.