American Airlines announced today that it has formed an agreement with Priceline.com to distribute American’s flights on the popular online travel site.
Priceline, the number four ranked online travel agency, has agreed to use American’s own Direct Connect system to distribute flight information in lieu of the dominant global distribution system (GDS) offerings from Sabre Holdings and Travelport.
This follows in a series of strategic moves American Airlines (AA) has made since December against the largest GDS.
The longstanding dependence on GDS companies to distribute fares broke down when American pulled its fares from Orbitz.com (owned by Travelport) back in December.
The GDS struck back when Expedia, which uses both Travelport and Sabre for flight information, removed American’s fares from its popular flight search.
Earlier this month, Sabre threatened to cancel American’s contract entirely, but a lawsuit by American resulted in an injunction that prevented Sabre from doing so.
American is drawing a line in the sand, but it’s still too early to tell if other large players in the travel industry—especially other airlines—will join.
The conflict reaches beyond just online travel agencies. Sabre distributes flight inventory for airlines to brick-and-mortar travel agencies and corporate partners, accounting for 45 percent of AA’s bookings in 2010.
Many of these agents have yet to show support for American’s Direct Connect system, so the airline might be forced to seek a peaceful resolution with Sabre if the new model proves to be unpopular.
Then there’s the pending Google ITA merger.
Just today, the Department of Justice approved an equally controversial merger between Comcast Corporation and NBC Universal, so the Google ITA purchase is expected to be approved.
With the increased competition from Google, American will have considerable leverage to renegotiate a contract with the GDS companies.
By Fernando Padilla for PeterGreenberg.com.
Related links: Wall Street Journal, Bloomberg, Tnooz.com
Related links on PeterGreenberg.com:
- AA Gets New Ally: Google’s ITA Acquisition Imminent As DOJ Considers Lawsuit
- News Analysis: What The Battle Between American Airlines & OTAs Means
- American Wins Injunction Against Sabre As Booking Wars Continue
- Sabre Dumps American Airlines As Online Booking Wars Heat Up
- FairSearch Adds Members In Opposition To Google’s Acquisition of ITA Software
- Expedia Protests American Airlines Decision By Hiding Its Fares
- US Airlines Bullish For 2011: More Fees For Travelers
- Delta, American Airlines Pull Fares From Some Third-Party Web Sites
