April 14, 2011 – 7:11 am
From Bloomberg News: American Airlines sued Travelport Ltd. to stop what it called anticompetitive behavior and retaliation against the carrier for a push to use its own technology to distribute fares and schedules to travel agents.
The legal action expands a dispute between AMR Corp. (AMR)’s American and global distribution systems that historically have compiled fare and schedule data from various airlines and distributed them to travel agents. American wants to bypass those companies, including units of Travelport and Sabre Holdings Corp., and substitute its proprietary technology.
“Travelport, Orbitz and other industry participants have undertaken … Read the Rest Of The Artice.
Background: For those of you who aren’t so familiar with “parent company” names, Travelport is really Galileo / Worldspan; a widely used Global Distribution System (GDS). Also note that a global distribution system makes money by charging a supplier a transaction fee each and every time you book something in that global distribution system for that supplier. Travelport also runs Orbitz.
Opinion: The really interesting part of this entire fiasco is that here is an airline, who doesn’t pay commissions to agents, suing a company for not listing their product. This is analagous to you not listing Carnival…but listing all the other cruiselines on your website as available for retail sale. Does Carnival have the right to sue you?
In reality though, this is about Travelport being forced to use a particular technology…..just because American Airlines says to do so. Sabre is really in the same boat but as well but you haven’t heard much about it. Note as well Google is hidden in the mix here as well. Google IS USING American Airlines new technology…..that Hewlett Packard created…and that gives American Airlines the moxy to try and mandate the new technology on the traditional GDS companies.
The problem here is really for American Airlines. They implemented a new technology in partnership with the behemoth Google, and they (AA) expect the other GDS companies to drop everything, invest capital, and migrate to the new system as well, thus making AA’s investment in the new technology pay off (Return on investment or ROI). But if the GDS companies don’t adopt the new technology (because they don’t have to due to market share), AA is in a real jam. AA will then have to support two huge technology platforms and Wall Street isn’t going to like that.
Thus the lawsuits.
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