23 Mar 2017

Full content agreements for airline distribution live to fight another day

Several major airlines, including Lufthansa, Air Canada and American Airlines, were unsuccessful in their recent attempt to bring the GDS “full content agreement” closer to a demise.

The carriers had sought declaratory relief to clarify the outcome of the long-running US Airways vs. Sabre antitrust trial and its impact on future GDS-airline agreements.

The jury found in favor of US Airways, and the carrier was awarded $5.1 million in damages.

The amount was trebled to $15.3 million, as is mandatory in cases where the Clayton antitrust law has been violated.

But without further clarity, the airlines said, Sabre will continue to engage in practices that violate antitrust laws.

Sabre continues to maintain that the verdict applies only to its 2011 agreement with US Airways – an agreement that has expired with a carrier that no longer exists, following its 2013 merger with American.

Full content agreements require that airlines provide the GDS company with all published fares that they provide to other sales and distribution channels, including their own websites.

The provision, which has become standard in airline-GDS contracts, has been at the heart of nearly every major dispute between the two industries for a decade, including American Airlines’ antitrust lawsuit against Sabre and Travelport, which was settled, and Lufthansa’s imposition of a surcharge imposed on all bookings processed by a GDS.

But Judge Lorna Schofield, who presided over US Airways’ lawsuit, issued her opinion and order without reference to the airlines’ requests.

“Few cases present such a clear need for declaratory relief as this one,” Alaska Airlines and Virgin America said in court papers.

Sabre and US Airways still dispute whether the jury’s verdict, which found that Sabre “unreasonably restrained trade by means of the challenged contract provisions” bars Sabre from imposing again the “very draconian” terms that US Airways had battled in court.

Lacking clarity, Alaska and Virgin said they will be forced to negotiate any new contracts with Sabre “under a cloud of uncertainty”.