Carriers warn on GDS renewals

American Airlines and Continental Airlines are warning travel agencies they may drop out of expensive distribution systems if GDS renewal negotiations are unsatisfactory.

The two major carriers said travel agencies should pursue alternative options for airline content.

The jockeying for position comes in the wake of the deal between Amadeus and Sabre to share airline inventory if an airline exits from one of the two systems.

American and Continental oppose the pact as a violation of existing contracts and as anti-competitive. Separately, the two airlines warned agencies to consider using alternative companies to access flights, and said they may introduce an extra distribution charge if agencies book flights through expensive channels.

The question now is whether the stances by American and Continental – or the position taken by Sabre and Amadeus – are merely part of a negotiating dance as most major US airlines’ contracts with the GDSs expire this year and into 2007, or whether the airlines are serious about withdrawing from some GDSs.

Northwest and US Airways have already signed new five-year deals with Sabre. And American, in signing a five-year distribution deal with Worldspan that begins August 1, may have been sending a message to Sabre and Amadeus. 

Northwest, US Airways and American all have said their new agreements have helped them reduce distribution costs, although they have not disclosed the financial terms. American and Worldspan have also been coy about their deal. This may be the first opt-in agreement, where agents would be charged to access certain content, in the US market.

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