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Feds Open Antitrust Inquiry Of Airlines And Ticket Distributers

Posted  June 20, 2011

The Antitrust Division of the U.S. Department of Justice is investigating whether third-party sellers of airline tickets have violated antitrust law

The federal investigation opens a new front in the legal battles involving several U.S. airlines and the companies that aggregate and distribute flight and booking – the practices known as global distribution systems (“GDSs”).  GDSs serve as intermediaries between airlines, online ticket sellers, and travel agents by providing airlines’ flight information to the ticket sellers and booking information to the airlines.

Several airlines, including American Airlines, Delta, and U.S. Airways, and the major GDSs, including Sabre, Travelport, and Amadeus, have confirmed that they have received civil investigative demands from the Antitrust Division.  According to several reports, the Justice Department is investigating “the possibility of anti-competitive practices in the global distributions industry.”

In April, American Airlines sued Orbitz Worldwide Inc. and air fare data provider Travelport, one of the leading GDSs, for allegedly making American’s fares wrongfully appear more expensive than the fares of other airlines.  Also in April, U.S. Airways filed an antitrust suit against Sabre, another major GDS.

American claims that Travelport was retaliating against American’s Direct Connect network, which directly connects online ticket sellers and travel agents to the airline’s reservation system.  Such a system circumvents GDSs and their associated fees.

GDSs typically charge about two percent of total tickets costs.  In 2008, GDSs sold 64 percent, or $81 billion, of U.S. airline tickets.

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