Travel Payments

EU Probes Sabre, Amadeus Over Airline Ticket Prices

The European Union has launched an inquiry into deals between players in the air travel industry that may have resulted in a slew of companies colluding to hike airline ticket prices consumers pay.

The Financial Times, citing EU competition commissioner Margrethe Vestager, reported the regulator is looking into price manipulation agreements between airliners, travel agents and flight reservation booking companies Amadeus and Sabre. Vestager said the EU investigation will focus on “possible restrictions in competition in the market for airline ticket distribution services,” noting there are concerns restrictions “could create barriers to innovation and raise ticket distribution costs,” which would ultimately raise the airline ticket price consumers pay. Amadeus and Sabre provide the technology backbones for the travel industry, including global distribution systems that aggregate the flight information, schedules, seat availability and ticket prices for many of the airlines around the globe. Travel agents and online travel services use the systems to compare flights, book reservations and provide tickets to customers.

According to the Financial Times, the EU is looking into whether agreements over the systems include restrictions in terms of the information airlines can provide to rival systems and clauses that call on the carriers to provide flight information and prices that are at the very least competitive with where they are offered, including at the airline’s websites. Startups have emerged, including TravelFusion and Farelogix, that help the airlines develop their own internal systems that are better than the offerings by Amadeus and Sabre — but one player, Farelogix, has recently been acquired by Sabre, noted the report. Amadeus told the Financial Times it expected the investigation for a while, saying: “The [EU’s] process will confirm that Amadeus’ business practices are fully aligned with legal and regulatory requirements. Airline distribution is affected by many interdependent factors, including the commercial behavior of airlines and airline groups. The review of any one factor must take into account its dependence and impact on all other factors to avoid undermining the neutral marketplace and thereby harming consumers.” Meanwhile, Sabre told the Financial Times the company will continue to focus on providing competitive access for travel agencies to airline information.

 

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