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Is Google Making Sabre and Global Distribution Systems Obsolete?

Is Google Making Sabre and Global Distribution Systems Obsolete?
Joe Cortez

Finnair made quiet headlines when they announced they would pull out of Sabre’s global distribution system right before Thanksgiving 2019. Is it a sign that the once-mighty giant is slowly crumbling? Or is it a one-time speed bump in the continuing of a behind-the-scenes monopoly on airline pricing and routes?

Much of the travel world woke up to a shock on November 26, 2019, when Finnair made a major announcement that could potentially change how and where flyers can purchase tickets. After negotiations with travel powerhouse Sabre, the Finnish airline announced they would temporarily pull the plug on publishing fares through both Sabre and Abacus’ Global Distribution Systems.

For those who book flights in the digital world, this change may not affect how they do business. But for older travelers, high-end luxury travelers, and business travelers, this small move could have major implications down the road. It bears the question: Is the digital world making global distribution systems like Sabre obsolete?

When Finnair left Sabre and Abacus

The announcement came on Nov. 26, 2019, two days before the United States took a break for the Thanksgiving holiday. The statement was clear and to the point: “Finnair content has been fully removed from Sabre and Abacus GDSs as of Tuesday 26th November. The distribution agreement has not been reached with Sabre and Abacus GDS.”

How could Finnair pull their flight data from the biggest global distribution system? According to their statement, Finnair wanted to move “…to our desired state of pricing and distribution freedom in direct channels and content differentiation in indirect channels.” Effectively, the airline saw more value in flyers purchasing fares directly from them, or through indirect channels including online travel agencies and Google Flights.

A recent search showed Finnair flights were still available on Google Flights, giving flyers plenty of options when it comes to booking their trips. Moreover, selecting a Finnair flight on Google Flights through Priceline allowed the flyer to book their trip from inside the search engine website, with the online travel agency fulfilling the itinerary.

While this will create some disruption, it won’t be catastrophic. In advice to travel agents, Finnair encouraged booking through other global distribution systems, including Amadeus, Travelport or Travelsky. In Europe, those using Sabre or Abacus can still book Finnair flights – but refund requests will be disabled until a new contract is finalized.

Building Goliath and his “SABRE”

While it can be argued that travelers are less and less dependent on global distribution systems to book flights, airlines and travel agents are dependent on the software package. Sabre was first created by American Airlines back in 1964 with the help of IBM. According to company historians, the name itself was an acronym for “Semi-Automated Business Research Environment.”

With the growth of American and the rise of computers, the airline wanted an easier way to distribute fare information to airports and travel agents. What started as a reservation and distribution channel to 1,500 computer terminals across North America would quickly grow to the main place everyone booked their tickets.

Soon after the American Society of Travel Agents worked with Sabre to offer the platform to its members in 1972, technology allowed for the rapid growth of the company. By 1990, the company claims Sabre was available to over 130,000 travel agencies and lead to the launch of their own online travel agency, Travelocity. By 2000, Sabre outgrew their parent company and was spun off as an independent entity from AMR Corporation – the then-parent company of American Airlines.

Today, Sabre has a huge reach among carriers, even if flyers don’t realize it. According to research by Wired Magazine, over 50 percent of travel agency bookings come from travel agents using Sabre, forcing airlines to still use the technology. Additionally, high-value customers and large businesses still prefer to work with travel agents overbooking on their own, looking for a higher tier of customer service that airlines and online travel agencies can provide.

While Sabre handles a number of tickets every year, it also comes with hidden costs that are ultimately passed down to flyers. In 2011, American Airlines accused its former child company of exorbitantly raising fees for using the global distribution system to publish fares. In comments to Tnooz, Sabre wouldn’t comment on “confidential customer matters,” claiming simply their goal was to “Obtain a new distribution agreement with AA that meets the needs of all constituents.”

How much were these Sabre fees? The answer was revealed in the 2010 lawsuit US Airways v. Sabre, an anti-trust lawsuit against the global distribution giant accusing collusion to force the former carrier to use their services, charge a high amount for it and prevent them from forming a new ticketing technology. In research published by The Company Dime, the lawsuit revealed that Sabre charged airlines differently: while Southwest Airlines would pay only $1.35 per-segment to Sabre, American paid $2.09 while United Airlines paid $3.13 for the same service.

As a result, one can argue that Sabre holds the industry at blade-point (pun intended) to use their software – despite the changes technology brings.

Clash of the Titans

While Sabre was doing battle with airlines over fees, a smaller player in the travel space with a big name would begin building their pathway to dominance. In 2010, Google quietly purchased a flight information software company called ITA Travel. Not a global distribution system in itself, ITA collected data such as flight times, ticket code availability and pricing, all of which were invaluable to the “do-it-yourself” travel booker. ITA Travel would then go on to power the biggest threat to Sabre and its stranglehold on the travel community: Google Flights.

In the beginning, Google and Sabre had an amicable relationship. In 2015, the two companies worked together to launch the Google Hotel Ads Commission Program, which promised to combine “the benefits and reach of Google Hotel Ads with the hotels’ existing commission programs by making the hotels’ best available retail rates searchable and bookable on Google.”

But by 2019, Sabre admitted Google did more for direct travel than anyone could have anticipated. A blog written by the company’s director of search marketing revealed interesting conclusions: 75 percent of travelers start searching destinations through search engines, while meta channels (like Google Flights and Google Travel) drove more than $33 billion in sales.

Google Flights, along with other global distribution systems, provided a new direction for airlines. Instead of being dependent on a legacy technology service, they could market fares directly to travelers, and keep more of the fare through direct booking with the airline. As a result, the tables turned against Sabre – allowing airlines to be bolder in their relationship with the global distribution system.

What’s Next in the Technology Battles?

As with all changes, progress is a slow process. As revealed in US Airways v. Sabre, the former American holding had as much as 52 percent of the market share between 2006 and 2012. And according to the Wired article, around 20 percent of all flights booked in the United States go through Sabre.

But as Finnair has demonstrated, the future may be in consumers’ hands. As technology makes data accessibility easier for both companies and consumers, more decisions could be made outside of global distribution systems and through consumer-focused technology.

Will Sabre crumble overnight? Absolutely not: the travel industry still relies on it. But if they don’t make a move to modernize in the future, Google and Amazon could eventually replace the once-mighty data house.

View Comments (1)

1 Comment

  1. Dr.Ells

    December 9, 2019 at 11:22 am

    Why did this “author” stick in ‘amazon’ at the very end? Is the “author” receiving a PoundSign#kickback, for mentioning the mere word? Ridiculous. A successful writer does not do that. A successful writer would have explained that above in the article.

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