Connect with us

Business News

Amadeus, Sabre targeted in EU antitrust investigation



BRUSSELS (Reuters) – European Union antitrust regulators are investigating global distribution service (GDS) providers Amadeus (AMA.MC) and Sabre (SABR.O) over contract terms which they say may prevent airlines and travel agents from switching to rival ticketing agents.

The logo of Amadeus, the leading global provider of technology and distribution solutions for the travel and tourism industry, is seen at the company site in Sophia Antipolis, France, May 30, 2016. REUTERS/Eric Gaillard

Airlines typically sell about 70 percent of their tickets via third parties such as travel agents, but have a tense relationship with GDS providers, which use software networks to sell products like airline tickets and hotel rooms to consumers.

These companies typically achieve much higher profit margins than the airlines whose tickets they help to distribute.

Previous attempts to bypass them and send customers to their own booking systems have usually ended in airlines losing customers and then backtracking.

The European Commission opened an investigation into the two companies on Friday, saying the practices by Amadeus and Sabre may breach EU competition rules and result in higher prices for consumers.

“We are concerned that such restrictions could create barriers to innovation and raise ticket distribution costs, ultimately raising ticket prices for travelers,” European Competition Commissioner Margrethe Vestager said in a statement.

Vestager can impose fines of as much as 10 percent of a company’s global turnover for breaching EU rules.

Amadeus had no immediate comment, while Sabre did not immediately respond to a request for comment.

Three years ago, Europe’s largest airline Lufthansa (LHAG.DE) shook up the industry by charging a fee for tickets booked through third parties in a bid to have more control over its prices and boost revenues.

IAG-owned airlines British Airways and Iberia subsequently followed suit last year.

Reporting by Robin Emmott; Editing by Foo Yun Chee and Jan Harvey