BRUSSELS (Reuters) – Electronic travel services companies Amadeus (AMA.MC) and Sabre (SABR.O) are being investigated by the EU over contract terms that the bloc’s antitrust watchdog says could prevent airlines and travel agents from switching to rival ticket 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 global distribution service (GDS) providers such as Amadeus and Sabre, 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 of 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 said its business practices comply with legal and regulatory requirements and that airline distribution is affected by the commercial behavior of airlines and airline groups, among other factors.
“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,” the company said.
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 an effort to have more control over its prices and boost revenue.
IAG-owned (ICAG.L) airlines British Airways and Iberia subsequently followed suit last year.
Reporting by Robin Emmott; Editing by Jan Harvey and David Goodman