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Why Sabre makes the wrong choice

January 10, 2011 |

Companies like Farelogix are working on things that will eventually make Sabre irrelevant when it comes to booking air travel. Sabre can try to fight that as long as it wants, but if it doesn’t evolve, it’s going to be out of this part of the business. It’s just a matter of when.

When Sabre announced that it would no longer offer American Airlines (AMR) flights for booking in its reservation system, some thought the move was extreme. In reality, however, this is one of only two options Sabre had. Instead of choosing to change with the times, Sabre has opted to use its heft to try to prevent the times from changing. In the long run, this will not work.

Data transfer costs almost nothing today, so the old model of segment fees and incentive payments has too much cost sitting in the middle. The airlines were able to get some of that out earlier this decade, but the model really just needs to be blown up. And that’s what the airlines are trying to do eventually.

Seeing where this is going, Sabre has two options. It can try to create this hub of direct connections that would eventually be able to replace the existing reservation system with much lower cost to the airlines or it can fight to cling to its existing business model. Its decision to pull American out of its system in August (oh, the irony) shows that Sabre is going to cling to its business model and try to use its current heft to prevent airlines from being able to use other options.

This is not smart. If Sabre won’t evolve, then others will jump in to fill the vacuum.

Get the full story at BNET

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