Southwest and Sabre fail to reach commercial terms for a GDS partnership

    Southwest Airlines recently took a major step to bolster its corporate revenue when it reached deals to list its inventory in the Travelport and Amadeus global distribution systems, but so far discussions with Sabre have failed to produce an agreement.

    The US’ second largest domestic airline reached deals with Travelport and Amadeus earlier this year, in part to eliminate friction in the booking process for corporate travel agents.

    But the airline has not been able to reach a deal with Sabre, one of the big three GDS providers. “…Very simply we just weren’t able to get to commercial terms with Sabre, which is unfortunate”, company CEO Gary Kelly recently told analysts and investors.

    Mr Kelly acknowledges Sabre’s importance as the “largest US GDS player” and it “…would be crazy not to talk to them”, but “…where things go with Sabre, I don’t know”.

    Southwest plans to go live in the Travelport and Amadeus GDS’ in mid-2020 and has previously stated that listing its inventory in those platforms should generate USD10 million to USD20 million in EBIT (earnings before interest and taxes) in 2H2020.

    “…This opens up a whole new pool of corporate customers that we haven’t had access to…”, said company president Tom Nealon.

    Southwest is also working to strengthening its relationships with TMCs (Travel Management Companies), said Mr Nealon: “…Historically, we have not spent a lot of time with TMCs, we just haven’t had to. So we are out there right now with our sales team…and we’re starting to work with the TMCs and with travel managers”.

    Unsurprisingly, Mr Nealon believes Southwest has a favourable competitive proposition in the corporate space. “…It’s important to note that the vast majority of domestic business travel is booked as coach travel, which we happen to be pretty good at”.