Then there are online travel sites, such as Expedia, that chip into Sabre's business by taking sales away from travel agents and offering a way to buy tickets and hotels without using Sabre's transaction system. But Expedia became a Sabre customer last month, contracting with Sabre to deliver information and process transactions for an unspecified portion of the flights and hotels booked on the site. Perhaps most ominous is Orbitz, the online travel site created by five airlines, which has 2-year-old software called Supplier Link that bypasses the global distribution systems by linking directly with carriers' central reservations systems. "Supplier Link is out there like a sharp-edged guillotine hanging over the necks" of all four global distribution systems, says Forrester's Harteveldt. "If the GDSs don't get their costs down, the airlines will lower the Orbitz blade on the GDSs that are most expensive."
Airlines are by far Sabre's largest customers, but they're already using technology to limit their dependence. Southwest Airlines and JetBlue Airways both subscribe to Sabre--the only global distribution system they use--but they do so at the lowest cost and lowest service levels and instead rely heavily on their own direct-sales Web sites as their primary channels. Air Canada last year pulled its cheapest fares out of the global distribution systems and moved them to a new travel-agency booking site to save on commissions.
David Anderson, CIO of Spirit Airlines, a low-cost carrier that specializes in shuttling vacationers in northern cities to locales such as Florida, Puerto Rico, and Cancun, says he wants to have his product "on as many shelves as possible"--which means he lists flights on Sabre. But Anderson says he needs the distribution systems only to sell distressed product, such as midweek flights heading north to cities such as Detroit and Chicago, so he withholds fares for flights the airline can sell through its own site. Moreover, when Spirit decided to update its internally developed legacy reservations system, it kept it in-house, building a Linux-based system last year. Spirit is one of a handful of airlines that hosts its own reservation system, meaning it could manage all of its transactions itself if it chooses to. "The fundamental objective is to eliminate intermediaries that add no value," Anderson says.
Yet Sabre has some advantages of market size compared with competitors--not the least of which is its ability to host reservations systems, which it does for more than 90 airlines. Having custody of an airline's reservation system gives Sabre--as well as Amadeus, which performs a similar function for many airlines outside the United States--the upper hand in a deregulated environment where airlines will have more freedom to pick and choose which global distribution systems they do business with.
Sabre's strength in reservations hosting was a key consideration for Aeroflot Russian International Airlines when it decided to update its aging reservations and distribution systems, which relied on software from Sita, a Swiss vendor of software for airlines, airports, and aerospace firms. Aeroflot considered new software offered by Sita as well as Amadeus, but it signed a multimillion-dollar software, hosting, and distribution deal with Sabre Airline Solutions in May, in part because Sabre's more-mature technology would be more reliable while operating in Russia's tenuous E-business infrastructure, CIO Sergey Kiryushin says. "We need to start next April, so we need to get an advantage as soon as possible," he says.
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